Friday evening, May 16th, the California Air Resources Board (CARB) announced that it had resubmitted modified Proposed Amendments to the Low Carbon Fuel Standard (LCFS) to the California Office of Administrative Law (OAL). In this Flash Report we catch you up on the regulatory process underway and highlight what’s new with this May 16th resubmission.
Background
On November 8, 2024, CARB approved Proposed Amendments to the LCFS Regulation, and on January 3, 2025, CARB staff submitted a final rulemaking package to OAL for review. On February 18, 2025, OAL disapproved the rulemaking package. CARB then had 120 days to rewrite and resubmit the amendments to OAL for reconsideration. CARB determined that some changes were appropriate and developed proposed modifications. Following review of comments submitted during the ensuing 15-day public comment period, CARB determined that no further changes to the modified text were required. The Proposed Amendments, as modified, were submitted to OAL on May 16, 2025.
Key Changes to the LCFS Amendment package
CARB’s resubmission of the amendments to OAL includes refined regulatory text with improved clarity in definitions and requirements to better align with administrative law standards and OAL’s feedback. CARB confirmed that the modifications do not result in new or more severe environmental impacts, addressing OAL’s concerns about regulatory compliance and environmental review.
Request for an Early Effective Date
As part of the resubmission package, CARB filed a formal request to OAL for an “earlier effective date.” Specifically, CARB requested that the amendments be made effective July 1, 2025 (the day after the deadline for 1Q2025 LCFS reporting). CARB argues that an earlier effective date is necessary to provide market certainty and prevent confusion. If the default effective date of October 1, 2025, were used, two different annual CI reduction standards could apply during 2025, leading to potential disruption and volatility in the LCFS credit market and the broader transportation fuel market. The LCFS program relies on annual carbon intensity reduction standards that affect business decisions, investments, and contracts. Delays in implementing the new standards could disrupt these activities and negatively impact programs dependent on LCFS revenues. There is precedent for such a move as OAL has previously granted early effective dates for similar LCFS amendments to maintain market stability.
What’s Next?
OAL has 30 working days from the resubmittal date to make a determination on the resubmitted LCFS rulemaking package. As such, OAL’s deadline is June 30th. If OAL approves the rulemaking package and grants CARB’s requested effective date, the updated LCFS regulation would be effective July 1, 2025. If not, CARB will need to consider next steps consistent with requirements of California’s Administrative Procedures Act and OAL’s feedback.
