Today, the U.S. Supreme Court denied petition for review in Rocky Mountain Farmers Union v. Corey. In Rocky Mountain Farmers, the Ninth Circuit addressed the constitutionality of California’s Low Carbon Fuel Standard (LCFS), focusing specifically on whether the LCFS discriminates against out-of-state businesses and thus violates the dormant Commerce Clause. Read our September 2013 blog post “Ninth Circuit Holds California’s Low Carbon Fuel Standard is Constitutional on its Face” for background.

By denying the petition for review, the Supreme Court lends finality to the Ninth Circuit’s decision that the LCFS does not facially violate the dormant Commerce Clause. The decision likely will have implications for other state energy regulation including state renewable portfolio standards (RPSs) that often reward or require in-state distributed generation and provide other incentives for in-state energy development.

While the Supreme Court’s denial of certiorari finalizes the Ninth Circuit’s determination that the LCFS is not facially discriminatory or discriminatory in purpose or effect, several important challenges to the validity of the LCFS remain undecided for the district court to address on remand.

First, the Ninth Circuit did not address whether the LCFS violates the Pike balancing test of the dormant Commerce Clause, under which a regulation will be invalid if its burdens on interstate commerce outweigh its benefits. Nevertheless, given the deference courts generally apply under the Pike test and the benefits of GHG reduction that the Ninth Circuit recognized, the court’s determination that the LCFS does not constitute unlawful economic discrimination likely removes the most substantial hurdle to the LCFS’s constitutional validity under the dormant Commerce Clause.

Second, the Ninth Circuit also remanded the issue of federal conflict pre-emption to the district court for consideration, specifically whether Section 211 of the federal Clean Air Act pre-empts California’s LCFS program. That issue also survives the Supreme Court’s denial of certiorari. Stay tuned for more developments on this case on California Environmental Law blog and other related Stoel Rives blogs.

Authored by my colleague Daniel Lee.