Industries Sue California's New Low-Carbon Fuel Regulations

Industry groups are suing California's recently adopted low-carbon fuel regulation on the basis that it discriminates against fuels not produced inside California's state limits. The first-of-its-kind law requires petroleum producers to reduce their carbon footprint by 10%, including extraction, production, and transportation of the fuel. Oil and natural gas groups say that the bill has two true purposes. The first of which is to penalize fuel companies for refining out of state, away from the additional costs associated with California's energy and corporate excise tax. The other purpose it to prevent the use of Canadian oil sourced from controversial oil sands in Californian gas tanks. Governor Schwarzenegger disagrees, saying that the new law will "reward innovation, expand consumer choice and encourage the private investment we need to transform our energy infrastructure."

The National Petrochemical and Refiners Association filed suit along with the American Trucking Association and the American Ethanol Association. These three groups say that the low-carbon fuel standard is not an environmental bill, but protectionism in disguise. "The LCFS is an ineffective tool for reducing GHG emissions. The fuel prohibited from use in California will simply be used elsewhere... which will result in increased GHG emissions from increased transportation distances," said the NPRA concerning the low carbon fuel standard. Calling it a "West Coast Offense against American consumers and the economy," the NPRA released a statement claiming that the LCFS unlawfully forces producers to build new refineries in-state, where California can collect taxes to aid their struggling budget.

The chairwoman of California's Air Resources Board, Mary D. Nichols, disagreed, calling the trio of lawsuits "shameful." Nichols advocates that the bill will protect Californians from volatile oil prices. The American Trucking Association countered her point with a statement that the law essentially forbids the use of hydrocarbons sourced from Canada's oil sands, meaning that consumption of crude oil from Saudi Arabia and the middle east would nearly double to replace oil once sourced in the Western Hemisphere. Nichols responded that "Instead of fighting us in court, [fuel companies] should be working to provide consumers with the next generation of cleaner fuels."