POET, LLC v. California Air Resources Board

The California Court of Appeal issued a slightly modified opinion regarding the California Air Resources Board's (CARB) lack of compliance with the California Environmental Quality Act in relation to CARB's issuance of the Low Carbon Fuel Standard. CARB and Natural Resources Defense Council sought rehearing to clarify ambiguities in the April 10, 2017 opinion and also asked the court to reconsider its determination that CARB had not acted in good faith in responding to the court's 2013 directive. In its modified opinion, the court clarified that the "freeze" that kept the 2017 standards in place pending CARB's compliance with CEQA applied only to carbon intensity standards for diesel fuel and its substitutes. The court also indicated that its conclusions regarding the appropriate scope of the "project" to be considered in the CEQA review was limited to the circumstances of this case. The court did not modify the language regarding CARB's lack of good faith.

On April 10, 2017, the California Court of Appeal ruled that the California Air Resources Board (CARB) had failed, for a second time, to comply with the California Environmental Quality Act (CEQA) in its promulgation of a Low Carbon Fuel Standard (LCFS). In 2013, the court identified CEQA violations in CARB’s original LCFS and directed CARB to correct the violations. The primary issue that CARB was to consider was the potential increase in nitrogen oxide emissions associated with increased biodiesel consumption. In its April 2017 decision, the Court of Appeal concluded that CARB had failed to comply with the court’s 2013 directive because CARB had improperly used 2014 emissions of nitrogen oxides as a baseline for its review of the LCFS adopted in 2015, rather than emissions levels prior to the adoption of the original LCFS in 2009. The appellate court determined that it would be appropriate and in the public interest, however, to leave the remainder of the LCFS regulations in place and to allow the 2017 standards for diesel fuel and its substitutes to remain in effect until CARB remedied the CEQA violations.

The California Court of Appeal issued a tentative ruling in its review of the California Air Resources Board’s (CARB) compliance with a 2013 ruling that CARB had not complied with the California Environmental Quality Act (CEQA) when it first adopted its Low Carbon Fuel Standard (LCFS). The court—which provided the tentative ruling to guide counsel at oral argument on March 23—indicated that CARB had failed to comply with its earlier directives concerning the CEQA review. The appellate court said that on remand CARB had misinterpreted the scope of the “project” under review in a way that was “not objectively reasonable” and had used an inappropriate baseline for nitrogen oxide (NOx) emissions. (NOx emissions associated with potential increased biodiesel use under the LCFS were the primary substantive concern of the court’s 2013 ruling.) The appellate court said that CARB had resolved the question of whether increased biodiesel usage would result in increase NOx emissions in the affirmative but said that questions regarding whether the LCFS would cause increased biodiesel usage remained open and would have to be resolved on remand. The court indicated that the parties should assume that the order discharging the 2013 writ would be reversed, and that parties should be prepared to address the functional impacts of severing the biodiesel provisions from the remainder of the LCFS and what standards should remain “frozen in place” while CARB undertook the additional CEQA review.