msnbc.com staff and news service reports
updated 12/29/2011 7:45:06 PM ET 2011-12-30T00:45:06

A federal judge on Friday blocked California from enforcing its first-in-the-nation mandate for cleaner, low-carbon fuels, saying the rule unfairly benefits biofuels produced in the state.

The California Air Resources Board adopted the low-carbon fuel standard as part of the state's landmark 2006 law to reduce global warming emissions tied to carbon-based fuels.

U.S. District Court Judge Lawrence O'Neill ruled the standard violates a commerce clause by discriminating against crude oil and biofuels producers located outside California.

The lawsuit challenging the regulations was filed in a Fresno federal court last year by a coalition that includes the National Petrochemical & Refiners Association and the American Trucking Associations.

The refiners and truckers do not object to the standard itself, but just want to ensure that fuels from other states can benefit.

"If these standards had remained in place they would have done nothing for the environment and done nothing to reduce global greenhouse gas emissions, but would have created a regulatory nightmare for fuel manufacturers," NPRA President Charles Drevna said in a statement. "Different states could have followed California's example and created a patchwork quilt of varying fuel standards that would have raised the costs of manufacturing gasoline and diesel fuel across the United States."

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The Renewable Fuels Association echoed that, saying "it is our hope that the California regulators will come back to the table to work on a thoughtful, fair, and ultimately achievable strategy for improving our environment by incenting the growth and evolution of American renewable fuels."

The California Air Resources Board plans to ask the judge to stay the ruling, and appeal if necessary to the San Francisco-based 9th U.S. Circuit Court of Appeals, spokesman Dave Clegern said.

The rule is "an evenhanded standard that encourages the use of cleaner low carbon fuels by regulating fuel-providers in California," Clegern said, adding that it "does not discriminate against any fuels on the basis of geography."

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. All gasoline and diesel fuel sold in California must be 10 percent less carbon-intensive by 2020.

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 ruling was a major setback for the state's aggressive greenhouse gas emission regulations.

"California is leading the way on cleaner fuels and a cleaner power grid, and the state's programs are consistent with federal law," 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."

The Associated Press contributed to this report.

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