258 F. Supp. 3d 1134
E.D. Cal.2017Background
- California enacted the Low Carbon Fuel Standard (LCFS) in 2009–2011, amended in 2012, repealed, and re-adopted in 2015 (operative 2016); LCFS regulates lifecycle carbon-intensity (CI) of transportation fuels and uses credit/deficit trading.
- Two plaintiff groups: RMFU Plaintiffs (challenge ethanol provisions of 2015 LCFS; assert preemption, Commerce Clause facial/as-applied and Pike claims) and AFPM Plaintiffs (challenge crude-oil and ethanol provisions across Original/2012/2015 LCFS; mainly Commerce Clause claims).
- Procedural posture: Defendants moved to dismiss (Rule 12(b)(6)) and for judgment on the pleadings (Rule 12(c)) on various claims; Ninth Circuit’s RMFU decision previously reviewed many LCFS issues and remanded discrimination-in-purpose/effect re: ethanol.
- Plaintiffs seek declaratory and injunctive relief (and fees); AFPM also, in briefing, sought recalculation/redistribution of LCFS credits from repealed versions.
- Court narrowed issues: dismissed several claims as foreclosed by RMFU or prior orders; addressed mootness/Eleventh Amendment, standing for credit-recalculation relief, preemption by the federal Renewable Fuel Standard (RFS), discriminatory purpose/effect under the Commerce Clause, and Pike balancing for ethanol provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mootness of claims against Original and 2012 LCFS | RMFU/AFPM: challenges not moot because credits from prior versions carry forward and affect 2015 compliance; Court can order recalculation | Defs: repealed regs moot; Eleventh Amendment bars retrospective relief; recalculation impracticable and inequitable | Not moot under RMFU footnote for prospective/declaratory relief; recalculation relief barred by Eleventh Amendment and infeasible — motion GRANTED in part and DENIED in part |
| Standing and associational relief to recalculate credits | AFPM: association can seek relief for members | Defs: recalculation requires individualized member proof (Warth); associational standing fails for damages-like relief | Associational standing insufficient for credit-recalculation that would require individualized determinations; such relief denied |
| Preemption by the federal RFS (EISA §7545(o)) | RMFU Plaintiffs: LCFS conflicts with RFS (grandfathering, geographic limits, EPA discretion) | Defs: RFS applies to EPA rulemaking; CAA and EISA contain savings clauses preserving state authority; programs are complementary | Preemption claim dismissed as clearly erroneous to maintain; RFS does not preempt LCFS; preemption claims DISMISSED WITHOUT LEAVE TO AMEND |
| Commerce Clause — discriminatory purpose (ethanol provisions) | Plaintiffs: LCFS intentionally favors California ethanol (legislative materials, press statements) | Defs: RMFU found no discriminatory purpose; evidence previously considered and insufficient | Plaintiffs’ discriminatory-purpose claim precluded by RMFU under law-of-the-case; DISMISSED WITHOUT LEAVE TO AMEND |
| Commerce Clause — discriminatory effect (ethanol provisions) | Plaintiffs: CI assignments and credit scheme burden Midwestern ethanol disproportionately (needs volumetric analysis) | Defs: some out-of-state and many in-state producers benefit; Brazilian and some Midwest pathways have low CI; plaintiffs fail to show volumetric impact | Plaintiffs plausibly alleged discriminatory effect as to Original and 2015 ethanol provisions (volume + CI can show disproportionate burden on Midwest); claim survives dismissal (DENIED) |
| Pike balancing test (ethanol provisions) | RMFU Plaintiffs: burdens on interstate commerce outweigh local benefits; environmental benefits minimal | Defs: plaintiffs fail to show substantial burden or imbalance | Court finds plaintiffs plausibly alleged substantial burdens and limited local benefits (per CARB admission); Pike claim survives dismissal (DENIED) |
| Commerce Clause — discriminatory effect (crude-oil provisions) | AFPM: Baseline and Annual Crude Averages artificially favor California crude | Defs: averages benefit and burden both in- and out-of-state crudes; Step Two (incremental deficits) not triggered; volumetric data show more foreign crude benefits | Applying volumetric analysis and considering both Step One and Step Two, court finds crude provisions do not show protectionist effect; discriminatory-effects claim dismissed WITHOUT LEAVE TO AMEND |
Key Cases Cited
- Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070 (9th Cir. 2013) (Ninth Circuit decision addressing LCFS, remanding ethanol purpose/effect issues)
- Papasan v. Allain, 478 U.S. 265 (U.S. 1986) (Eleventh Amendment bars relief tantamount to retroactive compensation from state treasury)
- Warth v. Seldin, 422 U.S. 490 (U.S. 1975) (limits associational standing where individual member participation is indispensable)
- Pike v. Bruce Church, Inc., 397 U.S. 137 (U.S. 1970) (dormant Commerce Clause balancing test for non-discriminatory laws)
- Decker v. Northwest Environmental Defense Center, 568 U.S. 597 (U.S. 2013) (mootness standard — case moot only when no effectual relief can be granted)
- Crosby v. National Foreign Trade Council, 530 U.S. 363 (U.S. 2000) (field and obstacle preemption analysis considers statute purpose and effects)
- Gade v. National Solid Wastes Management Ass’n, 505 U.S. 88 (U.S. 1992) (presumption against preemption in areas of traditional state regulation)
- Wyeth v. Levine, 555 U.S. 555 (U.S. 2009) (presumption against preemption; clear and manifest congressional intent required)
- Hines v. Davidowitz, 312 U.S. 52 (U.S. 1941) (state law preempted if it conflicts with federal law or stands as obstacle to federal objectives)
- Healy v. Beer Institute, 512 U.S. 186 (U.S. 1994) (state regulation must be considered as a whole for dormant Commerce Clause effects)
- United Food & Commercial Workers Union Local 751 v. Brown Group, 517 U.S. 544 (U.S. 1996) (associational standing and limits on organizational claims for members' damages)
- Oxygenated Fuels Ass’n v. Davis, 331 F.3d 665 (9th Cir. 2003) (states retain primary role regulating air quality; presumption against preemption)
- Int’l Franchise Ass’n v. City of Seattle, 803 F.3d 389 (9th Cir. 2015) (noting difficulty and variety of tests in dormant Commerce Clause jurisprudence)