California’s controversial new fuel rules rejected by state legal office

In a surprising twist, California’s controversial new fuel standard — a key part of its effort to replace fossil fuels — has been rejected by the state agency that reviews the legality of state regulations.

The fuel standard enacted by the Air Resources Board last year was the subject of a rancorous debate, largely because it will potentially increase the price of gasoline and diesel fuels by an unknown amount.

The rules were rejected by the state Office of Administrative Law, a state agency whose mandate is to ensure “regulations are clear, necessary, legally valid, and available to the public.” The law office informed the air board that the rule does not conform with a provision in state code that requires “clarity” in rulemaking “so that the meaning of regulations will be easily understood by those persons directly affected by them.”

The air board said it would review the order and then resubmit the rules, which would be required within 120 days. Any substantial changes, however, would require a delay, including a public comment period.

The low carbon fuels program, which offers financial incentives to companies to produce cleaner transportation fuels, aims to help transition the state away from fossil fuels that contribute to smog and other air pollution and greenhouse gases that warm the planet.

The program, which has existed since 2011, is a $2-billion credit trading system that requires fuels sold in California to become progressively cleaner, while giving companies financial incentives to produce less-polluting fuels, such as biofuels made from soybeans or cow manure.

In an initial assessment released in 2023, the air board projected that the new rules could potentially raise the price of diesel by 59 cents per gallon and gasoline by 47 cents. But air board officials later disavowed that estimate, saying that the analysis “should not be misconstrued as a prediction of the future credit price nor as a direct impact on prices at the pump.”

A report by the University of Pennsylvania’s Kleinman Center for Energy Policy predicted that the fuel standard changes could increase the cost of gas by 85 cents a gallon through 2030.

Republican legislators, who protested the rule and introduced a bill to repeal it, applauded the law office’s decision to reject them.

“Families in this state are already grappling with soaring living costs, and a gas price hike of 65 cents or more will only deepen their financial strain,” Sen. Rosilicie Ochoa Bogh, a Republican from Redlands, said in a statement. “It’s deeply frustrating that the governor’s administration ignored calls for reconsideration from the start.”

Supporters say the new rules are necessary to keep California on track for its ambitious climate goals, including net-zero emissions by 2045. But critics have warned that the new standards could push gas prices even higher in a state where drivers already pay some of the highest fuel costs in the nation.

The air board last month was forced to abandon other climate and air pollution rules that would have cleaned up truck and train emissions because the Trump administration would reject granting them waivers.