At a time when the federal government is openly hostile to actions to address the climate crisis, climate leadership from states like California is more important than ever. But Governor Newsom and the California Air Resources Board (CARB) are falling short. Instead of stepping up to the challenge, Newsom and CARB have allowed one of California’s flagship climate programs, the Low Carbon Fuel Standard (LCFS), to be hijacked by Big Ag and their friends in the fossil fuel industry. The industries are capitalizing on “factory farm biogas” and CARB’s massive incentives for its production under the LCFS. Factory farm biogas is produced when factory farms put manure into anaerobic digesters, essentially large pits or tanks designed to generate “biogas” (methane, carbon dioxide, and other trace gases). CARB has issued new LCFS rules that double down on factory farm gas incentives.

Biogas has become big business, with the oil and gas industry investing billions of dollars in recent years and the Wall Street Journal calling it “a gold rush in cow manure.”  And the biggest driver is California’s LCFS program. The LCFS awards large numbers of “credits” for factory farm gas, which fossil fuel companies then purchase and use to greenwash their operations while continuing their polluting business as usual. This has turned a program intended to deliver clean air and real climate progress into a slush fund for the biggest, most polluting factory farms in California and in communities across the country.

Even though this is a California program, its impacts and perverse incentives to build and expand factory farms are rippling across the nation. Even factory farms in Wisconsin and Iowa can sell their biogas into the program—and they are. Large out-of-state factory farms are increasingly taking advantage of the LCFS to create new revenue streams from their massive amounts of pollution, further tilting the playing field in favor of larger and larger factory farm operations. This also means that smaller family farms struggling to compete under “get big or get out” ag policies are put under yet more pressure. Only large factory farms have the capital to install the expensive digesters needed to produce factory farm gas and reap these new LCFS profits. In addition, digesters only work at scale—smaller family farms simply don’t generate the massive amounts of manure needed to run them.

Similarly, because smaller, more sustainable farms don’t have massive climate emissions to begin with, they can’t claim the LCFS credits awarded to factory farms that are supposedly reducing their emissions when they produce and capture factory farm gas. Simply put, this scheme rewards the biggest polluters with the biggest payouts. The result of this backwards policy is that livestock operations of all sizes and types are encouraged to get bigger and pollute more, while actually adding more pollution into local communities.

That’s why we’re suing CARB for doubling down on massive incentives for the false solution of factory farm gas in the LCFS through its new regulations. Our lawsuit seeks to bring CARB and the LCFS back in line with the law and to protect communities in California and across the country.

What Is the LCFS?

The LCFS is a transportation fuel program that was designed to encourage the production of alternative fuels to reduce greenhouse gas emissions in California. It does this by creating a market of credits that can be traded between fossil fuel companies and alternative fuel producers. CARB assigns each transportation fuel a different “carbon intensity” rating that represents how many credits a producer of that fuel can get from the LCFS. The idea is that shifting to alternative fuels with lower climate emissions will reduce petroleum dependence while improving air quality and climate impacts. However, the program’s treatment of factory farm gas has undermined its effectiveness and integrity.

The LCFS Encourages Factory Farms to Pollute

California has more mega-dairies than any other state, with most located in its Central Valley. Many communities there are already dealing with a disproportionate amount of air and water pollution from the dairy industry, and the way CARB is rewarding factory farm pollution through the LCFS is making things worse.

Newsom and CARB are subsidizing the creation of biogas (and other factory farm pollution) by creating a market for factory farms to sell their gas to the transportation sector through the LCFS’ credit scheme. The program has put a massive thumb on the scale in favor of biogas by assigning it a negative carbon score—essentially treating factory farms that install digesters as though they are pulling methane out of the air. The LCFS accomplishes this trick through a concept called “avoided methane crediting.” Avoided methane crediting rewards factory farms for the captured methane that does not go into the atmosphere, even though their practices produced the methane pollution in the first place. This means that when a factory farm can sell its gas as fuel, it receives many valuable credits for its supposedly clean energy. The factory farm can then sell these credits to, say, a diesel company. Because diesel has a high carbon intensity rating, under state law, the company must either sell less diesel or buy a certain number of credits to “offset” its emissions. Avoided methane crediting for biogas means diesel companies keep burning diesel, and factory farms keep getting bigger.

Biogas’ negative carbon intensity rating incentivizes factory farms to consolidate and expand to generate more credits and thus more profit. Even media outlets for the dairy lobby have noted that this consolidation is driven by energy revenue (read: manure), not food production, and may have unintended consequences for milk production, supply, and price. This has led to expansion at factory farms in disproportionately low-income communities and communities of color in California, which are already experiencing the worst of large livestock pollution as mega-dairies pollute more to cash in on the LCFS.

More animals on factory farms also means more climate emissions, undermining the whole purpose of the LCFS. CARB doesn’t properly account for all the emissions associated with factory farms, like enteric emissions (cow burps and farts), methane leaks, and increased emissions from the leftover waste after digestion, called digestate. But because digesters capture some methane and “avoided methane crediting” treats this as being cleaner than solar and wind energy, CARB looks the other way and issues lavish rewards for those who pollute the most.

Fighting to Protect Communities and the Climate, not Corporate Profits

The LCFS has it all wrong when it comes to factory farms’ climate emissions. That’s why we are challenging CARB’s LCFS scheme under the California Environmental Quality Act, Global Warming Solutions Act, and California Administrative Procedure Act. Part of why the LCFS has gone off the rails so badly is that CARB is ignoring the guardrails put in place by the California legislature when it authorized CARB to create climate programs like the LCFS. These include requirements to ensure the Program does not disproportionately harm vulnerable communities and that it is not just enriching factory farms for no benefit to the climate. Our lawsuit seeks to fix that.

This mismanagement takes us further away from farming that works for people and the planet. It further entrenches a system that prioritizes corporate profit at the expense of a livable climate, animal welfare, and public health. If California wants to prevent methane emissions, it can mandate better waste management practices at factory farms to far more effectively deal with the problem. Instead, Newson and CARB would rather shoehorn agricultural policy into a transportation program, resulting in bad policy and outcomes for both. California can and should directly regulate climate emissions from factory farms instead of monetizing and rewarding them. Factory farm biogas is not the climate fix CARB and the factory farm industry would have you believe; our litigation will expose this false solution for what it really is.

Petitioners are Defensores del Valle Central para el Aire y Agua Limpio, Food & Water Watch, Animal Legal Defense Fund, and Center for Food Safety. Defensores is represented by Leadership Counsel for Justice and Accountability, the Law Office of Brent Newell, and Shute, Mihaly & Weinberger LLP. Food & Water Watch and Center for Food Safety are represented by Food & Water Watch.