The U.S. Chamber urged the U.S. Court of Appeals for the Ninth Circuit to strike down the Low Carbon Fuels Standard (“LCFS”), promulgated by the California Air Resources Board (“CARB”), because the LCFS unconstitutionally regulates conduct outside California in violation of the Commerce Clause.
The LCFS is a regulation that favors fuels that generate fewer carbon emissions during the “life cycle” of the fuel - which includes production and transportation of the fuel, in addition to using the fuel. Fuels with higher “carbon intensity” are penalized by requiring producers to purchase credits that increase the cost of the fuel within California. As a result, the regulation discriminates against fuels produced and transported from out-of-state.
The amicus brief explains that the LCFS will impede the free flow of transportation fuels in interstate commerce and thus hinder the operation of the Nation’s integrated market. The LCFS not only discriminates against out-of-state fuels in favor of in-state fuels, but also attempts to export California’s local policy preferences about means of production, methods of transportation, and land use throughout the United States and abroad. Upholding the LCFS will encourage other States to enact their own potentially inconsistent regulations. Such fragmentation of the interstate market for transportation fuel will create significant inefficiencies and, as experts predict, could impose billions of dollars of costs on industry and consumers.