A Victory for Cleaner Fuels

On June 30, 2014, the last day of the 2013 term, the United States Supreme Court declined to hear the oil companies' and ethanol manufacturers' appeals in the California low carbon fuel standard (LCFS) case.  This is a big step forward in California's fight to clean up motor vehicle fuel sold in the state and fight global climate change. 

I have written about the LCFS before so let me give a quick summary here.  Enacted by the California Air Resources Board (CARB),  the LCFS incentivizes the producers of motor vehicle fuel, wherever it is made, to reduce the carbon content of fuel that  is sold in California.   Fuel sold in any other state is not affected. 

Trade groups for Big Oil and Bog Ethanol seized on a few scraps in the lengthy CARB administrative record and filed a lawsuit claiming that the LCFS violates the Commerce Clause of the U.S. Constitution by discriminating on its face against out-of-state oil and ethanol producers, and by trying to regulate businesses outside of California.  The trial court agreed with the industry plaintiffs but the 9th Circuit Court of Appeals ruled in favor of CARB in a long and well-reasoned opinion that you can read here. Plaintiffs appealed to the Supreme Court, and if you took their briefs seriously the entire fabric of the American republic was at stake.  Apparently the Court did not, because Plaintiffs could not win over four of the nine justices, the number required for the Court to accept a case.  The case will now go back to the trial court to allow the Plaintiffs to try to prove that, as a factual matter, the LCFS discriminates against the oil and ethanol industries as a whole.  It does not.

For you Commerce Clause fans, the notable thing about the Ninth Circuit opinion is that it is the first appellate case that looked at whether a State's use of a lifecycle analysis to evaluate the global warming potential of a motor vehicle fuel is constitutional.  There is really no good alternative to lifecycle analysis because, if more CO2 is produced in manufacturing the fuel than is saved in using it, California is a net loser in the fight against injuries to our state and its citizens caused by global climate change.  The Ninth Circuit recognized this, and its decision will stand as a result of the Supreme Court decision not to take the case.  This is a very good outcome for Californians.