CALIFORNIA: Refiners and truckers sue over low-carbon fuel standard

Debra Kahn, Environment & Energy Daily, Feb. 3 2010--Oil refiners and truckers filed suit against California yesterday to overturn its low-carbon fuel standard (LCFS). The suit, filed in the U.S. District Court for the Eastern District of California, alleges that the LCFS violates the Constitution's commerce clause, which reserves for the federal government the right to regulate interstate business.

The National Petrochemical and Refiners Association is joined by three other plaintiffs: the American Trucking Associations, the Center for North American Energy Security and the Consumer Energy Alliance.

The California Air Resources Board enacted the rule last month; it had been in the works since 2007 (E&ENews PM, Jan. 13). Starting in 2011, fuel suppliers will have to meet annual carbon intensity targets with their chosen blend of fuels. The overall goal is to reduce fuel emissions 10 percent by 2020, or about 15 million metric tons.

Yesterday's suit cites the commerce clause as well as the supremacy clause, which establishes the dominance of federal laws over state laws.
The federal renewable fuels standard, the Energy Independence and Security Act of 2007 and the Energy Policy Act of 2005 all prevent California from embarking on its own fuel standard, the groups said.

ARB Chairwoman Mary Nichols said the rule would benefit consumers and the environment. "Their actions are shameful," she said. "Instead of fighting us in court, they should be working with us to provide consumers in California and the rest of the nation with the next generation of cleaner fuels."
'Protectionism run amok'

"Perhaps it wasn't the state's intent, but as written, the California LCFS is an example of parochial protectionism run amok," said Michael Whatley, vice president of the Consumer Energy Alliance. "But make no
mistake: This isn't the type of protectionism that will benefit California consumers; it's the type that will ensure sources of essential energy are harder to find in the future, and much more expensive to purchase."

The ARB also faces another suit, filed in the same court in December by the Renewable Fuels Association and ethanol producer Growth Energy. That suit also cited the commerce and supremacy clauses. Both suits also challenge the rule's reliance on "indirect land-use change," which calculates fuels' net CO2 footprint by including such factors as their effect on overseas deforestation.

The ARB is convening a committee of experts to examine the land-use angle later this month, spokesman Stanley Young said.