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Rocky Mountain Farmers Union v. Corey

ELR Citation: 43 ELR 20216
Nos. 12-15131, -15135, (9th Cir., 09/18/2013)

The Ninth Circuit held that the California Air Resource Board (CARB) low carbon fuel standard's regulation of ethanol does not facially discriminate against out-of-state commerce. CARB treats all ethanol within each regional category the same, and its decision to draw one of the regional categories along its boundary was not facially discriminatory. The fuel standard's regional categories for the default pathways were chosen to accurately measure and control greenhouse gases and were not an attempt to protect California ethanol producers. Although the default pathways categorize fuels by their origin, the carbon intensity values were not assigned based on the out-of-state character of fuels. Rather, the fuel standard uses these regional categories to calculate accurate and broadly applicable carbon intensity values in a way convenient for regulated parties. Nor does the fuel standard violate the dormant commerce clause's prohibition on extraterritorial regulation. The fuel standard regulates only the California market. Firms in any location may respond to the incentives provided by the fuel standard if they wish to gain market share in California, but no firm must meet a particular carbon intensity standard, and no jurisdiction need adopt a particular regulatory standard for its producers to gain access to California. On remand, the lower court must determine whether the fuel standard's ethanol provisions discriminate in purpose or in practical effect. The court expressed no opinion as to whether the fuel standard is preempted by CAA §211(o), the federal renewable fuel standard (RFS). Nor did the court address CARB's claim that the savings clause in the Energy Independence and Security Act of 2007 precludes implied preemption by the RFS.