Tuesday, January 3, 2012

Federal judge blocks California's low-carbon fuel regulation

SAN DIEGO. On December 29, 2011, judge Lawrence J. O’Neill of United States District Court in Fresno blocked enforcement of California's low-carbon fuel rule designed to reduce greenhouse gas emissions. The halted rule as a major part of California's effort to reduce  greenhouse gas emissions to 1990 levels by 2020. However, the judge decided that the rule favoring producers of biofuels, diesel fuel and gasoline (which generate less greenhouse emissions) unconstitutionally discriminated against out-of-state refiners and ethanol producers by requiring them to buy credits for the privilege of importing into California.

In issuing the injunction, the judge invoked the so-called Dormant Commerce Clause, also known as the Negative Commerce Clause. This doctrine is based on the Article I Commerce Clause of the U.S.
Constitution which expressly grants Congress the power to regulate commerce "among the several states." The premise of the Negative Commerce Clause is that since the U.S. Constitution grants interstate commerce regulatory power to federal authority, the negative converse must be true  of the states, and the states must, therefore, abstain from interfering with interstate commerce.

The judge's preliminary injunction is not a final decision. "Preliminary injunction" means that the defendant must stop the activity in question while the lawsuit continues because the judge believes that the plaintiff is likely to prevail at trial and suffer significant harm if the defendant is not stopped before that. Injuction is often indicative of how the judge will rule at trial. Therefore, California is now precluded from enforcing the low-carbon fuel rule now, and is likely to lose this right at trial.