Rocky Mountain Farmers Union v. Corey

913 F.3d 940

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

and

American Fuel & Petrochemical Manufacturers Association, fka National Petrochemical & Refiners Association; American Truckings Associations; The Consumer Energy Alliance, Plaintiffs,

v.Richard W. COREY, in His Official Capacity as Executive Officer of the California Air Resources Board; Alexander Sherriffs; Barbara Riordan; Hector De La Torre ; John Eisenhut ; John Gioia; Mary D. Nichols; Ron Roberts; Daniel Sperling; Sandra Berg; John R. Balmes; Phil Serna; Dean Florez; Diane Takvorian; Judy A. Mitchell, in Their Official Capacities as Members of the California Air Resources Board; Gavin Newsom, in His Official Capacity as Governor of the State of California; Xavier Becerra, in His Official Capacity as Attorney General of the State of California, Defendants-Appellees,Sierra Club; Conservation Law Foundation; Environmental Defense Fund; Natural Resources Defense Council, Intervenor-Defendants-Appellees.

Rocky Mountain Farmers Union; Redwood County Minnesota Corn and Soybean Growers; Penny Newman Grain, Inc.; Rex Nederend; Fresno County Farm Bureau ; Nisei Farmers League ; California Dairy Campaign; Growth Energy, Plaintiffs,

and

American Fuel & Petrochemical Manufacturers Association, fka National Petrochemical & Refiners Association; American Truckings Associations; The Consumer Energy Alliance, Plaintiffs-Appellants,

v.Richard W. Corey, in His Official Capacity as Executive Officer of the California Air Resources Board; Alexander Sherriffs; Barbara Riordan; Hector De La Torre ; John Eisenhut ; John Gioia; Mary D. Nichols; Ron Roberts; Daniel Sperling; Sandra Berg; John R. Balmes; Phil Serna; Dean Florez; Diane Takvorian; Judy A. Mitchell, in Their Official Capacities as Members of the California Air Resources Board; Gavin Newsom, in His Official Capacity as Governor of the State of California; Xavier Becerra, in His Official Capacity as Attorney General of the State of California, Defendants-Appellees,Sierra Club; Conservation Law Foundation; Environmental Defense Fund; Natural Resources Defense Council, Intervenor-Defendants-Appellees.

No. 17-16881

No. 17-16882

United States Court of Appeals, Ninth Circuit.

Argued and Submitted September 26, 2018 Pasadena, California

Filed January 18, 2019

Paul J. Zidlicky (argued), Clayton G. Northouse, and Erika L. Maley, Sidney Austin LLP, Washington, D.C.; John C. O’Quinn, Kirkland & Ellis LLP, Washington, D.C.; John P. Kinsey and Timothy Jones, Wagner Jones Helsley PC, Fresno, California; for Plaintiffs-Appellants.

M. Elaine Meckenstock (argued), Jonathan Wiener, and Myung J. Park, Deputy Attorneys General; Gavin G. McCabe, Supervising Attorney General; Robert W. Byrne, Senior Assistant Attorney General; Xavier Becerra, Attorney General; Office of the Attorney General, Oakland, California; Sean H. Donahue, Donahue Goldberg & Weaver LLP, Washington, D.C.; Joanne Spalding, Sierra Club, Oakland, California; David Pettit, Natural Resources Defense Council, Santa Monica, California; for Defendants-Appellees.

Before: Dorothy W. Nelson, Ronald M. Gould, and Mary H. Murguia, Circuit Judges.

GOULD, Circuit Judge:

In 2013, we decided the first appeal in a long-running, complex challenge to California’s Low Carbon Fuel Standard (LCFS) under the Commerce Clause in Rocky Mountain Farmers Union v. Corey , rejecting some of Plaintiffs’ claims and remanding for further proceedings on others. Rocky Mountain Farmers Union v. Corey , 730 F.3d 1070 (9th Cir. 2013)reh’g en banc denied , 740 F.3d 507 (9th Cir. 2014), and cert. denied , ––– U.S. ––––, 134 S. Ct. 2875, 189 L.Ed.2d 835 (2014) (hereinafter Rocky Mountain I ). That challenge returns to us today. In the intervening years, the LCFS has been repealed and replaced, and Plaintiffs’ claims have changed form, but both the regulations and the claims have the same core structure now as they did then. We hold that Plaintiffs’ challenges to previous versions of the LCFS have been made moot by their repeal, and we affirm the dismissal of their remaining claims against the present version of the LCFS as largely precluded by our prior decision in Rocky Mountain I . To the extent Plaintiffs raise new arguments on this appeal, we conclude that they are without merit.

I

A

Since 2006, the California Air Resources Board (CARB) has acted under a mandate to reduce California’s rate of greenhouse gas emissions in light of the California legislature’s finding that "[g]lobal warming poses a serious threat to the economic well-being, public health, natural resources, and the environment of California." Cal. Health & Safety Code § 38501. The California legislature is rightly concerned with the health and welfare of humans living in the State of California. These persons may be subjected, for example, to crumbling or swamped coastlines, rising water, or more intense forest fires caused by higher temperatures and related droughts, all of which many in the scientific communities believe are caused or intensified by the volume of greenhouse gas emissions.¹ The California legislators and regulators who created the CARB regulation of greenhouse gas emissions were clearly concerned with such dreadful environmental impacts.² And, whatever else may be said of the revolutionary colonists who framed our Constitution, it cannot be doubted that they respected the rights of individual states to pass laws that protected human welfare,³ see, e.g. , The Federalist No. 45 at 289 (James Madison) (Clinton Rossiter ed., 2003) ("The powers reserved to the several States will extend to all the objects, which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people; and the internal order, improvement, and prosperity of the State."), and recognized their broad police powers to accomplish this goal. See, e.g. , Metro. Life Ins. Co. v. Massachusetts , 471 U.S. 724, 756, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985) ("The States traditionally have had great latitude under their police powers to legislate as ‘to the protection of the lives, limbs, health, comfort, and quiet of all persons.’ " (quoting Slaughter-House Cases , 83 U.S. (16 Wall.) 36, 62, 21 L.Ed. 394 (1873) ) ); Lewis v. BT Inv. Managers, Inc. , 447 U.S. 27, 36, 100 S.Ct. 2009, 64 L.Ed.2d 702 (1980) ("[T]he States retain authority under their general police powers to regulate matters of ‘legitimate local concern,’ even though interstate commerce may be affected."); Huron Portland Cement Co. v. City of Detroit , 362 U.S. 440, 442, 80 S.Ct. 813, 4 L.Ed.2d 852 (1960) ("Legislation designed to free [the air] from pollution ... clearly falls within the exercise of even the most traditional concept of ... the police power.").

We are presented with several versions of the challenged CARB regulations that regulate fuel sales in California. This case concerns three iterations of CARB regulations aimed at accomplishing the goal of reducing the rate of greenhouse gas emissions in California’s transportation sector: (1) the first LCFS, which went into effect in 2011; (2) the LCFS as amended in 2012; and (3) and the LCFS which replaced the first LCFS in 2015.

The function of the 2011 and 2012 versions of the LCFS was heavily discussed and analyzed in Rocky Mountain I and no current factual allegations have disturbed our summary of them. See Rocky Mountain I , 730 F.3d at 1078–86 (9th Cir. 2013). We reaffirm, finding Rocky Mountain I ’s conclusions binding here. Id. at 1106–07.

In brief, the 2011 LCFS established a program for the regulation of Californian transportation fuels based on the fuels’ "carbon intensity."⁴ See Rocky Mountain I , 730 F.3d at 1080–81. Parties who sell fuel in California are assessed for the carbon intensity of those fuels, and parties who fall below the carbon intensity standard gain tradeable credits that can be used by parties who are above the carbon intensity standard to meet their regulatory obligations. CARB assigns carbon intensity differently for different kinds of fuels, and the 2012 amendments to the LCFS, while retaining this basic structure, changed the precise procedure for assigning carbon intensity values to crude oil.

In 2013, after our decision in Rocky Mountain I , a decision in California state court based on the state’s administrative law required CARB to reconsider the LCFS. See POET, LLC v. CARB , 218 Cal. App. 4th 681, 766–67, 160 Cal.Rptr.3d 69 (2013) (requiring CARB to "[s]et aside its approval of the LCFS"). This led to the currently-effective LCFS (the "2015 LCFS") that repealed the 2011 LCFS and, of course, the 2012 amendments. The method and structure of the 2015 LCFS is identical to the 2011 LCFS, and it still contains the central carbon intensity and lifecycle analysis elements. The changes that are material for this appeal are limited to the process for assigning carbon intensity values to non-crude oil fuels.

The 2011 LCFS gave two different pathways for regulated parties to have the carbon intensity of their fuels assessed. Under "Method 1," CARB provided default values for different fuels with different production procedures from different parts of the country and the world. Rocky Mountain I , 730 F.3d at 1082. Regulated parties could also use "Method 2," which provided different options aimed at giving a more individualized assessment of a fuel’s carbon intensity. Id. The 2015 LCFS abandons the Method 1 process and assigns an individualized carbon intensity to each fuel, streamlining the application process for some conventionally produced fuels that CARB had previous experience in evaluating. This change means that no part of the LCFS now refers to particular regions of origin, as the 2011 LCFS had. See Rocky Mountain I , 730 F.3d at 1081–84.

B

The first version of this case began in 2009 and 2010, when Pl...