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Opponent of Clean Fuels Standard Fires Warning Shot at Attorneys General

Group says NE low-carbon fuel law 'unlikely to survive judicial scrutiny.' One AG tells InsideClimate News the warning won't change state's course.

Apr 3, 2012
Tremley Point oil refinery on the Arthur Kill and Rahway River, Linden, New Jers

One of the country's biggest opponents of low-carbon fuel standards has fired a warning shot at attorneys general of Northeast and mid-Atlantic states, cautioning that a mandate requiring cleaner fuels would bury their states in costly lawsuits—as it has in California.

On Monday, the Consumer Energy Alliance (CEA), a coalition that includes oil companies and trucking and transportation groups, sent letters to 11 attorneys general whose states are developing the regional Clean Fuels Standard, saying the initiative could be unconstitutional and is "unlikely to survive judicial scrutiny" if challenged in court. The standard would limit consumption of high-carbon fuels like oil sands crude, just as Canadian companies lay plans to pump tar sands oil to Northeast markets for the first time. The policy is expected to be completed next year.

The letters signal a ratcheting up of CEA's campaign to keep low-carbon fuel rules from  taking hold in the region. The alliance has strong ties to HBW Resources, a lobbying and public affairs firm whose clients include the American Petroleum Institute, the largest oil industry trade group, and the Center for North American Energy Security, a group created to promote oil sands development.

CEA says that oil and gas firms make up roughly one-third of its membership of about 190 organizations. The group also has 400,000 individual members, it says.

In an interview with InsideClimate News, Vermont Attorney General William Sorrell said he had "no particular reaction" to the letter when it showed up in his email inbox Monday morning. A hard copy was expected to arrive Tuesday.

"There is nothing that I've seen thus far in the letter or otherwise to change Vermont’s course ... to pursue the possibility of a multistate [clean fuels] initiative."

Sorrell noted that it is typical for his office to get lobbied by groups or individuals on policies in many areas, including immigration, gun control and the environment.

Since late 2009, 11 states—Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont—have been crafting the Clean Fuels Standard, with the intention of modeling the policy on California's landmark Low-Carbon Fuel Standard.

CEA is a plaintiff in a two-year-old lawsuit to block the California standard, together with the Center for North American Energy Security, among other groups. The group says that a California-style approach in the Northeast would raise gas prices and cost the region hundreds of billions of dollars.

For months, CEA has been meeting with Northeast governors, legislators and environmental regulators to convince them to reconsider. In New Jersey, Republican Gov. Chris Christie's administration recently backed out of the work-in-progress pact. In Maine, the government said it will continue to engage in the program, but won't apply the rules to its own transportation sector. And in New Hampshire, the GOP-controlled House passed a bill to withdraw the state.

California's fuel standard requires oil refiners and suppliers to reduce the carbon intensity of their fuel mix by 10 percent in 2020. It was supposed to take effect on Jan. 1, 2012, but just days before a federal judge ruled that the policy violates the commerce clause of the U.S. Constitution. The judge also ruled that California's Air Resources Board (CARB) can't enforce the rule until the lawsuit with CEA is resolved in 2013.

CARB has asked the Ninth Circuit Court of Appeals in San Francisco to reverse the judge's ruling and to stay the injunction so it doesn't have to wait another year to begin to enact the mandate. Dave Clegern, a CARB spokesperson, told InsideClimate News that the agency will present its written arguments for the appeal in mid-April and is still awaiting a decision on its request to lift the injunction.

In an interview, Michael Whatley, CEA's executive vice president, said that the developments in the California case drove CEA to contact the Northeast attorneys general this week.

"Now that the case is up at the appeals court, we thought it was important to get these letters out to the attorneys general," Whatley said. Attorneys general are not involved in making laws like low-carbon fuels standards. However, "they do have a role to play," he said. "If there are concerns over whether or not the potential [fuels standard] is legal or constitutional, they can provide advice and counsel."

Sorrell, Vermont's attorney general, said his office was already aware of—and was monitoring—the legal action in California.

Whatley said if the Northeast states choose the California model, "we would probably raise the same constitutional issues ... that we raised in California," which could mean a lawsuit.

"We would certainly have to take a real, hard look at litigation."

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