• That the LCFS regulation is not exempt from Commerce Clause scrutiny;

• That the LCFS violates the Commerce Clause in its treatment of ethanol; and

• That the LCFS violates the Commerce Clause in its treatment of crude oils.

Judge O’Neill ordered an injunction enjoining ARB from enforcing the LCFS.

On 5 January 2012, ARB filed a notice of appeal, and then on 20 January 2012, ARB moved to suspend the preliminary injunction pending appeal. In response to that motion, Judge O’Neill found that:

• Once the appeal was filed, the District Court had no jurisdiction to act on the merits of the case or to alter the status of the appeal; i.e., he lacks jurisdiction to grant the motion to stay the injunction and judgments pending appeal.

  Defendants’ motion to suspend the preliminary injunction is based on defendants’ arguments that they are likely to succeed on the merits of their claims on appeal and that they—and not plaintiffs—will experience irreparable harm pending appeal if the preliminary injunction is not stayed. Defendants’ arguments are based on issues that this Court resolved in its orders, and are the issues that are currently pending appeal. Thus, Defendants’ motion improperly seeks to re-litigate issues this Court resolved in its order granting the preliminary injunction and orders on the summary judgment motions.

• The District Court could grant only such relief as might be necessary to preserve the status quo pending an appeal.

  The current status quo pending appeal is the preliminary injunction which enjoins defendants from enforcing the LCFS. Defendants’ motion does not seek to preserve the status quo. Rather, defendants seek to alter the status quo by suspending the preliminary injunction to allow California to enforce the LCFS. This request goes even farther than requesting the current status quo to roll back to the pre-injunction status quo. At the time of the injunction, California enforced the LCFS under the 2011 regulations. Pursuant to the LCFS, the regulated parties’ required reductions increased [emphasis in order] significantly in 2012. It appears that defendants are requesting an order that would not only change the status quo by allowing California to enforce the LCFS, but to allow enforcement that imposes higher restrictions than had been imposed previously. Defendants cite no authority, and this Court finds none, to support the proposition that this Court has jurisdiction to grant this type of relief.

• Although statues allow the Court to suspend an injunction during the pendency of an appeal “on terms for bond or other terms that secure the opposing party’s rights,” ARB proposed no such terms that would secure the plaintiffs’ rights, according to the judge.

Because this Court found that the LCFS violate the dormant Commerce Clause, this Court cannot conceive of terms which would preserve plaintiffs’ rights while allowing enforcement of an unconstitutional law. Indeed, in this Court’s opinion, an order to suspend the preliminary injunction and to allow continued enforcement of an unconstitutional law would itself violate—and not secure—the plaintiffs’ rights. Because there are no terms that would secure the plaintiffs’ rights which allowing the preliminary injunction to be suspended, this Court must deny defendants’ motion.

Resources

• Order On Motion To Stay Preliminary Injunction And Judgments Pending Appeal