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These new proposed amendments no longer obligate jet fuel as part
of the low carbon fuel standard, a change from the original
proposal to include jet fuel burned in flights that take off and
land in California.

A subtext of this decision is that there is a risk of litigation
due to possible federal preemption. As I blogged yesterday on Legal
Planet
(https://legal-planet.org/2024/08/26/california-pulls-back-on-sustainable-aviation-fuels/),
the airline industry has asserted that California is wholly
preempted by various federal laws from mandating any sort of
decarbonization of jet fuel.

But the industry overstates the risk of preemption, as a
forthcoming CLEE legal analysis will document. There are three
federal statutes at issue when it comes to aviation and federal
preemption, which our report will detail. Despite their existence,
California still has runway (ahem) to regulate jet fuel.

First, the Clean Air Act governs regulation of airplane engines and
associated emissions. But in this case, California would not
require airlines to change their engines or meet specific emissions
standards. Instead, the low carbon fuel standard solely regulates
the fuels as inputs. And when low-carbon biofuels blend with fossil
jet fuel (the most common type of sustainable aviation fuel), no
engine modifications are necessarily required.

Second, the Airline Deregulation Act prevents states and local
governments from interfering with the national aviation market, if
they take action "related to" prices, routes and services. A
mandate for blending lower-carbon fuels into fossil jet is on its
face not "related" to these specific economic features of a
national aviation market. But if the fuels requirement became
stringent enough to significantly affect the prices consumers pay
or where airlines schedule refueling or routes, there is likely an
outer limit to what California can require on fuels without risking
preemption. As a result, the board would need to craft the
regulation carefully to avoid these significant impacts.

Finally, the Federal Aviation Act could preempt state laws on jet
fuel if the agency set forth national requirements for low-carbon
jet fuel, but to date it has not yet finalized any such rule. And
in that absence, California has leeway to regulate.

(And if the concern relates to a separate potential challenge based
on the "dormant" commerce clause of the U.S. constitution, where
state action creates an unjustified and significant barrier to free
trade among states, such a challenge to the low carbon fuel
standard program was already rejected by the Ninth Circuit in 2019,
with the US Supreme Court declining to review.)

The Air Resources Board's recent change in policy matters because
aviation is arguably the hardest-to-decarbonize sector in our
economy, and policy could help jumpstart solutions. No single
technology otherwise currently exists to cover all of our aviation
needs in the long term, despite progress on batteries, hydrogen,
and potentially "e-fuels," which combine captured carbon with
zero-emission hydrogen to create a synthetic, carbon-neutral fuel
that can combust in current engines just like fossil fuel.

So in the short run, the Air Resources Board has an opportunity to
require airlines to blend in more low-carbon biofuels with fossil
jet fuel, lowering the carbon content while sending a clear policy
signal to the industry that research and investment must begin now
on these longer-term solutions. This is what Governor Newsom
required when he directed the Board in 2022 to "adopt an aggressive
20% clean fuels target for the aviation sector."

With its low carbon fuel standard, California is well positioned
not just to offer more carrots to the airline industry to achieve
these targets, but an actual stick to ensure compliance. At the
same time, a legal pathway to achieve this goal and avoid
preemption remains open, as our forthcoming report will discuss in
more detail. Instead, by reversing course with this decision, the
state now risks a delayed departure when it comes to more
sustainable air travel.