Federal court issues temporary injunction against Calif. LCFS

By Erin Voegele | January 03, 2012

On Dec. 29, Judge Lawrence O’Neill of the U.S. District Court for the Eastern District of California issued a ruling preventing the California Air Resources Board from enforcing the state’s low carbon fuels standard (LCFS) during pending litigation. The decision was one of several rulings made by the court regarding federal lawsuits challenging the program.

The U.S. ethanol industry had claimed California’s LCFS is unconstitutional, citing that the program violates the Commerce Clause of the U.S. Constitution. Specifically, a lawsuit filed in December 2009 by representatives of the ethanol industry claimed that the LCFS violates the Commerce Clause—and is in effect unconstitutional—due to the fact that the program seeks to regulate farming and biofuel production practices in states other than California, as the cause forbids state laws that discriminate against out-of-state goods and those that regulate out-of-state conduct.

Responding to the decision, Renewable Fuels Association President and CEO Bob Dinneen and Growth Energy CEO Tom Buis said in a joint statement that the LCFS discriminates against out-of-state corn-derived ethanol. It is our hope, said Buis and Dinneen, that California regulators will come back to the table to work on a thoughtful, fair, and ultimately achievable strategy for improving our environment by incenting the growth and evolution American renewable fuels.

Although the ruling was spurred by a lawsuit filed by the U.S. ethanol industry, the move will likely impact the U.S. biodiesel and advanced biofuels industries. In fact, under the LCFS, biodiesel production was expected to play a large near-term role in meeting the requirements of the program. The LCFS was also expected to help drive local development of an advanced biofuels industry.

According to CARB, it will respect the court’s ruling and withhold enforcement of the LCFS requirements so long as the injunction remains in effect.  The board also said, however, that it intends to appeal the decision and will seek an order staying the preliminary injunction. “In seeking a stay of the preliminary injunction, [CARB] will request an order that all requirements of the LCFS in 2011 and 2012 are enforceable for the entire period,” said the board in a statement. “Thus, to the extent that existing guidance issued by [CARB] is expiring or stakeholders or the board has requested modifications to the regulation, [CARB] will continue its stakeholder and rulemaking process.”

Subject to the limitation on enforcement imposed by the court, CARB also noted it has issued a Supplemental Regulatory Advisory. The advisory, 10-04B, which went into effect on Jan. 1, 2012, applies in conjunction with Supplemental Regulatory Advisory 10-04A, which was issued in July 2011.  According to CARB, Advisory 10-04B is intended to bridge the gap between current regulatory provisions and the expected Jan. 1, 2013 enforcement of proposed amendments to the LCFS, which include modifications to provisions that address treatment of high-carbon-intensity crude oils (HCICO) under the program. Advisory 10-04B will remain in effect through the end of the year unless it is otherwise superseded by another CARB regulatory action, advisory or notice. 


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