By Joshua T. Bledsoe and Kimberly Farbota

In a previous post, we described how potential delays in the resolution of the case commonly known as POET I could create uncertainty regarding the future of the California Low Carbon Fuel Standard (LCFS). On August 23, 2017, the Supreme Court of California issued an order: (1) denying California Air Resources Board (ARB)’s petition for review of the appellate decision in POET I; (2) denying ARB’s request for an order directing depublication of the associated opinion; and (3) remitting the case to the Fresno County Superior Court.

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 requiring it to remedy violations of the California Environmental Quality Act (CEQA) that occurred during adoption of the original LCFS. In response to a petition for rehearing filed by ARB, 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. On July 10, 2017, ARB filed a petition with the California Supreme Court seeking depublication of the May 30, 2017 opinion, or in the alternative, Supreme Court review. In the petition, ARB argued that the decision should be depublished because it creates unnecessary confusion about how agencies and courts should address uncertainty under CEQA. ARB also argued that Supreme Court review could provide clarification regarding the standards by which compliance with a CEQA-related writ should be measured. As is common practice, the Supreme Court’s August 23, 2017 order did not provide the Court’s reasons for denying ARB’s petition and request.

ARB is now required to conduct a CEQA-compliant analysis of the LCFS program’s impact on nitrogen oxide (NOx) emissions, as directed by the Court of Appeal. It remains unclear whether this analysis will be integrated into ARB’s planned 2018 rulemaking to increase the LCFS’s carbon intensity reductions and extend the Program to 2030, or will be processed separately. With POET I presumably resolved, judicial review of the LCFS program is now focused squarely on POET II, where petitioner POET, LLC has challenged the LCFS and Alternative Diesel Standard (ADF) regulations adopted by ARB in 2015. As indicated in our prior post and as argued by ARB in prior filings, the Court of Appeal’s May 30, 2017 opinion has the potential to influence the outcome of POET II. With the case already fully briefed, a hearing on the merits in the POET II case has been scheduled in Fresno County Superior Court for December 21, 2017.