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Calif. Emissions Dispute Inspires Biting Dissent

(CN) - Several 9th Circuit judges complained Wednesday that the court improperly sidelined claims that California's tough emissions standard discriminates against nonresidents.

As part of its ongoing efforts to combat global warming, California established the Low Carbon Fuel Standard (LCFS) to regulate the "carbon intensity" of all transportation fuel used in the state, with the goal of returning 1990-level emissions by 2020.

To determine the intensity of a particular fuel, such as crude oil or ethanol, the program uses a "life-cycle analysis" that measures both pollution from a vehicle and the total emissions created from producing, refining and moving the fuel to California.

The American Fuels & Petrochemical Manufacturers Association and various producers of ethanol and oil-based fuel challenged the program in several federal lawsuits that were consolidated for appeal.

They argued that the fuel standards discriminated against out-of-state producers in violation of the Commerce Clause, as the life-cycle analysis and other aspects of the standard make it more difficult for them to compete in California.

U.S. District Judge Lawrence O'Neill issued three decisions for the fuel producers in 2011, finding that the fuel standard improperly sought to regulate the national ethanol market and discriminated against out-of-state ethanol and crude-oil producers.

A divided three-judge panel of the 9th Circuit reversed this past September, emphasizing California's leadership in environmental regulation and its reputation as a national "laboratory" for avant-garde policy.

The court refused petitions for a rehearing en banc Wednesday, inspiring a lengthy dissent that slams the majority for disregarding longstanding doctrine on the dormant commerce clause and placing "the law of this circuit squarely at odds with Supreme Court precedent."

"The deleterious effects of California's scheme on our national economic union are not speculative," Judge Milan Smith wrote, noting that major producers of corn and ethanol such as Nebraska, Illinois, Iowa, Kansas, Michigan, Missouri, North Dakota, Ohio, and South Dakota all raised concerns.

Five judges joined Smith's dissent, and a sixth judge joined only one part of the six-part opinion.

That section challenges the majority's rejection of the discrimination claims.

"Because ethanol from Midwestern states faces a regulatory burden that chemically identical in-state ethanol does not, California's regime is facially discriminatory," Smith wrote. "In concluding otherwise, the majority contravenes black letter law and renders our dormant commerce clause jurisprudence incoherent."

Judge Ronald Gould, who penned this fall's original opinion, offered some "supplemental observations" Wednesday to counter the dissent that he claims is "riddled with overstatements."

"For example, it claims that California's Low Carbon Fuel Standard ('LCFS') - and the ethanol provisions contained therein - explicitly discriminates against other states and is a 'protectionist regulatory scheme that threatens to Balkanize our national economy,'" Gould wrote. "Not only is this mere alarmist rhetoric, it also does not fit the reality of the California legislation. Moreover, although the dissent trumpets that nine states seek rehearing, the converse is that 41 do not. And some states, like Washington and Oregon, have already joined California in its endeavor to combat global warming by reducing greenhouse gas emissions from fuels."

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