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Energy Groups Ask Supreme Court To Hear California Low Carbon Fuel Case

Publications - Newsletter | April 28, 2014

Ethanol trade groups Renewable Fuels Association and Growth Energy recently filed a petition with the U.S. Supreme Court to make a final ruling on the constitutionality of California’s low carbon fuel standard (LCFS).

The case stems from California’s enactment in 2006 of its Global Warming Solutions Act, which sought to reduce the state’s greenhouse gas emissions to 1990 levels by 2020. As one part of the goal, California adopted the LCFS, which required businesses that sell transportation fuels in California to reduce the “carbon intensity” of their fuels by 10% before 2020.

The ethanol industry sued California in federal district court in 2009, claiming the regulations violated the Commerce Clause of the U.S. Constitution. In December of 2011 the district court agreed that the LCFS violates the Constitution because the regulations treat ethanol differently on the basis of where it is produced—e.g., California versus the Midwest, and that the regulations impermissibly benefitted in-state ethanol and burdened ethanol produced outside of California.

On September 18, 2013, however, the federal court of appeals reversed the district court in a 2-1 decision. The appeals court found that the LCFS did not “facially discriminate” against interstate commerce because California had “good and non-discriminatory reason[s]” for treating ethanol produced out of state differently than in-state ethanol.

In January the trade groups had asked that the full 9th Circuit Court of Appeals reconsider the 2-1 decision but the court declined to do so. Given the court’s final action, the trade groups now have asked the Supreme Court to decide the issue. The appeal court’s order denying the “en banc” request provides an excellent summary of the issues involved in the case. 

Twenty-one states have joined the trade groups in their petition.