Ethanol Industry Responds to Legal Filing in California Case; Argues for Maintaining Stay on Illegal

WASHINGTON, DC – A coalition of national ethanol groups, along with California and Midwest farming groups, filed a brief urging the U.S. 9th Circuit Court of Appeals to uphold a court-ordered injunction on the California Air Resource Board’s low-carbon fuel standard. The coalition includes Growth Energy and the Renewable Fuels Association.

At issue is California’s request for a stay of the injunction issued by District Court Judge Lawrence J. O’Neill when he ruled in December that the new fuel regulation issued by CARB violated the Commerce Clause and was therefore unconstitutional.

RFA and Growth Energy brought this challenge in 2009 because California was penalizing Midwest ethanol producers based on where they are located, the production processes they use, and how farmers grow corn. California is using its leverage as the largest single state in the U.S. ethanol market to try to force producers in other states to reduce emissions in those states—not California. The Commerce Clause forbids regulations like the LCFS, where one state tries to regulate activity in another state, and which put a thumb on the scale in favor of in-state business. The LCFS also interferes with Congress’s objectives in the Energy Independence and Security Act of 2007, and is preempted.

In the brief filed Thursday night with the Ninth Circuit, RFA and Growth Energy argue that staying Judge O’Neill’s injunction would harm and disrupt the Midwest ethanol industry, but would not appreciably advance the goals of the LCFS. Growth Energy and RFA provided extensive evidence that Midwest ethanol producers have already been shut out of the California market, and that the LCFS has caused inefficient “shuffling” of fuel previously sold in California to other markets, and vice-versa. While the LCFS has come at great cost to the ethanol industry, it has produced no environmental benefits.

Growth Energy CEO Tom Buis and RFA CEO Bob Dinneen issued a joint statement to the press in response to questions about the case:

“We are hopeful that the Ninth Circuit Court will see the merits of our argument to uphold Judge O’Neill’s injunction. Ultimately, we believe California’s low carbon fuel standard should be designed and implemented in a fair and legal manner. If we are going to have a low-carbon society, we need to have a low-carbon fuel. Ethanol is the only commercially-viable, low-carbon fuel we have today.”

The two ethanol associations joined in December 2009 to file a lawsuit seeking to stop the LCFS because it would discriminate against Midwest ethanol producers, blocking them from selling clean, renewable ethanol into the California market.