The U.S. Supreme Court ruled that oil and ethanol producers had standing to challenge the U.S. Environmental Protection Agency’s (EPA) approval of California’s vehicle emissions waivers that allow the state to set emissions standards that were stricter than the federal standards.
In a 7-2 decision, the Court ruled on June 20, 2025 that the fuel producers have standing. “The government generally may not target a business or industry through stringent and allegedly unlawful regulation, and then evade the resulting lawsuits by claiming that the targets of its regulation should be locked out of court as unaffected bystanders,” Justice Brett Kavanaugh wrote in Diamond Alternative Energy v. EPA.
The Clean Air Act (CAA) authorizes California to request a waiver from the law’s emissions standards in order to set its own, higher emissions standards. The fuel producers argued that the California vehicle emissions regulations reduce the manufacture and sale of cars gasoline-powered cars, causing a decrease in sales of those fuels. The fuel producers argue that invalidating the regulations would allow them to fully compete in the market.
Kavanaugh dismissed as “odd” the EPA and California suggestion “that the new vehicle market has developed in a way that even if the California regulations are invalidated, automakers would not likely manufacture or sell more gasoline-powered cars than they do now.”
“After all, if invalidating the regulations would change nothing in the market, why are EPA and California enforcing and defending the regulations?,” Kavanaugh wrote. “The whole point of the regulations is to increase the number of electric vehicles in the new automobile market beyond what consumers would otherwise demand and what automakers would otherwise manufacture and sell. And EPA and California are presumably defending the regulations because they think that the regulations still make a difference in the market.”
The decision reverses a U.S. Court of Appeals for the D.C. Circuit decision and remands the case to be considered on its legal merits. The decision will likely make it easier for oil companies and fuel producers to challenge future vehicle emissions rules.
The Environmental Defense Fund (EDF) noted that the case “did not address California’s longstanding Clean Air Act Authority or the merits of the state’s Advanced Clean Car I standards, which are unaltered by the Court’s decision and remain in full force and effect.”
The EDF stated that the Court declined to review a challenge to the constitutionality of the Clean Air Act provision that authorizes California’s standards, leaving in place the D.C. Appeals Court decision rejecting those constitutional challenges.
The decision comes a week after President Donald Trump signed into law three resolutions that repeal California vehicle emissions waivers. California is challenging the repeal in court.