Two related cases, advancing in parallel, have the potential to upend California’s Low Carbon Fuel Standard (LCFS), whether via full suspension of the LCFS or carving out diesel fuels from the deficit and crediting regime.
Both cases involve challenges by POET, LLC (POET), a South Dakota-based ethanol producer, against the LCFS rules adopted by the California Air Resources Board (ARB). ARB first adopted LCFS rules in 2009 and amended them in 2011, but these rules successfully were challenged by POET, leading the California Court of Appeal for the Fifth Appellate District (Court of Appeal) on July 15, 2013, to find deficiencies in ARB’s California Environmental Quality Act (CEQA) review process. The Court of Appeal issued a peremptory writ of mandate (Writ) in this case (POET I), requiring ARB to remedy legal defects in the initial adoption of the regulation, but opting to leave the LCFS in place while ARB reworked its analysis and repeated the necessary procedural steps and substantive analysis. Over the next two years, ARB reviewed and revised the LCFS, before re-adopting the regulation on September 25, 2015. Shortly thereafter, on October 30, 2015, POET once again brought suit in Fresno County Superior Court (Superior Court) to challenge the re-adopted regulations (POET II), arguing that ARB both failed to comply with the Writ issued in POET I and that it violated CEQA, the California Administrative Procedure Act (APA), and the Health & Safety Code. Continue Reading