News Column

California Low-carbon Rule Survives Legal Challenge

June 30, 2014

Dale Kasler, The Sacramento Bee

Ethanol (file image)
Ethanol (file image)

June 30--California's Low Carbon Fuel Standard, one of the centerpieces of the state's fight against global warming, survived a significant legal challenge today when the U.S. Supreme Court declined to hear a lawsuit brought by oil-industry and out-of-state farm groups.

The court's decision lets stand a 2013 decision by the 9th Circuit Court of Appeals, which upheld the state's low-carbon fuel standard. But opponents of the law said there will be more litigation against the standard under different legal theories. "I don't think this closes the door," said Anthony Francois of the Pacific Legal Foundation, a conservative Sacramento group that filed court briefs on behalf of the plaintiffs.

The standard became law in 2007 by executive order of then-Gov. Arnold Schwarzenegger. It requires fuel producers to reduce the "carbon intensity" of their products by 10 percent by 2020.

The fuel standard is one of the two key components of California's effort to curtail greenhouse gases. The other is AB 32, signed into law by Scharzenegger in 2006, which established a "cap-and-trade" program requiring hundreds of big industrial firms to purchase credits in order to release carbon into the air. Refineries have been exempt from the requirement so far, but their emissions will come under the program's regulations beginning next January. Analysts have said it could mean gas prices at the pump could rise 10 to 20 cents.

The Low Carbon Fuel Standard takes the issue one step further. It doesn't just measure the carbon in tailpipe emissions; it takes into account the entire process of creating the fuel and bringing it to market. That includes everything from shipping fuel to California to the process of growing corn for ethanol.

Environmentalists hailed the Supreme Court's decision to keep the fuel standard in place. It "is welcome news for the millions of Californians at risk from the clear and present danger of climate change," said Tim O'Connor of the Environmental Defense Fund in a prepared statement. The standard "will protect the health of Californians while strengthening our clean energy economy."

Besides the oil industry, the standard was also attacked in court by Midwest farmers and ethanol producers. They argued that the standard discrminated against their corn-based ethanol because they had to transport their product into California. The process of shipping raised their ethanol's "carbon intensity," which they said represented unconstitutional discrmination against products made out of state.

"California's efforts to dictate how fuel is produced outside of its borders ignores constitutional safegards that have long protected against one state controlling the conduct of private parties beyond their borders," said Richard Moskowitz of the American Fuel & Petrol Chemical Manufacturers in a prepared statement. The trade association fought to have the California standard struck down.

Although Midwest ethanol producers fought the standard, a Sacramento-based ethanol maker supported it. "We're staunch defenders of the Low Carbon Fuel Standard," said Neil Koehler, president of Pacific Ethanol Inc., in a recent interview. He acknowledged that the company has a "competitive advantage" from being able to serve West Coast markets from a string of nearby production facilities, which reduces the carbon intensity of the fuel his company makes.


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Original headline: California low-carbon rule survives big legal challenge

Source: (c)2014 The Sacramento Bee (Sacramento, Calif.)

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