California Low-Carbon Fuel Standard is Blocked by U.S. Judge

California’s low-carbon fuel standard was blocked by a federal judge who found that it discriminates against out-of-state corn ethanol and crude oil and violates the Commerce Clause of the U.S. Constitution.

“The point of the LCFS is to penalize the differences between the California and the Midwest ethanol,” U.S. District Lawrence J. O’Neill in Fresno, California, said today in one of three orders siding with agriculture and oil-industry groups and denying a request by the California Air Resources Board to rule in its favor.

The judge agreed with the farmers that 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, because of factors such as electricity used to produce it and transportation, discriminates against interstate commerce.

Similarly, the judge found that California discriminates against Alaska and foreign crude oil by assigning these a higher carbon intensity value.

The judge issued a preliminary injunction that stops California from enforcing the standard until the lawsuit has been resolved completely.

‘Punitive for Farmers’

“The state of California overreached in creating its low carbon fuel standard by making it unconstitutionally punitive for farmers and ethanol producers outside of the state’s border,” Bob Dinneen, chief executive officer of the Renewable Fuel Association, and Tom Buis, chief executive of Growth Energy, said in a joint statement.

“With this ruling, it is our hope that the California regulators will come back to the table to work on a thoughtful, fair, and ultimately achievable strategy for improving our environment by incenting the growth and evolution of American renewable fuels.”

Dave Clegern, a spokesman for the California Air Resources Board in Sacramento, didn’t immediately return a call to his office seeking comment on the rulings.

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

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

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

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