A federal court has upheld California’s global-warming law in the face of legal challenges claiming that the carbon-cutting plan discriminates against out-of-state producers, thereby violating the Commerce Clause of the U.S. Constitution.
The three-judge panel on the 9th District Circuit Court of Appeals found that the state’s Low Carbon Fuel Standard (LCFS) did not discriminate against out-of-state producers, reversing a decision by a lower court in 2011 that temporarily halted the state from implementing its global-warming law.
“California should be encouraged to continue and to expand its efforts to find a workable solution to lower carbon emissions, or to slow their rise,” wrote Judge Ronald Gould for the majority’s opinion. “If no such solution is found, California residents and people worldwide will suffer great harm. We will not at the outset block California from developing this innovative, nondiscriminatory regulation to impede global warming.”
The decision was hailed by environmentalists, but derided by the oil and gas industry as well as consumer groups.
“Although the LCFS is a California law, its broad reach and intended scope means that implementing the LCFS will have adverse consequences throughout the nation’s fuel refining facilities and supply chain far beyond California’s borders,” argued Charles Drevna, president of the American Fuel & Petrochemical Manufacturers, adding that the group was seeking further legal action.
“This is bad news for energy consumers,” said Michael Whatley, executive vice president for the Consumer Energy Alliance which was a plaintiff in the case. “The court is upholding an untested program that even the EPA has no plans to pursue. Study after study has concluded that an LCFS would unnecessarily raise gasoline and diesel prices, leading to significant decline in [the economy].”
Whatley added that the law could strap California drivers with gas prices higher than the $4.03 per gallon they’re are currently paying.
“A great day for public health and the economy of California,” said Tim O’Connor of the Environmental Defense Fund. “The court clearly upheld a groundbreaking policy that will protect consumers and the environment by diversifying our fuel mix and providing more choices for a clean energy future.”
“This is a very good step for Californians and the fight against climate change,” Dave Clegern, a spokesman for the California Air Resources Board told Bloomberg Businessweek. “We are pleased, on behalf of the people of California and its environment, that the court recognized the importance of this program and that the (standard) remains in effect.”
The court’s decision would allow state regulators to punish fuel wholesalers and refineries that sell gasoline or biofuels with carbon footprints higher than state-mandated limits. The aim of the 2009 law is to reduce the carbon intensity of fuels by at least 10 percent by 2020 in an effort to curb global warming.
State officials would calculate the carbon intensity of fuels over their life cycle — from extraction or cultivation to combustion. Out-of-state refiners and ethanol producers argue that transporting their fuels into the state would raise their carbon calculations and make them less competitive with in-state refineries and ethanol makers.
The Los Angeles Times reports that “[f]or example, the state considers how corn is grown, harvested and converted to ethanol intended for California gas tanks, a life-cycle evaluation called ‘seeds to wheels.’”
However, critics of the law argue that it will be costly, killing jobs and forcing consumers to pay more at the pump.
The Boston Consulting Group found that the law would close up to seven fuel refineries and eliminate between 28,000 and 51,000 jobs by 2020. Another study by Charles River Associates, prepared for the Consumer Energy Alliance, found that the state’s law would raise gas and diesel prices by as much as 170 percent over a decade.
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