A US District Court decision last month against California's low carbon fuel standard jeopardizes projects aimed at producing lower carbon fuels, the California Air Resources Board said in a motion asking the court for a stay against the standard.

"In the absence of a stay, fuel producers that have invested in lower carbon fuels are unable to recoup those investments," CARB said in the motion, which was sent to reporters on Saturday.

"For example, a biodiesel plant in Washington State anticipated selling 45 million gallons on its low-carbon biediesel in California in 2012 under the low carbon fuel standard," CARB said. The state's fuel standard, which aims to cut greenhouse gas emissions by ranking fuels based on their carbon intensity, "was a major component of the justification for this company's investment," the motion said.

A US District Court judge last month barred California from enforcing its low carbon fuel standard because it violates the US Constitution's Commerce Clause by improperly discriminating against out-of-state sources of ethanol and crude oil.

Judge Lawrence O'Neill granted a motion for summary judgment by the National Petrochemical and Refiners Association, one of several plaintiffs in the case challenging the California law. He also partially granted a summary judgment motion from the Renewable Fuels Association and other ethanol groups that had challenged the California rule.

O'Neill agreed with the plaintiffs that by assigning a lower greenhouse gas emissions score to ethanol produced in the state, California's standard improperly discriminates against ethanol produced in the Midwest and elsewhere. He found that the California law, while aimed at reducing the emission of GHGs, "discriminates against interstate commerce by design and in practical effect." ETHANOL INDUSTRY SAID TO 'THRIVE' UNDER STANDARD

But CARB argued that the US ethanol industry "thrived" throughout 2011 with the fuel standard "in full effect."

"Midwest ethanol flowed freely into California and into new markets around the globe, with both production and exports setting records in 2011," CARB said.

The agency said that "some" Midwest ethanol producers benefitted form the fuel standard since Midwest ethanol "obtained a 1-2 cent per gallon price premium for sales into California." CARB said that the judge's finding of future injury is unsupported and plaintiffs "allegations of future injuries were highly disputed.

CARB argued that in the absence of demand that the fuel standard would have created, "this producer expects a decreased market demand for this product in California, which may prevent it from recovering its investments or from retaining all of its employees."

CARB did not identify the biodiesel producer, and calls to board spokesmen were not returned.

Elsewhere, CARB said that the court's orders are "jeopardizing investment in the construction of a renewable diesel facility in Illinois... [and] two foreign cellulosic ethanol producers invested substantial time and reseources preparing to enter California's market under the LCFS and now see those investments in jeopardy."

CARB's 32-page motion also provided a glimpse of how the agency might implement the low carbon fuel standard should it ultimately prevail in an appeal of O'Neill's ruling.

Under a "new approach," CARB's high carbon intensity crude oil distinction will be "eliminated entirely," CARB said. At the end of each year, using actual data and individualized carbon intensity values for each crude, CARB will calculate the average carbon intensity of California?s crude oil for that year, the agency said. "If the average carbon intensity is higher than that of 2010, all regulated gasoline refiners will incur an incremental deficit based on that increase in average carbon intensity," the motion said.

"Refiners will then need to offset the incremental deficit by acquiring credits through buying lower carbon intensity alternative fuels or LCFS credits," CARB said.