Judge Rejects California's Low-Carbon Fuel Standard, Says State Rule Burdens Interstate Commerce

By Robert C. Cook  

A federal court in California ruled Dec. 29 that the state's low-carbon fuel standard is unconstitutional and violates the commerce clause of the U.S. Constitution (Rocky Mountain Farmers Union v. Goldstene, E.D. Cal., No. CV-F-09-2234, 12/29/11).

Judge Lawrence J. O'Neill of the U.S. District Court for the Eastern District of California issued an injunction temporarily blocking the standard, ruling in favor of the Rocky Mountain Farmers Union and other ethanol industry groups.

The standard “impermissibly discriminates against out-of-state corn ethanol and impermissibly regulates extraterritorially in violation of the dormant Commerce clause,” O'Neill said.

The dormant commerce clause prevents state regulation when its activity unduly burdens interstate commerce.

Because the plaintiffs had established a likelihood of success on the merits on the commerce cause claim and raised serious questions related to their preemption claim, O'Neill said the likelihood of irreparable harm and the balance of the equities tip in their favor.

For this reason, the court granted the plaintiffs' motion for a preliminary injunction and enjoined enforcement of the standard while the litigation continues.

The court also certified judgment on plaintiffs' dormant commerce clause claim to allow an immediate appeal to the U.S. Court of Appeals for the Ninth Circuit.

Oil Industry Raises Similar Issues.

In a separate opinion, O'Neill granted summary judgment to the National Petrochemical & Refiners Association, who also argued that California's low-carbon fuel standard violates the dormant commerce clause and discriminates against out-of-state and foreign crude oil sources (National Petrochemical & Refiners Ass'n v. Goldstene, E.D. Cal., No. CV-F-10-163, 12/29/11).

Both groups of plaintiffs sued James Goldstene, executive officer of the California Air Resources Board.

O'Neill also found that CARB failed to establish that there are no alternative methods to advance its goals of reducing greenhouse gas emissions.