In the lawsuit, Tesoro claimed that planting corn and making ethanol from it will increase greenhouse gas emissions. Scientists have found that farmers are clearing more forests -- which can effectively absorb carbon emissions - to make way for ethanol cropland.

Tesoro said it wants the state to study the environmental and food price impacts of corn-based ethanol before implementing a rule that could nearly double the state's ethanol use.

It is obvious that California means well in making the requirement. California has been a leading state in adopting alternative energy and trying to encourage widespread use of technologies that could reduce air pollution. Critics claim that it contributes to global warming due to the processes involved (clearing of land, using fossil fuels to run the machinery that produce ethanol, it's low efficient, etc.) and that it drives up the prices of foodstuffs, since corn that would have gone into food is now going into fuel.

The outcome of this case should be interesting. It will let us know where things stand as far as state mandates for alternative energy and fuels.

Disclosure: I do not invest in TSO.