U.S. appeals court rejects California fuel rule challenge

by Reuters
Wednesday, 18 September 2013 18:47 GMT

SAN FRANCISCO, Sept 18 (Reuters) - A California program to reduce greenhouse gas emissions from transportation fuels was cleared by a federal appeals court on Wednesday, boosting the state's pioneering efforts to help combat global climate change.

The ruling from the Ninth U.S. Circuit Court of Appeals lifted a pretrial injunction on the program. It rejected the central argument that California was violating a constitutional rule against impeding interstate commerce - the Commerce Clause - with a low-carbon fuel standard.

The standard regulates fuels based on the carbon produced in their production, transportation and use. Fuel producers from outside California argued that it discriminated against their products in favor of California-produced fuels. A federal judge in Fresno ruled last year that the standard was unconstitutional for that reason.

"The Commerce Clause does not protect Plaintiffs' ability to make others pay for the hidden harms of their products merely because those products are shipped across state lines," the court said.

California state regulators argue that the standard is a crucial component in its effort to roll back emissions to 1990 levels by 2020. Transportation accounts for about 40 percent of the state's output of heat-trapping gases.

"This is a resounding win for the environment," said Tim O'Connor, an Environmental Defense Fund attorney.

The Ninth Circuit did not state an opinion as to whether California's regulations are preempted by federal law, and sent the case back to the Fresno federal court for more litigation on a variety of legal issues.

The appeals court had already granted the state's request for a stay on the now-vacated injunction, which allowed California to continue implementing the program.

Other states and the federal government are watching the battle to cut emissions from fuels closely to see if the policy is viable. In December, Oregon adopted its own version of the low carbon fuel standard, which has raised objections from industry similar to the ones seen in California.

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