Appeals Court Issues Key Decision On California’s Low Carbon Fuel Standard

On September 18, 2013, the 9th Circuit Court of Appeals reversed a December 2011 district court ruling and held that California's Low Carbon Fuel Standard (LCFS) does not violate the Dormant Commerce Clause of the U.S. Constitution on its face. The district court had sided with groups from the oil and gas, ethanol, and trucking industries and found that the LCFS violated the Dormant Commerce Clause because the statute gave higher carbon intensity values to out-of-state, Midwest, ethanol, putting that fuel at a disadvantage in California. At the time of the 2011 decision, the district court had also issued a preliminary injunction preventing the California Air Resources Board (CARB) from enforcing the LCFS.

In its decision this week, the appeals court held that the LCFS does not violate the Dormant Commerce Clause on its face, and it remanded to the district court whether the statute violates the clause "in purpose or in practical effect." The appeals court also vacated the preliminary injunction.

It has been reported that the ethanol industry is looking at their legal options in light of the appeals court decision.