Bloomberg News

California Appeals Ruling Blocking Low-Carbon Fuel Standard

January 09, 2012

(Updates with appeals court in fourth paragraph.)

Jan. 6 (Bloomberg) -- California appealed a ruling by a federal judge who blocked the state’s low-carbon fuel standard after finding that it discriminates against out-of-state corn ethanol and crude oil and violates the Commerce Clause of the U.S. Constitution.

The judge’s decision and a related court order blocks the state from enforcing rules discouraging refiners such as Chevron Corp. and Tesoro Corp. from processing types of crude that release more carbon when produced and transported into the state, such as output from Canada’s oil sands.

“We respectfully disagree with the court’s decision,” the California Air Resources Board said in an e-mailed statement. “The low-carbon fuel standard is an evenhanded standard that encourages the use of cleaner low-carbon fuels by regulating fuel-providers in California. It does not discriminate against any fuels on the basis of geography.”

The board is asking a federal appeals court in San Francisco to reverse the judge’s ruling and his order blocking the rules from being enforced until a lawsuit challenging them is resolved. The rules were to be enforced starting Jan. 1.

U.S. District Judge Lawrence J. O’Neill in Fresno, California, on Dec. 29 sided with farming and oil-industry groups that argued California’s method of assigning a higher so- called carbon intensity score to ethanol produced in the Midwest, which is otherwise chemically and physically identical to that produced in California, discriminates against interstate commerce.

The lower court case is Rocky Mountain Farmers Union v. Goldstene, 09-2234, U.S. District Court, Eastern District of California (Fresno).

--Editors: Peter Blumberg, Glenn Holdcraft

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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