POET, LLC v. California Air Resources Board

The California Court of Appeal issued a final disposition reversing the trial court’s denial of the challenge to the Low Carbon Fuel Standard (LCFS). While stating that the California Air Resources Board (CARB) “satisfied a vast majority of the applicable legal requirements,” the court concluded that CARB had committed procedural errors in its consideration of the LCFS by, among other things, prematurely approving the LCFS prior to completion of the environmental review. The court also ruled that CARB had improperly deferred the formulation of mitigation measures for potential increases in nitrogen oxide emissions from biodiesel without committing to specific performance criteria for judging the efficacy of the future mitigation measures. The appellate court directed the trial court to issue a writ of mandate directing CARB to set aside its approval of the LCFS but permitting the LCFS to remain in effect while CARB took action to rectify the errors identified in the appellate court’s decision.

The appellate court issued a tentative disposition reversing the superior court’s granting of judgment in favor of the defendants. With respect to the procedural challenges, the appellate court’s tentative disposition found that the Low Carbon Fuel Standard (LCFS) was approved for California Environmental Quality Act (CEQA) purposes on April 25, 2010 and that the decision-making function had been improperly split between the California Air Resources Board (CARB) and its executive officer. With respect to the substantive challenge, the tentative disposition determined that CARB violated CEQA by deferring the formulation of mitigation measures to address potential increases in NOx emissions from the increased use of biodiesel fuels caused by the LCFS. The appellate court noted that its tentative disposition would not suspend operation of the LCFS and requested input from the parties as to the terms of its disposition of the proceeding, including as to deadlines for CARB actions, whether the LCFS should remain in effect pending CARB’s actions in response to the disposition, whether the court should dictate that public comment be permitted on the issue of carbon intensity values attributed to land use changes, the proper framework for considering NOx emissions, and whether CARB should be required to file an initial return setting forth how it will comply with the writ to be issued by the superior court. The parties were required to respond by June 11, 2013.