Consumer Energy Alliance files complaint with District Court in Fresno asking for immediate injunction on Low-Carbon Fuel Standard

FRESNO – February 2, 2010   California’s recently implemented Low-Carbon Fuel Standard (LCFS) violates federal law by attempting to regulate “commerce and conduct” outside of the state, while imposing a mandate that even regulators admit will result in “little or no net change” to the carbon intensity of fuels on “a global-scale.” Such is the formal complaint filed by Consumer Energy Alliance (CEA) in the U.S. District Court for the Eastern District of California today, asking the court to suspend the imposition of a statewide LCFS until a number of substantive legal concerns can be addressed.

“The practical outcomes of the California LCFS are higher fuel costs for consumers, dramatic reductions in the availability of those fuels, and a rapid expansion of the state’s already unacceptable level of dependence on foreign, unstable regimes for its energy,” said Michael Whatley, vice-president of CEA and former chief counsel for the U.S. Senate subcommittee on clean air and climate change. “More relevant to today’s filing, the California LCFS also actually violates federal law – and stands in direct contravention of key consumer protections and safeguards enshrined in the U.S. Constitution.”

Formally adopted last month after the state’s Office of Administrative Law (OAL) issued its final approval, the California LCFS, according to its authors, seeks to reduce the carbon-intensity of fuels included in the state’s transportation mix “while stimulat[ing] the production and use of alternative, low-carbon fuels.” But under the bizarre accounting methodology of the plan, energy sources with physically identical chemical properties and carbon contents can – and, in fact, must be – treated differently under the law, with in-state sources significantly advantaged over resources that are found and produced outside California.

“Perhaps it wasn’t the state’s intent, but as written, the California LCFS is an example of parochial protectionism run amok,” added Whatley. “But make no mistake: This isn’t the type of protectionism that will benefit California consumers; it’s the type that will ensure sources of essential energy are harder to find in the future, and much more expensive to purchase.”

In support of that statement, Whatley pointed to a recent analysis of the proposed state LCFS completed by California-based Sierra Research. In that study, analysts from Sierra found that an LCFS will increase the cost of fuel in California by $3.7 billion over the next decade – all while producing “no detectable change in climate.”

With more than 260,000 grassroots supporters and 130 affiliates representing both the major consuming and producing segments of the U.S. energy sector, CEA has been an active contributor to the national debate on LCFS – including the proceedings in California – for the better part of the last two years.

Last August, the Washington, D.C.-based Center for North American Energy Security, a CEA member, sent a letter to the California Air Resources Board (CARB) detailing the myriad short-comings with the LCFS, and several CEA members (including the National Petrochemical & Refiners Association and the American Trucking Associations – which joined CEA in filing the complaint today) have lodged formal comments with CARB objecting to the plan as well. In addition, CEA wrote directly to U.S. Sen. Barbara Boxer (D-Calif.) in October identifying several significant consequences that consumers should expect to encounter under the initiative.

What follows are several key excerpts taken from the CEA complaint filed in Fresno this morning:

42.        Because “carbon intensity” is designed to account not only for a fuel’s physical characteristics, but also the energy necessary to bring the transportation fuel to market in California, chemically identical fuels are assigned different carbon intensities under the LCFS.  LCFS  § 95486(b), Tables 6–7.
44.        By regulating the “fuel pathway” of transportation fuels – i.e., the manner in which transportation fuels are produced and ultimately reach the California market – the LCFS directly regulates interstate commerce and conduct occurring outside of California.
47.        CARB has admitted that, because no other states have adopted a similar standard, “fuel producers are free to ship lower-carbon-intensity fuels to areas with such standards, while shipping higher-carbon-intensity fuels elsewhere.”  CARB, California’s Low Carbon Fuel Standard: An Update on the California Air Resources Board’s Low Carbon Fuel Standard Program (Oct. 2009) at 1.
48.        According to CARB, “[t]he end result of this fuel ‘shuffling’ process is little or no net change in fuel carbon-intensity on a global scale.”  Id.
49.        In fact, the “fuel shuffling” promoted by the LCFS likely will lead to an overall increase in GHG emissions, because it will mean redirecting fuels and feedstocks destined for California to other states through less efficient and redundant supply lines.  Id.; see also CARB, Final Statement of Reasons (Dec. 2009) at 234–35.
50.        The burdens imposed by the LCFS on the interstate market for transportation fuels and fuel feedstocks in California are clearly excessive when measured against the putative local benefits of the LCFS in California.

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