• Rocky Mountain Farmers Union
  • November 7, 2013
  • Law Firm: Kutak Rock LLP - Omaha Office
  • In Rocky Mountain Farmers Union v. Cory, the United States Court of Appeals, 9th Circuit, reversed part of the lower district court’s decision that California’s Fuel Standard ethanol provisions violates the Commerce Clause of the U.S. Constitution.

    The Court, however, sent the matter back to the lower court, and asked whether California’s standards violate the Constitution using a different legal test.

    The case stems from California’s adoption in 2009 of certain fuel standards intended to reduce the quantity of greenhouse gases (GHGs) emitted in the production of transportation fuel. The standard uses a “life-cycle” or “well to wheel” analysis intended to determine the total carbon “intensity” of a given transportation fuel. For example, the regulations include the carbon intensity of ethanol produced in the Midwest where the plant largely uses coal for its electricity and heat. It also includes the “indirect” land use impacts of ethanol production, including the GHG emissions released in tilling the land, etc. When these indirect impacts are included, Midwest ethanol yields carbon intensities even greater than petroleum gasoline and higher intensities than ethanol produced in-state because, for example, California ethanol plants rely less on coal for its electricity needs than does its Midwestern competitors.

    The ethanol industry, along with others, sued California arguing that the regulations discriminated against out-of-state ethanol in violation of the Commerce Clause.

    In December 2011, the California district court largely agreed with the Midwest ethanol industry, finding that the regulations impermissibly discriminated against Midwest ethanol - not coincidentally where most of the ethanol in the country is produced.

    In late September of this year, however, the Court of Appeals largely reversed the lower court. The Court held that the regulations did not “facially” discriminate. It then directed the lower court to determine if the regulations violate the Commerce Clause under different constitutional tests. The Court’s decision can be found by clicking the link below.

    While the case will continue to generate controversy, it is likely to wind up before the U.S. Supreme Court.