Commerce Clause and Supremacy Clause Challenge to Low-Carbon Fuel Standard
American Fuel & Petrochemical Manufacturers et al v. O’Keeffe et al.
Most Recent Development: Complaint filed in March 2015. In September 2015, the district court ruled in favor of the defendants and dismissed all claims.
In January 2015, the Oregon Department of Environmental Quality finalized a low-carbon fuel standard (LCFS) that is similar to California’s. Under Oregon’s standard, various types of fuels are assigned carbon intensity values based on a lifecycle emission analysis that accounts for the type of fuel, its production and distribution, and other factors. Each entity that produces fuel in Oregon or imports fuel into the state must meet average carbon intensity limits across all of its products. It can demonstrate compliance by producing or importing only fuels that meet the standard, by producing or importing fuels that meet the standard in aggregate, or by purchasing credits generated by fuels below the standard to reduce the average intensity of its products.
Three trade associations filed suit in federal district court, arguing that the LCFS violates the dormant Commerce Clause and the Supremacy Clause. With regard to the dormant Commerce Clause, they highlight that the only fuels produced in Oregon are biofuels that meet the carbon intensity standard. Biofuel producers could sell into the Oregon market at will, or generate credits and sell those credits to importers of other types of fuel. Plaintiffs argue that the LCFS is designed as an incentive to these producers and therefore “discriminates in favor of Oregon industry at the expense of out-of-state industry.” They also argue that by considering out-of-state production processes in setting carbon intensity limits and measuring the carbon intensity of a product, Oregon is impermissibly regulating out-of-state conduct.
With regard to the Supremacy Clause, plaintiffs allege that the LCFS is preempted by two provisions of the Clean Air Act. Section 211(c) prohibits any state from regulating “any characteristic or component of a fuel” if EPA has determined that such regulation is not necessary. Plaintiffs argue that EPA determined not to regulate methane under this section, so Oregon’s LCFS, which incorporates methane emissions, is therefore preempted.
Plaintiffs also argue that the LCFS conflicts the federal Renewable Fuel Standard (RFS). They claim that the LCFS penalizes facilities that were exempted from the federal RFS and “stands as an obstacle to the congressional purpose of ensuring a continued nationwide market” for renewable fuels.
District Court Opinion and Order (Sep. 24, 2015)
Filed Briefs at the Ninth Circuit
Appellants’ Opening Brief (Feb. 1, 2016)
Oregon’s Brief (Apr. 29, 2016)
Defendant-Intervenors California Air Resources Board (CARB) and Washington State’s Brief in Support of Oregon (Apr. 29, 2016)
Defendant-Intervenor Environmental Organizations’ Brief in Support of Oregon (Apr. 29, 2016)
Filed Briefs at the District Court
Complaint (Mar. 23, 2015)
Oregon’s Motion to Dismiss (Jun. 5, 2015)
Intervenors’ Motion to Dismiss (Jun. 5, 2015)
Conservation Defendant Intervenors’ Motion for Judgment on Pleadings (Jun. 17, 2015)
Oregon Plaintiffs’ Opposition to Motions to Dismiss (Jul. 10, 2015) (withdrawn due to length)
Corrected Oregon Plaintiffs’ Opposition to Motions to Dismiss (Jul. 15, 2015)
Oregon’s Reply in Support of Motion to Dismiss (Aug. 17, 2015)
Intervenors’ Reply in Support of Motion to Dismiss (Aug. 17, 2015)