Rocky Mountain Farmers Union v. Goldstene

• Decision Date: 29 December 2011
• Docket Number: Case Nos. CV–F–09–2234 LJO GSA, CV–F–10–163 LJO DLB.
• Citation: 843 F.Supp.2d 1042
• Court: U.S. District Court — Eastern District of California
• Parties: ROCKY MOUNTAIN FARMERS UNION, Redwood County Minnesota Corn and Soybean Growers, Penny Newman Grain, Inc., Growth Energy, Renewable Fuels Association, Rex Nederend, Fresno County Farm Bureau, Nisei Farmers League, and California Dairy Campaign, Plaintiffs, v. James N. GOLDSTENE, Executive Officer of the California Air Resources Board, Defendant. National Petrochemical & Refiners Association, American Trucking Association, Center for North American Energy Security, and the Consumer Energy Alliance, Plaintiffs, v. James Goldstene, Executive Officer of the California Air Resources Board, Mary D. Nichols, Daniel Sperling, Ken Yeager, Dorene D'Adamo, Barbara Riordan, John R. Balmes, Lydia H. Kennard, Sandra Berg, Ron Roberts, Ronald O. Loveridge, member of the California Air Resources Board; Arnold Schwarzenegger, Governor of the state of California, and Edmund Brown, Attorney General of the state of California, Defendants. and related intervenor actions and amici.

843 F.Supp.2d 1042

ROCKY MOUNTAIN FARMERS UNION, Redwood County Minnesota Corn and Soybean Growers, Penny Newman Grain, Inc., Growth Energy, Renewable Fuels Association, Rex Nederend, Fresno County Farm Bureau, Nisei Farmers League, and California Dairy Campaign, Plaintiffs,

v.James N. GOLDSTENE, Executive Officer of the California Air Resources Board, Defendant.

National Petrochemical & Refiners Association, American Trucking Association, Center for North American Energy Security, and the Consumer Energy Alliance, Plaintiffs,

v.James Goldstene, Executive Officer of the California Air Resources Board, Mary D. Nichols, Daniel Sperling, Ken Yeager, Dorene D'Adamo, Barbara Riordan, John R. Balmes, Lydia H. Kennard, Sandra Berg, Ron Roberts, Ronald O. Loveridge, member of the California Air Resources Board; Arnold Schwarzenegger, Governor of the state of California, and Edmund Brown, Attorney General of the state of California, Defendants.and related intervenor actions and amici.

Case Nos. CV–F–09–2234 LJO GSA, CV–F–10–163 LJO DLB.

United States District Court,

E.D. California.

Dec. 29, 2011.

John P. Kinsey, Timothy Jones, Wanger Jones Helsley PC, Fresno, CA, John C. O'Quinn, Stuart A. C. Drake, Kirkland and Ellis LLP, James W. Coleman, Paul J. Zidlicky, Roger R. Martella, Sidley Austin LLP, Washington, DC, Shannon Suzanne Broome, Katten Muchin Rosenman LLP, Oakland, CA, Marie L. Fiala, Sidley Austin LLP, San Francisco, CA, for Plaintiffs.

Mark William Poole, Gavin Geraghty McCabe, Margaret Elaine Meckenstock, California Department of Justice, San Francisco, CA, for Defendant.

ORDER ON DEFENDANTS' SUMMARY JUDGMENT MOTION (Doc. 138)

LAWRENCE J. O'NEILL, District Judge.

Introduction

To implement provisions of California Assembly Bill 32 (“AB 32”), California's Global Warming Solutions Act of 2006, Cal. Health & Saf.Code, § 38500 et seq., defendant California Air Resource Board (“CARB”) promulgated its Low Carbon Fuel Standard, Cal.Code Regs. tit. 17, §§ 95480–95490 (“LCFS”). Plaintiffs ¹ initiatedseparate actions to challenge California's LCFS. Plaintiffs challenge the LCFS. Plaintiffs assert that the LCFS is prohibited by the dormant Commerce Clause and is preempted by federal law.

Defendants ² seek summary judgment, pursuant to Fed.R.Civ.P. 56, that California's LCFS is an authorized control of a motor vehicle fuel pursuant to 42 U.S.C. § 7545(c)(4)(B) (“Section 211(c)(4)(B)”) that is insulated from preemption and Commerce Clause challenges. This Court addresses Defendants' summary judgment motion first because, if meritorious, Defendants' arguments would resolve this action. Defendants contend that pursuant to Section 211(c)(4)(B) of the Clean Air Act, the LCFS is an authorized control on carbon emissions associated with fuels. Defendants rely on Section 211(c)(4)(B) to argue further that the LCFS is not preempted by the federal Clean Air Act and is insulated from Commerce Clause scrutiny.

Having considered the parties' arguments, relevant legal authority, and the admissible exhibits submitted, this Court finds that the LCFS is an authorized regulation pursuant to Section 211(c)(4)(B). California's authority pursuant to Section 211(c)(4)(B), however, is not unfettered. California regulations that are exempt from preemption under Section 211(c)(4)(B) must still be considered according to ordinary conflict preemption principles. In addition, contrary to Defendants' repeated assertions, Section 211(c)(4)(B) does not insulate CARB from dormant Commerce Clause scrutiny.

In addition to the arguments presented related to Section 211(c)(4)(B), Defendants' challenge Plaintiffs' preemption and Commerce Clause claims on the merits. Defendants argue that the Plaintiffs' facial preemption claim fails in toto, because Defendants cannot establish that there are no set of circumstances under which the LCFS would be valid.

Having considered the parties' arguments, the admissible evidence, and relevant case law, this Court finds that Section 211(c)(4)(B) does not exempt California from preemption when applied to EISA. California's Section 211(c)(4)(B) exempts California from federal regulations outlined in Section 211(c). This Court must apply the ordinary preemption principles to determine whether the LCFS is preempted by Section 211( o ), a separate provision of the Clean Air Act. In addition, this Court finds that Section 211(c)(4)(B) does not expressly remove the LCFS from Commerce Clause scrutiny. As to the appropriate standard of review on a facial preemption challenge, this Court finds that Defendants have failed to establish that the “no set of circumstances” standard is the appropriate standard to address the current preemption challenge. For these reasons, this Court DENIES Defendants' summary judgment motion on these issues. This Court shall address Defendants' other affirmative arguments on the merits of Plaintiffs' challenges in separate orders resolving Plaintiffs' summary judgment motions.

Background

Clean Air Act

The Clean Air Act is comprehensive federal legislation governing air pollution prevention and control, emissions standards, acid rain reduction, permits, and stratospheric ozone protection. See generally, 42 U.S.C. ch. 85. Congress approved the Clean Air Act “to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population.” 42 U.S.C. § 7401(b)(1). Pursuant to the Clean Air Act, “[t]he direct regulation of emissions from stationary sources is primarily left to the states. On the other hand, the federal government sets nationwide emissions standards for mobile sources.” Jensen Family Farms, Inc. v. Monterey Bay Uni. Air Pollution Control Dist., 644 F.3d 934, 938 (9th Cir.2011) (citations omitted). Although the Clean Air Act creates national standards and programs for mobile sources, it “generally seeks to preserve state authority in the area of pollution.” Oxygenated Fuels Assoc., Inc. v. Davis, 331 F.3d 665, 670 (9th Cir.2003) (“Oxygenated Fuels ”).

The Clean Air Act “encourage[s] or otherwise promote[s] reasonable Federal, State, and local government actions, consistent with the provisions of this Act, for pollution prevention.” 42 U.S.C. § 7401(c). Under the Act, the “States and the Federal Government [are] partners in the struggle against air pollution.” Gen. Motors Corp. v. United States, 496 U.S. 530, 532, 110 S.Ct. 2528, 110 L.Ed.2d 480 (1990). Federal, state and local governments work together to implement and enforce some provisions of the Clean Air Act. For example, the Clean Air Act grants the EPA the authority to set national ambient air quality standards, but allows states to create plans to meet those standards. Id. Pursuant to the Clean Act, the federal government shares jurisdiction with states in some instances because “air pollution prevention ... and air pollution control at its source is the primary responsibility of States and local governments.” 42 U.S.C. § 7401(a)(3).

Based on these principles, the Clean Air Act's savings clause provides a “substantial retention of State authority.” Oxygenated Fuels, 331 F.3d at 671.42 U.S.C. § 7416 provides:

Except as otherwise provided in sections 1857c–10(c), (e), and (f) (as in effect before August 7, 1977), 7543, 7545(c)(4), and 7573 of this title (preempting certain State regulation of moving sources) nothing in this chapter shall preclude or deny the right of any State or political subdivision thereof to adopt or enforce (1) any standard or limitation respecting emissions of air pollutants or (2) any requirement respecting control or abatement of air pollution; except that if an emission standard or limitation is in effect under an applicable implementation plan or under section 7411 or section 7412 of this title, such State or political subdivision may not adopt or enforce any emission standard or limitation which is less stringent than the standard or limitation under such plan or section.

Id. (emphasis added).

Federal Fuels Program

Section 211 of the Clean Air Act, 42 U.S.C. § 7545, sets forth the federal statutory framework for regulating motor vehicle fuels and fuel additives. Section 211 authorizes the United States Environmental Protection Agency (“EPA”) to regulate fuels to control vehicle emissions and to ensure a national market for fuels. 42 U.S.C. § 7545. Section 211 contains numerous, diverse provisions. Section 211(a) gives the EPA the authority to require registration of any fuel or fuel additive. Section 211(c) allows the EPA to “control or prohibit” any fuel or fuel additive that is found to contribute to air pollution or water pollution. Section 211(g) regulates the use of leaded gasoline. Section 211(k) sets forth a fuels program for the reformulation of gasoline. Section 211( l ) requires that gasoline contain detergent additives, pursuant to federal specifications, to prevent the accumulation of engine and fuel supply deposits. Section 211(m) requires that, during the winter months, gasoline sold in certain areas have an oxygen content that equals or exceeds 2.7 percent by weight.

In their complaints, Plaintiffs allege that the LCFS conflicts with and is preempted by Section 211( o ). The Energy Policy Act of 2005 modified Section 211 of the Clean Air Act by establishing a national renewable fuel standard program (“RFS”), codified in 42 U.S.C. § 7545( o ) (“Section 211( o )”). The RFS established a renewable fuel volume mandate that requires 7.5 billion gallons of renewable fuels, including ethanol, to be blended into gasoline by 2010. The RFS was modified by the Energy Independence and Security Act of 2007 (“EISA”), creating a second federal renewable fuel standard program (“RFS2”). EISA modified the RFS in several ways. For example, EISA significantly increased the required volume of renewable fuels for sale in gasoline. The required volumes include an incremental increase from 2009 through 2022, with a goal of 36...