California's effort to reduce the carbon footprint of producers and refiners of fuel has hit a snag. Shortly after the passage of the Global Warming Solutions Act (AB32), requiring reduction of greenhouse gases to 1990 levels by 2020, former California Governor Arnold Schwarzenegger signed an Executive Order setting a statewide goal of reducing "the carbon intensity of California's transportation fuels by at least 10 percent by 2020." Pursuant to this Executive Order, the California Air Resource Board (ARB) adopted the Low Carbon Fuel Standard (LCFS) in June 2007 as an early action measure under AB32. In April 2010, the regulation was formally adopted. On December 29, 2011, District Judge Lawrence O’Neill in the Eastern District of California issued a preliminary injunction blocking ARB from implementing LCFS.

The purpose of LCFS is to "reduce greenhouse gas emissions by reducing the full fuel-cycle, carbon intensity of the transportation fuel used in California." LCFS regulates transportation fuels that are sold, supplied, or offered for sale in California, and regulates any person who is responsible for the transportation of fuel. LCFS focuses on the "carbon intensity" of fuels to estimate emissions related to a fuel's lifecycle, including greenhouse gases emitted when fuel is extracted, refined, and transported to California. LCFS creates different standards for gasoline and diesel fuels that were to be gradually implemented.