913 F.3d 940
9th Cir.2019Background
- California Air Resources Board (CARB) enacted the Low Carbon Fuel Standard (LCFS) to reduce lifecycle greenhouse-gas emissions from transportation fuels; original rule effective 2011, amended 2012, repealed and replaced in 2015.
- LCFS assigns carbon-intensity values via lifecycle analysis; creates tradable credits for regulated parties below the standard and deficits for those above it.
- Plaintiffs (Rocky Mountain Farmers Union and industry groups) challenged the 2011, 2012, and 2015 LCFS versions under the Commerce Clause and broader federal-structure/federalism theories, plus claims of facial and purposeful discrimination against out-of-state ethanol and crude oil.
- Ninth Circuit previously decided core Commerce Clause issues in Rocky Mountain Farmers Union v. Corey (2013) ("Rocky Mountain I"); that decision left some issues for remand.
- CARB repealed the 2011/2012 regimes and adopted the 2015 LCFS, which retains lifecycle analysis but eliminates regional default ‘‘pathways’’ and assigns individualized carbon-intensity values.
- District court dismissed many claims; on appeal the Ninth Circuit (Gould, J.) vacated/dismissed claims as moot for repealed rules, and affirmed dismissal of 2015-based claims as precluded by Rocky Mountain I and by Ninth Circuit precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mootness of claims against 2011 & 2012 LCFS | Challenges to repealed 2011/2012 provisions remain justiciable because credits awarded under them can carry forward | Repeal removed the challenged law; no effective relief is available now | Claims against 2011/2012 LCFS are moot; vacated district judgment and remanded to dismiss |
| Extraterritoriality / "federal-structure" challenge to 2015 LCFS | 2015 LCFS still regulates conduct outside California and thus violates federal structure and Commerce Clause | 2015 LCFS is functionally like the prior LCFS; lifecycle regulation targets in-state effects and is allowed; prior decision controls | Extraterritoriality claims precluded by law of the case and by circuit precedent (O’Keeffe); dismissal affirmed |
| Facial discrimination (ethanol & crude oil) against 2015 LCFS | 2015 LCFS treats out-of-state fuels (ethanol/crude) differently, facially discriminating against interstate commerce | 2015 retains lifecycle approach and now removes region-based defaults; Rocky Mountain I held lifecycle analysis is non- discriminatory | Facial-discrimination claims controlled by Rocky Mountain I and are dismissed/affirmed against Plaintiffs |
| Purposeful discrimination against out-of-state ethanol | Plaintiffs allege LCFS was motivated to favor in-state interests (hidden protectionism) | Defendants say legislative history and the 2015 rule show environmental, not protectionist, motives; no new evidence on purpose | Plaintiffs failed to present new material evidence of illicit purpose; claim dismissed/affirmed for lack of proof |
Key Cases Cited
- Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070 (9th Cir. 2013) (prior panel decision addressing Commerce Clause challenges to LCFS and establishing controlling analysis)
- Am. Fuel & Petrochemical Mfrs. v. O’Keeffe, 903 F.3d 903 (9th Cir. 2018) (circuit precedent holding similar state fuel-regulation programs do not violate federal-structure limits when they do not control out-of-state conduct)
- Healy v. Beer Inst., 491 U.S. 324 (1989) (test for extraterritoriality: a state law impermissibly regulates beyond its borders when its practical effect controls out-of-state conduct)
- Pike v. Bruce Church, Inc., 397 U.S. 137 (1970) (balancing test for undue burden on interstate commerce)
- Decker v. Northwest Environmental Defense Center, 568 U.S. 597 (2013) (statement of mootness standard: a case is moot when court cannot grant any effectual relief)