Justices Rule for Fuel Producers in California Emissions Suit (2)

The US Supreme Court sided with fuel producers, saying they should be able to get their day in court to challenge California’s stringent vehicle emissions standards.

Writing for a 7-2 court on Friday, Justice Brett Kavanaugh said the producers have “standing,” or the ability to sue over the standards because a ruling in their favor would “redress” their legal harm.

The US Court of Appeals for the D.C. Circuit dismissed the claims by businesses, saying they hadn’t shown how a ruling undoing the standards would affect the cost of fuel. The Supreme Court reversed the lower court ruling, finding that “commonsense economic principles support the fuel producers’ standing.”

It’s likely “that invalidating the California regulations would result in more revenue for the fuel producers from additional sales of gasoline and other liquid fuels,” Kavanaugh said.

At the heart of the dispute are stringent state pollution standards intended to tackle the climate crisis, which required a waiver of EPA emissions benchmarks. But the issue before the justices asked only whether energy companies could sue.

The Biden administration waived the EPA’s own vehicle-emissions standards, allowing the California ones to take effect. The court notes that President Donald Trump has directed EPA to again reconsider approval of California standards.

On June 12, Trump signed a Congressional Review Act resolution terminating other waivers, prompting a lawsuit from a coalition of states led by California.

Justice Ketanji Brown Jackson filed a dissenting opinion that said the court’s “ruling today amounts to little more than error correction in the context of a dispute that all agree will be over soon in any event.” She was referencing the action already taken by Trump.

Downstream Effects

In siding with the fuel makers, the court emphasized that even a dollar of additional revenue would satisfy the redressability requirement of standing. California’s regulation of automakers “will likely ‘cause downstream or upstream economic injuries to others in the chain,’ such as producers of gasoline and other liquid fuels,” Kavanaugh wrote.

California and the federal government argued that this case is unusual and doesn’t follow commonsense economic principles. They say the market has changed and consumer demand for fuel efficient vehicle is such that automakers would be unlikely to manufacture more gasoline-powered cars even if California’s standards were invalidated.

That “is an odd argument,” Kavanaugh wrote. “After all, if invalidating the regulations would change nothing in the market, why are EPA and California enforcing and defending the regulations?”

Jackson criticized the majority for expanding standing requirements to allow some litigants to sue but not others. “Over time, such selectivity begets judicial overreach and erodes public trust in the impartiality of judicial decisionmaking,” she said.

Justice Sonia Sotomayor also wrote a dissenting opinion.

More Cases

The opinion will affect several live petitions in the DC Circuit, some brought by fuels producers, that lean on third-party standing, as engine manufacturers have reached deals with California to abide by environmental standards regardless of how litigation pans out, said Brian Bunger, a land use and environment partner at Holland & Knight LLP.

But it shouldn’t impact California and a coalition of states’ legal challenge to the CRA resolution signed by Trump to overturn waivers allowing the state to regulate on electric vehicles and emissions, two lawyers said. The waiver in this case is different than the ones that were subject to the CRA resolution.

“Standing is an important, cross-cutting issue,” said attorney Sean Hoe Donahue of Donahue & Goldberg, LLP, who represents the public interest organizations in the Diamond case. “It’s often important to environmental plaintiffs that they get their day in court. That issue is separate from the issue of the merits of these programs.” The court didn’t rule on the merits.

The case is Diamond Alternative Energy LLC v. Environmental Protection Agency, U.S., No. 24-7, 6/20/25.