California’s LCFS Ruling is a Win for Consumers and Alternative Fuels Companies

By Tim O’Connor and Larissa Koehler

Last week, we saw a big win for California’s Low Carbon Fuel Standard (LCFS) – a regulation to diversify the state’s fuel mix with lower carbon sources of energy. After almost a year of deliberation, the United States 9^th Circuit Court of Appeals filed a decision in the case Rocky Mountain Farmers Union, et al. v. Corey, in favor of California.

In its 79-page decision, the Court addressed two major constitutional issues: 1) whether the LCFS was invalid because it directly regulated wholly out-of-state ethanol producers (extraterritoriality); and 2) whether the LCFS was invalid because it impermissibly discriminated against out-of-state producers based solely on origin, thereby violating the Commerce Clause. The court overturned a District Court ruling on both grounds, finding that the state can move forward with the LCFS unimpeded. Of course, the ruling is only a temporary win for California, as additional legal process at the District court — and possibly U.S. Supreme Court — is forthcoming.

Although not required to do so, the Court of Appeals went to great lengths to recognize the importance of California’s leadership in developing and implementing environmental policy. The Court said it did not wish to “block California from developing this innovative, nondiscriminatory regulation to impede global warming… [as] it will help ease California’s climate risks and inform other states as they attempt to confront similar challenges.”

These words of support for the LCFS and California’s leadership are supported by tremendous growth in alternative fuels industries like California biodiesel, and also by analysis that shows fuel diversification can yield long-term price reductions at the pump. The 9^th Circuit’s decision which allows these trends to continue is not just a win for the state in a long legal battle, but also a win for California’s consumers and environment.