California’s Tough Ethanol Standards Stand

A federal appeals court upheld California’s tough ethanol regulations, although seven judges dissent saying the “protectionist regulatory scheme threatens to Balkanize our national economy.”

Tough talk from a minority of the 9th U.S. Circuit Court of Appeals’ 27 active judges, but it wasn’t enough to swing an en banc vote to reconsider the ruling Wednesday.

A three-judge panel upheld the state’s ethanol regulation in September, finding it did not discriminate against out-of-state commerce.

Rocky Mountain Farmers Union sued in 2009, along with a host of other ethanol producers, challenging the state’s ethanol regulations under the global warming law.  They challenged the state regulation under the Constitution’s Commerce Clause and said the regs were preempted by federal law.

The dissenters, led by Judge Milan Smith, in Wednesday’s decision say California closes its border to ethanol produced in 10 states, which produce corn-based ethanol in favor of chemically-identical ethanol produced within California.

In that September ruling, Judge Ronald Gould wrote, “We conclude that [California Air Resources Board’s]  stated purpose was genuine.  There was no protectionist purpose, no aim to insulate California firms from out-of-state competition.”

The CARB rules call for businesses that sell transportation fuels in California to reduce the “carbon intensity” of fuels by 10 percent before 2020.  The intensity is not a measure of the fuel, but rather the process for making, distributing and using the fuel.

It treats out-of-state fuel differently in calculating intensity than in-state fuel, Smith wrote.

“California’s ethanol regulations suffer from another constitutional defect: they seek to control conduct in other states,” Smith wrote.

Joining Smith in the dissent were Judges Diarmuit O’Scannlain, Consuelo Callahan, Carlos Bea, Sandra Ikuta and N. Randy Smith.  Mary Murguia partially dissented and wrote the original dissent in the three-judge panel ruling in September.

To approve en banc reconsideration a majority of the court’s 27 judges must vote to reconsider.

Case: Rocky Mountain Farmers Union v. Corey,  No. 12-15131


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