US Supreme Court Refuses Challenge to California Climate Rule

The U.S. Supreme Court on Monday declined to hear a challenge to California's landmark low-carbon fuel standard, in a blow to out-of-state ethanol and gasoline producers that say the rule unfairly discriminates against their products.

A coalition of fuel makers, led by the Rocky Mountain Farmers Union, a grower of corn and soybeans for ethanol in western states, brought a lawsuit to overturn a 2009 rule mandating cuts in carbon emissions.

The California regulation calculates emissions throughout the life cycle of a fuel by including pollution from production as well as ultimate use.

Out-of-state fuel producers claim the standard penalizes them by calculating long transportation distances as part of the overall carbon footprint of their fuels.

They argued the measure violates the U.S. Constitution by interfering with interstate commerce but lost at the 9th U.S. Circuit Court of Appeals.

The Supreme Court's denial means the standard remains in place. The case will now be sent back to a lower court.

"Today's Supreme Court decision is a victory for everyone committed to taking meaningful action to tackle climate change," Mary Nichols, chairman of the California Air Resources Board, said in an emailed statement.

"It sends a clear message that the time for delay is over and the time to clean up and diversify transportation fuels is now," she said.

Richard Moskowitz, general counsel for American Fuel & Petrochemical Manufacturers, called the decision not to review the case disappointing.

"California's efforts to dictate how fuel is produced outside of its borders ignores constitutional safeguards that have long protected against one state controlling the conduct of private parties," he said in a statement.

He said the organization's members had yet to decide their next steps for the litigation.

California says the standard, created by an executive order of former Governor Arnold Schwarzenegger, is successfully slashing greenhouse gases to battle climate change.

The Environmental Defense Fund and the American Lung Association say the measure also reduces heart and lung diseases, health problems linked to poor air quality.

"This is another case of Big Oil and Big Ethanol trying to avoid cleaning up their act," attorney David Pettit from the Natural Resources Defense Council said in an emailed release.

Under California's regulation, fuel blenders and distributors must reduce the "carbon intensity" of their products by up to 10 percent over the next decade or risk being shut out of the state's lucrative market.

While California's program is the first of its kind in the country, other states such as Washington and Oregon have considered pursuing similar policies.

The case is Rocky Mountain Farmers Union v. Richard W. Corey, U.S. Supreme Court, No. 13-1148.

(By Mica Rosenberg; Additional reporting by Rory Carroll in San Francisco; Editing by Howard Goller and Steve Orlofsky)