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By Joshua Bledsoe and Kimberly Farbota

Two recent developments in the interrelated legal challenges commonly known as POET I and POET II may create additional uncertainty for the future of the Low Carbon Fuel Standard Program (LCFS).

Earlier this year, the California Court of Appeal for the Fifth Appellate District (Court of Appeal) issued two opinions in the POET I case, both of which were adverse to the California Air Resources Board (ARB). As we have discussed in previous posts, the POET I case arises from petitioner POET, LLC’s challenges to the original LCFS regulation adopted by ARB in 2009. On April 10, 2017, the Court of Appeal ruled that ARB had failed to faithfully execute a writ of peremptory mandate (the Writ) requiring it to remedy violations of the California Environmental Quality Act (CEQA) that occurred during adoption of the original LCFS. In the opinion, the Court of Appeal largely agreed with petitioner POET, LLC, finding that ARB failed to comply with CEQA’s requirement that it analyze the degree to which nitrogen oxide (NOx) emissions would be impacted by implementation of the LCFS.

In response to ARB’s petition for a rehearing, the Court of Appeal reissued its opinion on May 30, 2017. The revised opinion narrows the holding to focus more squarely on the facts of the case, but does not substantively alter the April 10, 2017 opinion. In the revised opinion, the Court of Appeal assigned continuing jurisdiction to the Fresno County Superior Court (Superior Court) over POET I pending ARB’s completion of the revised NOx analysis and discharge of a reissued writ.

By Joshua T. Bledsoe and Max Friedman

Big changes appear to be imminent for California’s Low Carbon Fuel Standard (LCFS).

As discussed in greater detail in our recent post, the LCFS currently is the subject of two interrelated legal challenges commonly known as POET I and POET II. Here we provide an update on recent proceedings before the California Court of Appeal for the Fifth Appellate District (Court of Appeal) in POET I. These proceedings concern the California Air Resources Board’s (ARB) attempts to comply with a peremptory writ of mandate (the Writ) that primarily required ARB to remedy violations of the California Environmental Quality Act (CEQA) that occurred during promulgation of the original LCFS regulation.

On March 20, 2017, three days before oral argument occurred, the Court of Appeal issued a tentative ruling in the POET I Writ appeal. The tentative ruling alerted the parties that the Court of Appeal intended to overturn the Superior Court’s discharge of the Writ and suggested that some or all of the existing LCFS regulatory regime was in jeopardy. The tentative ruling found that ARB failed to comply with the Writ by excluding from its CEQA analysis information relating to nitrogen oxide (NOx) emissions from biodiesel, resulting in the utilization of an improper baseline for measuring NOx emissions. The tentative ruling also found that ARB’s treatment of NOx emissions was not a “good faith” attempt at corrective action because it relied on an objectively unreasonable interpretation of the CEQA term “project.” The Court of Appeal then further underscored its dim view of ARB’s response to the Writ: “ARB’s actions do not appear to be a sincere attempt to provide the public and decision makers with the information required by CEQA and omitted from the earlier documents.”

By Joshua Bledsoe and Max Friedman

After a lengthy process of policy review and revision, the California Air Resources Board (ARB) re-adopted the state’s Low Carbon Fuel Standard (LCFS) on September 25, 2015. The LCFS is expected to contribute approximately 20% of the statewide greenhouse gas (GHG) reductions required by 2020 under Assembly Bill 32. Moreover, the LCFS has been identified by Governor Brown as a key regulatory tool both to reduce petroleum consumption 50% by 2030…

Joshua Bledsoe and Michael Dreibelbis of Latham & Watkins, recently co- wrote a LCFS Fact Sheet with the International Emissions Trading Association (IETA). The article is available on IETA’s website and below:

The California Global Warming Solutions Act of 2006 (aka Assembly Bill 32 or “AB 32”) mandates a reduction in California statewide greenhouse gas (GHG) emissions to 1990 levels by 2020. The Low Carbon Fuel Standard (LCFS) is one of the primary Emission Reduction Measures promulgated by the California…

By Joshua T. Bledsoe, Michael Dreibelbis, and Max Friedman

I. LCFS Readoption

On February 19, 2015, the California Air Resources Board (ARB) will take feedback on proposed regulations implementing the readoption and updating of California’s Low Carbon Fuel Standard (LCFS), with formal readoption targeted for the Summer of 2015.  Triggered by legal defects during the original adoption of the LCFS Program, ARB initiated the rulemaking after the U.S. Supreme Court denied certiorari regarding the constitutionality of the program. …

By Joshua Bledsoe, Michael Dreibelbis, Michele Leonelli, and Aron Potash

I. LCFS Readoption

The California Air Resources Board (“ARB”) is on the cusp of readopting the Low Carbon Fuel Standard (“LCFS”) regulation to remedy legal defects in the initial adoption process found by the California Court of Appeal on July 15, 2013.  In conjunction with the LCFS readoption, ARB is expected to propose significant changes to the program.  ARB staff has been vetting potential revisions via a series of workshops this year, and ARB plans to float a draft revised LCFS regulation next month.  The readoption process gained momentum this summer when the Supreme Court denied certiorari regarding the constitutionality of the program.  A new cost containment mechanism, an updated carbon intensity model, and a reanalysis of fuel availability are among the significant changes that could materially impact program participants, both obligated entities and opt-in fuel producers.

By JP Brisson, Joshua Bledsoe and Michael Dreibelbis

Today, the US Supreme Court denied certiorari regarding the constitutionality of California’s Low Carbon Fuel Standard (LCFS) in Rocky Mountain Farmers Union v. Corey.  The Court’s decision effectively affirms the Court of Appeals for the Ninth Circuit’s recent ruling that the LCFS does not facially violate the dormant Commerce Clause of the US Constitution.  Plaintiffs — including ethanol, farming, petrochemical, energy and trucking industry groups — had argued that the LCFS program’s “lifecycle analysis” impermissibly regulates beyond state lines and discriminates against ethanol and crude oil produced out-of-state, in violation of the dormant Commerce Clause.

Latham & Watkins is pleased to present a complimentary 60-minute webcast on Wednesday, July 24 at 9:00 am pacific/12:00 pm eastern. The webcast is presented by the Air Quality and Climate Change Practice and will address the following current air quality and climate change regulatory and policy updates:

  • The recent decision in the California Low Carbon Fuel Standard case and its implications for the implementation of the LCFS 
  • Greenhouse gas emissions trading for airlines
  • How climate change issues are being handled by

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By Joshua T. Bledsoe and Aron Potash

California’s low carbon fuel standard (LCFS), a core component of the state’s greenhouse gas (GHG) emission reduction strategy, likely will survive a legal challenge and remain in effect despite an appellate court’s order indicating that the regulation was improperly adopted.

The California Court of Appeal for the Fifth Appellate District issued a tentative disposition on June 3, 2013, in POET, LLC et al. v. Goldstene, et al. finding that the California Air Resources…

By Michael Dreibelbis, Eli Hopson, and Aron Potash

A California appellate court signaled on February 26, 2013, that it might find that California’s low carbon fuel standard (LCFS) was improperly adopted.  The court sent a request for supplemental briefing in POET, LLC et al. v. Goldstene, et al. indicating that the California Air Resources Board (CARB) may have violated the California Environmental Quality Act (CEQA) in adopting the LCFS.  Although the court has not yet issued its decision…