In a decision issued Thursday, Fresno-based U.S. District Court Judge Lawrence O'Neill said the low-carbon fuel rules favor biofuels produced in the state. He said that violates the U.S. Constitution's commerce clause by discriminating against crude oil and biofuels producers located outside California.
California Air Resources Board spokesman Dave Clegern disagreed, saying the fuel rule is "an evenhanded standard that encourages the use of cleaner low carbon fuels by regulating fuel-providers in California."
He said the board plans to ask the judge to stay the ruling, and appeal if necessary to the 9th U.S. Circuit Court of Appeals.
Out-of-state fuels producers hailed the decision as a win for California drivers.
"Today's decision ... struck down a misguided policy that would have resulted in even higher fuel costs for Californian consumers while increasing the cost of business throughout the state," Consumer Energy Alliance Executive Vice President Michael Whatley said.
Beginning this year, the standard has required petroleum refiners, companies that blend fuel and distributors to gradually increase the cleanliness of the fuel they sell in California.
The board previously had said the low-carbon mandate will reduce California's dependence on petroleum by 20 percent and account for one-tenth of the state's goal to cut greenhouse gas emissions by 2020.
The regulation does not mandate specific alternative fuels. Rather, it assigns a so-called carbon-intensity score to various fuels. By 2020 all vehicles fuels, on average, must be 10 percent less carbon-intensive than gasoline is now.
The Rocky Mountain Farmers Union, the California Dairy Campaign, the Renewable Fuels Associations and other groups filed a similar lawsuit in the same court in 2009. Their complaint said the regulation conflicted with the federal Renewable Fuel Standard and would close California's borders to corn ethanol made in other states.
The fuel standard "discriminates against out-of-state and foreign crude oil while giving an economic advantage to in-state crude oil," O'Neil wrote Thursday.
The nonprofit legal organization Earthjustice, which was not party to the suit but works on climate-related issues, said the state's clean energy programs are consistent with federal law.
"California is leading the way on cleaner fuels and a cleaner power grid," Earthjustice President Trip Van Noppen said. "It is not surprising that the oil industry is attacking these programs, but like previous attacks in the courts and at the ballot box, we expect this one ultimately to fail."
Associated Press writer Jason Dearen contributed to this report.