Summary of the Federal District Court’s Order Enjoining California’s Low Carbon Fuel Standard

January 19, 2012

On December 29, 2012, the United States District Court for the Eastern District of California granted partial summary judgment to the plaintiffs in Rocky Mountain Farmers Union v. Goldstene, holding that California’s Low Carbon Fuel Standard (LCFS) violated the dormant Commerce Clause of the United States Constitution.  The court also granted the plaintiffs a preliminary injunction, prohibiting enforcement of the LCFS until the litigation is completed. 

Judge Lawrence J. O’Neill acted in response to summary judgment motions filed by California and by two groups of plaintiffs – one associated with corn ethanol producers and led by the Rocky Mountain Farmers Union (RMFU), and one associated with petroleum producers, refiners and users led by the National Petrochemical & Refiners Association (NPRA).  Judge O’Neill addressed three central legal issues in the case: whether the LCFS violates the dormant Commerce Clause, whether it is preempted by the federal Renewable Fuel Standard (RFS2), and whether there is a “savings clause” that insulates the LCFS from dormant Commerce Clause or preemption challenges.  As discussed below, Judge O’Neill (1) held that the LCFS violates the dormant Commerce Clause both by discriminating against out-of-state crude oil and corn ethanol and by seeking to regulate conduct outside of California, (2) declined to rule on the preemption issue because the parties had not adequately briefed the relevant standard of review, and (3) rejected California’s argument that the LCFS was protected from challenge by a savings clause. 

On January 5, 2012, California appealed Judge O’Neill’s rulings to the United States Court of Appeals for the Ninth Circuit.  California has indicated that it will not enforce the LCFS while the injunction is in effect, but that it will continue its rulemaking and stakeholder processes regarding potential amendments to the LCFS. 

Click on the PDF link below for the full summary.