A federal judge has blocked a California program aimed at lowering the carbon content of transportation fuels, saying the rule violates the U.S. Constitution's Commerce Clause.

Judge Lawrence O'Neill of the U.S. District Court in Fresno issued a preliminary injunction Thursday against the low-carbon fuel standard (LCFS), one of the state's major policies aimed at curbing emissions of greenhouse gases.

The program, ordered by former Gov. Arnold Schwarzenegger (R) in 2007, requires fuel providers to lower the average carbon content of their fuels by 10 percent by 2020 (Greenwire, Aug. 15, 2011).

O'Neill opined that the LCFS runs afoul of the constitutional clause barring states from discriminating against interstate trade. The California regulation assigns carbon scores to each type of fuel, and ethanol from the Midwest has a higher score than California-produced ethanol, in part because it is transported over greater distances and uses different electricity sources.

"California is attempting to stop leakage of GHG emissions by treating electricity generated outside of the state differently than electricity generated inside its border," he wrote. "This discriminates against interstate commerce."

The judge also criticized the state's use of a "lifecycle analysis" to calculate each fuel's emissions, which also takes the fuel's impact on land-use decisions into account. He said it would be difficult to reconcile if other states decided to adopt their own policies. The ethanol market, he wrote, "would become Balkanized, since a producer would have strong incentives to either relocate its operations in the state of largest use, or sell only locally to avoid transportation and other penalties."

The California Air Resources Board vowed to appeal the ruling to the 9th U.S. Circuit Court of Appeals and seek a stay on the injunction but would delay enforcement of the regulations as ordered.

Ethanol producers -- which brought the suit along with truckers, Midwest farmers and oil refiners -- praised O'Neill's ruling.

"With this ruling, 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," said Renewable Fuels Association President Bob Dinneen and Growth Energy CEO Tom Buis in a joint statement.

Natural Resources Defense Council senior attorney David Pettit said his group would also appeal the decision. "California's low carbon fuel standard will help reduce harmful air pollution from the fuels used by our cars and trucks, reduce our dependence in petroleum and protect public health so we are confident that these merits will win the day," he said.

Legal observers were not surprised by the ruling. They predicted it would spur lawsuits against state-level climate policies.

"I've long believed the dormant Commerce Clause argument ... to be the most formidable constitutional argument confronting California's regulatory efforts to reduce the state's aggregate greenhouse gas emissions," Richard Frank, director of the California Environmental Law and Policy Center at the University of California, Davis, wrote in a blog post. "Judge O'Neill's decision is likely to encourage further invocations of that particular constitutional theory in future climate change litigation brought against California regulators."

Todd Guerrero of the Minnesota-based law firm Fredrikson & Byron wrote in Biofuels Digest, "Clearly this decision shows how difficult it is for states to tackle GHG issues, no matter how legitimate those state interests might be."