Rocky Mountain Farmers Union v. Corey

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In a longstanding constitutional challenge to California’s low-carbon fuel standard (LCFS), a California federal court found that its prior ruling that challengers of the LCFS had stated a preemption claim was clearly erroneous. The court therefore dismissed preemption claims with prejudice. In addressing the plaintiffs’ dormant Commerce Clause claims, the court found that the Ninth Circuit’s decision in Rocky Mountain Farmers Union v. Corey foreclosed the plaintiffs’ claim that the LCFS’s ethanol provisions had a discriminatory purpose but found that the plaintiffs had stated a claim that the LCFS ethanol provisions discriminated in practical effect against Midwestern ethanols and had “plausibly alleged that that burden far outweighs the benefits California will obtain as a result of the LCFS.” The court dismissed, however, dormant Commerce Clause claims against the LCFS’s crude oil provisions, finding that the plaintiffs had not and could not state a claim that the provisions discriminated against foreign crude oils in practical effect. The court rejected the argument that claims against the original and 2012 versions of the LCFS were moot, noting that these earlier versions affected how credits were calculated under the 2015 version. The court said, however, that the plaintiffs’ relief would be limited to declaratory and injunctive relief to address the present and future effects of the original and 2012 versions. The court said recalculation of past credits would be barred by the Eleventh Amendment.

The federal district court for the Eastern District of California granted in part motions by two sets of plaintiffs to amend their complaints in their “years-long and complex challenge” to California’s Low Carbon Fuel Standard (LCFS). The plaintiffs sought to add constitutional challenges to the current version of the LCFS, which the California Air Resources Board (CARB) amended in November 2015 in response to a state court lawsuit. The court noted that the defendants had not objected to the amendments, except with respect to as-applied constitutional claims made by one set of plaintiffs. The court agreed with the defendants that, despite the intervening changes to the LCFS, the law of the case foreclosed standing for all but one of the plaintiffs wishing to add the as-applied claims.

The federal district court for the Eastern District of California asked the parties to an action challenging California’s Low Carbon Fuel Standard (LCFS) to provide additional briefing on the issue of whether the plaintiffs could make “as-applied” constitutional challenges to LCFS amendments finalized in November 2015. The plaintiffs had requested leave to amend their complaints to add challenges to the 2015 LCFS, but the defendants objected to addition of the as-applied constitutional claims based on the court’s prior rulings and statements made by the plaintiffs. The court determined that it would need additional briefing to understand whether the 2015 LCFS was materially different from the original LCFS, and to determine whether its prior rulings concerning the plaintiffs’ lack of standing to make certain claims applied and whether the law of the case or other doctrine barred the as-applied claims.

The federal district court for the Eastern District of California issued a ruling that narrowed to one the claims that survive against California’s Low Carbon Fuel Standard (LCFS) following the Ninth Circuit’s 2013 decision that reversed the district court’s earlier determination that the LCFS violated the dormant Commerce Clause. Finding that the Ninth Circuit’s mandate was “explicit and unambiguous,” the district court granted summary judgment to the defendants on the claim that the original LCFS that went into effect in 2011 was an impermissible extraterritorial regulation. The court further applied the law of the case doctrine to dismiss plaintiffs’ extraterritoriality claim regarding the LCFS as amended in 2012. The court noted that the basis for the extraterritoriality challenge to the amended LCFS was the same as for the unsuccessful challenge to the original LCFS—namely, that the use of a life-cycle analysis to determine a fuel’s carbon intensity regulated activities occurring wholly outside California. The court also determined that the plaintiffs could not state a claim that the amended LCFS for crude oil discriminated in purpose and effect. The court found no precedent to support a dormant Commerce Clause claim where a challenged law—like the amended LCFS crude oil provisions—burdened and benefitted in-state and out-of-state interests alike. The district court allowed plaintiffs to proceed with their claim that the original LCFS’s ethanol provisions discriminated against interstate and foreign commerce in purpose and effect. The court agreed with plaintiffs that they had not abandoned or disavowed this claim. The court dismissed claims against Governor Jerry Brown on immunity grounds, but granted plaintiffs leave to amend.

The district court for the Eastern District of California granted in part and denied in part a motion by plaintiffs to amend their complaint in their constitutional challenge to California’s Low Carbon Fuel Standard (LCFS). The court will be addressing the remaining pieces of this challenge after the Ninth Circuit Court of Appeals largely rejected the contention that the LCFS violated the dormant Commerce Clause. The court rejected the request to amend claims of extraterritorial regulation in violation of the Commerce Clause as well as a claim of a violation of principles of interstate federalism embodied in the Constitution (plaintiffs called this latter theory their “horizontal federalism claim”). The court said the Ninth Circuit resolved any claim premised on extraterritorial regulation when it explicitly held that the LCFS did not regulate conduct outside California. The district court also found that the law of the case barred plaintiffs’ claim that the LCFS’s ethanol provisions facially discriminated. The court found, however, that law of the case did not bar the claim of discrimination in purpose and effect since the Ninth Circuit did not reach that issue. The court also held as a matter of law that the LCFS did not implicate the Import-Export Clause because it did not provide for anything that reasonably could be construed as a tax; the court therefore denied plaintiffs’ request to add a claim of impermissible discrimination in violation of the Import-Export Clause. The court granted leave to amend to challenge 2012 amendments to the LCFS crude oil provisions and to drop federal preemption and “Pike balancing” claims under the dormant Commerce Clause.

A federal district court in California denied a motion by the California Air Resources Board (CARB) to lift an injunction blocking enforcement of the state’s low-carbon fuel standard, concluding that it lacked authority to do so because CARB appealed the orders and thus it was without jurisdiction to do so.

The court granted a preliminary injunction, holding that because the Low Carbon Fuel Standard assigned more favorable carbon intensity values to corn-derived ethanol in California than to ethanol derived outside California, it impermissibly discriminated against out-of-state entities. In addition, the court held that the standard impermissibly regulated channels of interstate commerce. The court further held that although the standard served a legitimate local purpose, that purpose could be accomplished through other nondiscriminatory means. In addition, the court held that the plaintiffs’ preemption claim raised a serious question as to whether the standard was preempted by the Clean Air Act.

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