(Many thanks to Joseph Mandry for his research and writing for this post).

On January 22, 2014, the Ninth Circuit Court of Appeals denied petitions to rehear Rocky Mountain Farmers Union v. Corey, en banc. Rocky Mountain Farmers Union v. Corey, 740 F. 3d 507 (9th Cir. 2014). Two opinions, a dissent and a concurrence, accompanied the denial.

In response to the court’s decision to deny a rehearing of Corey, Circuit Judge M. Smith wrote in dissent that Corey was decided wrongly for two reasons, and thus, the petition for rehearing en banc should have been granted. Circuit Judge Smith first argued that majority opinion in Corey upheld a “protectionist regulatory scheme that threaten[ed] to Balkanize [the] national economy.” Judge M. Smith said further that the majority was impermissibly nullifying the constitutionally imposed constraints on California’s ability to discriminate against out-of-state producers of ethanol. Judge Smith’s second reason for dissenting was that the majority in Corey “sanction[ed] California’s clear attempt to project its authority into other states.” Judge Smith argued that, by allowing California’s low-carbon fuel standard to survive, the majority’s holding “stand[s] in open defiance” of controlling Supreme Court precedent and renders the dormant Commerce Clause “toothless” in the ninth circuit.

Circuit Judge Gould offered a concurring opinion, which countered the dissent with several observations. Judge Gould first noted that the dissent was merely using “alarmist rhetoric” that misunderstood the LCFS legislation. Next, Judge Gould accused the dissent of misunderstanding the majority holding in Corey. Rather than uphold the LCFS, as the dissent contended, the disposition in Corey remanded the case back to the district court to apply either strict scrutiny or the Pike balancing test; the court had not conclusively endorsed the LCFS. Third, Judge Gould reiterated that, in his opinion, the LCFS did not facially discriminate against out-of-state ethanol producers because the LCFS made geographic distinctions based on carbon impact and intensity of various fuels, rather than based purely on state-of-origin. Judge Gould then speculated that the dissenting opinion’s tone and substance might have been aimed mainly at encouraging Supreme Court review. Finally, Judge Gould responded to the dissent’s accusation that the majority in Corey opposed binding Supreme Court precedent by citing Supreme Court precedent that supported the majority’s contention in Corey that California could permissibly regulate conduct within its borders with the goal of influencing out-of-state behavior.

On June 30, 2014, the Supreme Court of the United States denied certiorari to hear Rocky Mountain Farmers Union v. Corey. No opinion accompanied the Supreme Court’s denial of certiorari. As with the Ninth Circuit’s denial to rehear Corey en banc, the Supreme Court’s denial of certiorari does not change the legal status of California’s LCFS.

The LCFS remains legally intact and enforceable. If the legal status of the LCFS is to change from its current state, it will be because of the district court’s further factual findings and application of either strict scrutiny or the Pike balancing test.

The Eastern District Court of Fresno has set a scheduling conference for August 28, 2014.