State Resource Guide: Drafting a Clean Fuel Standard to Manage Legal Risks

Many states are exploring whether to enact clean fuel standards to incentivize the use of lower-carbon fuels to decrease emissions from the transportation sector. Of the three states with clean fuel standards, California and Oregon have both defended against multiple legal challenges, and Washington is currently in the rulemaking process. The cases provide important lessons for states considering clean fuel standards, including which design approaches might help to mitigate legal risks. In particular, the litigation outcomes demonstrate the importance of treating importers the same as in-state producers, basing the standards on science, and clearly stating the environmental purposes of the program. With this roadmap, we provide analysis to assist states that are exploring the design and implementation of a program to reduce transportation fuel emissions. We provide a brief history of the existing clean fuel standards, descriptions of prior cases challenging them, and the legal theories behind these cases and other potential legal challenges. In addition, we include drafting considerations and messaging considerations based on the above-described legal challenges. Read State Resource Guide: Drafting a Clean Fuel Standard to Manage Legal Risks.