Judge Declares California's Low Carbon Fuel Standard Unconstitutional

U.S. District Judge Lawrence O'Neill in Fresno, California, Monday denied the board's motion to stay a decision he issued on December 29, 2011 halting implementation of the Low Carbon Fuel Standard.

Judge O'Neil ruled that California discriminates against interstate commerce when it assigns a higher so-called carbon intensity score to ethanol produced in the Midwest over the identical ethanol produced in California.

The judge agreed with the arguments of farming and ethanol-industry groups and issued a related court order blocking the state from enforcing the standard.

Ethanol fuel pump (Photo by ethanolpics)

"Judge O'Neill's decision demonstrates the strength of our claims against the Low Carbon Fuel Standard," said Renewable Fuels Association President and CEO Bob Dinneen and Growth Energy CEO Tom Buis.

"The California Low Carbon Fuel Standard seeks to regulate conduct outside its borders and is blatantly discriminatory and unconstitutional," the two executives said in a joint statement.

"American ethanol advocates will continue to oppose CARB's effort to reinstate this punitive policy that illegally seeks to dictate the production and transportion of ethanol and other fuels outside its border," they said.

Refering to his December 29 decision, Judge O'Neill ruled Monday that the Air Resources Board, "improperly seeks to relitigate issues this Court resolved in its order granting the preliminary injunction and orders on the summary judgment motions."

He wrote that the Air Resources Board sought not to preserve the "status quo" but rather to "allow enforcement that imposes higher restrictions than had been imposed previously" without citing any authority to show why the Court would have jurisdiction to grant that type of relief.

The Air Resources Board had approved the Low Carbon Fuel Standard in an attempt to discourage refiners from processing types of crude oil that release the highest levels of carbon when produced and transported into California, such as liquid bitumen from Canada's tar sands.

Air Resources Board climate change spokesman Dave Clegern said the state will take the case to the Appeals Court level. "ARB will now take its request for a stay of the injunction to the Ninth Circuit [Court of Appeals] and believe we will prevail there," he said.

Clegern said that because Judge O'Neill's order prevents enforcement of the Low Carbon Fuel Standard, "It removes the incentive for fuel producers to reduce their carbon footprints, and prevents us from rewarding those who do. As a result the injunction is creating confusion: It's hurting the producers and investors in cleaner fuels, and penalizing good actors."

"ARB has already filed its appeal of the full decision with the Ninth Circuit," Clegern said. "The timetable on the motion to stay the injunction in the appellate court, and on the appeal itself, are still being developed by the court."

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