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By Dan Levine and Rory Carroll
SAN FRANCISCO, Jan 22 (Reuters) - A U.S. appeals court on Wednesday refused to revisit a ruling which upheld California's low carbon fuel standard aimed at reducing transportation-related greenhouse gas emissions, according to a court filing.
A three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco upheld California's regulations last year. In a decision released on Wednesday, the 9th Circuit refused to rehear the case before a larger panel of judges. The case could still be appealed to the U.S. Supreme Court.
The state's low carbon fuel standard (LCFS) requires reductions in carbon emissions for fuels to be measured throughout the lifecycle - including production and transportation as well as ultimate use. Out-of-state fuel producers argue that it discriminates against their products and favors California-produced fuels, which are not transported as far.
Out-of-state oil and ethanol producers sued the state over the standard and a federal judge in Fresno, California agreed with them in 2011, but that decision was eventually overturned by the appeal's court last year.
Writing for the majority, Judge Ronald M. Gould said California is within its rights to implement laws designed to reduce greenhouse gas emissions.
"While a state may not mandate compliance with its preferred policies in wholly out-of-state transactions, it may regulate commerce within its boundaries even if one of its goals is to influence the out-of-state choices of market participants," he said. "This is what California permissibly has done with the LCFS."
In a strongly worded dissent, seven judges said California was that the LCFS threatens to "Balkanize our national economy."
"Our federal system grants states substantial discretion to remedy perceived local problems. But the Constitution sharply constrains their power to do so at the expense of other states," said Judge Milan D. Smith.
Plaintiffs in the case said they will be evaluating their legal options in the coming weeks. An appeal is expected.
"Although the LCFS clearly discriminates against fuels produced in other states and violates the Commerce Clause of the U.S. Constitution, the Ninth Circuit Court of Appeals chose to deny our petition and uphold this biased law," said Richard Moskowitz, general counsel for the American Fuel & Petrochemical Manufacturers, one of the plaintiffs in the case.
(Reporting by Dan Levine and Rory Carroll; Editing by Jonathan Oatis and Meredith Mazzilli)