On June 20, 2025, the U.S. Supreme Court delivered a 7–2 ruling in Diamond Alternative Energy v. EPA, granting fuel producers “standing” to challenge the EPA’s 2022 approval of California’s vehicle emissions standards waiver.
At the simplest level, standing means the legal right to bring a lawsuit. Legally, the concept of Article III standing comes from Article III, Section 2 of the U.S. Constitution, which determines who has the right to file suit in federal courts. There are three elements courts must look at to determine standing:
- Injury in fact
- Causation
- Redressability
Penning the majority decision, Justice Brett Kavanaugh wrote:
“To begin, the injury in fact and causation elements of the fuel producers’ standing, which no party disputes, are straightforward. As for injury in fact, the fuel producers make money by selling fuel. Therefore, the decrease in purchases of gasoline and other liquid fuels resulting from the California regulations hurts their bottom line. Those monetary costs ‘are of course an injury.’
“As for causation, EPA’s approval authorized California (and ultimately 17 other States) to enforce regulations that require lower fleet-wide greenhouse-gas (GHG) emissions and the electrification of automakers’ vehicle fleets, thereby reducing purchases of liquid fuels such as gasoline. The regulations likely cause fuel producers’ monetary injuries because the regulations likely cause a decrease in purchases of gasoline and other liquid fuels for automobiles. Indeed, that is the whole point of the regulations.
“As for redressability, invalidating the California regulations would likely redress at least some of the fuel producers’ monetary injuries. Even ‘one dollar’ of additional revenue for the fuel producers would satisfy the redressability component of Article III standing.”
California waiver background
The Clean Air Act (CAA) doesn’t allow states to adopt or enforce emissions standards for new motor vehicle engines or for new motor vehicles.
Because California had its own clean air regulations for vehicle emissions before the creation of the federal CAA, Congress wrote Section 209(b), allowing California to request a waiver on that prohibition, which allows the state to create stronger air regulations than those enforced federally.
Section 209(b) requires the EPA to grant California’s waivers unless the Agency administrator finds that:
- The state “was arbitrary and capricious in its finding that its standards are, in the aggregate, at least as protective of public health and welfare as applicable federal standards.”
- The state “does not need such standards to meet compelling and extraordinary conditions.”
- “[S]uch standards and accompanying enforcement procedures are not consistent with Section 202(a) of the [CAA].”
At the time the CAA was implemented, California was already way ahead of the federal government in regulating emissions and smog. This is why Congress, under the CAA, provided California with the specific ability to adopt emissions requirements to meet its significant air quality challenges.
SCOTUS deliberations
The fuel producers were opposed by both the EPA and the state of California.
In the majority opinion, Kavanaugh wrote the EPA and California’s arguments weren’t persuasive.
“EPA and California push back on that reasoning, asserting that this case is unusual and does not fit the typical pattern. They suggest 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.
“To begin with, that is an odd argument for EPA and California to advance. After all, if invalidating the regulations would change nothing in the market, why are EPA and California enforcing and defending the regulations? 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.”
Kavanaugh also noted that California, in asking the EPA to reinstate the regulations in 2021, previously stated the regulations are “critical not just for immediate emissions reductions” but also for “greater emission reductions in the future.” And California’s experts specifically “opined that absent California’s regulations, ‘fewer’ electric vehicles ‘are likely to be sold than would otherwise have been … and thus additional gasoline-fueled vehicles would be sold.’”
In summary, Kavanaugh said that “it is at least ‘predictable’ that invalidating the California regulations would likely result in the fuel producers ultimately selling more gasoline and other liquid fuels.”
Strong dissent suggests SCOTUS isn’t acting impartially
Justice Sonia Sotomayor penned a strongly worded dissent arguing that there was no need for SCOTUS to hear this case.
Standing, she wrote, is meant to promote judicial restraint.
“But standing doctrine cannot serve that important purpose if the Judiciary fails to apply it evenhandedly. When courts adjust standing requirements to let certain litigants challenge the actions of the political branches but preclude suits by others with similar injuries, standing doctrine cannot perform its constraining function. Over time, such selectivity begets judicial overreach and erodes public trust in the impartiality of judicial decision-making. Today’s ruling runs the risk of setting us down that path.”
Sotomayor strongly objected to SCOTUS hearing this case because:
- It revives a fuel industry lawsuit that all agree will soon be moot (and is largely moot already).
- It rests its decision on a theory of standing that the Court has refused to apply in cases brought by less powerful plaintiffs.
- The Court had several other options:
- It could have denied certiorari, recognizing that one of the core components of California’s emissions program—the electric vehicle mandate—will sunset when model-year 2025 ends.
- Alternatively, the Court could have deferred its decision in this case until after the EPA concludes its reassessment of the waiver, as the government requested.
- A third option, once certiorari was granted, would have been to simply vacate the judgment and remand the case to the D.C. Circuit, knowing that court’s original decision “appeared to rest, at least in part, on the erroneous factual assumption that California’s entire emissions program—and not just its electric-vehicle mandate—would sunset with model year 2025.”
Sotomayor also questioned the fact that SCOTUS didn’t explain its reasoning for agreeing to hear the case when doing so meant abandoning long-standing criteria for selecting a case for SCOTUS review.
“For some, this silence will only harden their sense that the Court softens its certiorari standards when evaluating petitions from moneyed interests, looking past the jurisdictional defects or other vehicle problems that would typically doom petitions from other parties,” she wrote.
“This case gives fodder to the unfortunate perception that moneyed interests enjoy an easier road to relief in this Court than ordinary citizens. Because the Court had ample opportunity to avoid that result, I respectfully dissent.
“Our ruling will no doubt aid future attempts by the fuel industry to attack the [CAA]. But Article III requires a live case or controversy, not merely the potential that a favorable judgment will help the plaintiff in some future lawsuit.”
She also worries that “the fuel industry’s gain comes at a reputational cost for this Court, which is already viewed by many as being overly sympathetic to corporate interests. And even the mere ‘appearance’ of favoritism, founded or not, can ‘undermin[e] confidence in the integrity of the judiciary.’
“Time will tell if today’s decision portends a broader shift in the Court’s view of Article III standing for all litigants. If it does not, and if the Court is not fastidious in maintaining consistency across its certiorari decisions and substantive rulings, its decisions will come to represent, like so many marble façades, another mere facsimile of justice.”
EPA decision
President Donald J. Trump recently signed into law three Congressional Review Act (CRA) resolutions disapproving California’s vehicle emissions waivers. Congressional disapproval of California’s electric vehicle mandates is another step toward ending the electric vehicle mandate on all Americans pursuant to Trump’s “Unleashing American Energy” Executive Order.
This decision “is relevant to other California waivers because the CRA has a provision prohibiting agencies from issuing future ‘rules’ that are ‘substantially the same’ as the disapproved ones,” according to law firm Holland & Knight LLP. “California and other states have filed a lawsuit challenging the legality of CRA efforts.”
Decision raises more questions
As summarized by the Harvard Law School Environmental & Energy Law Program, questions raised by the SCOTUS decision include:
- “How will the Court reconcile this case with the narrower approaches to standing highlighted by Justice Jackson in dissent, as well as in TransUnion v. Ramirez, authored by Justice Kavanaugh?
- Will the Court require non-industry plaintiffs such as states and NGOs (non-governmental organizations) to focus on economic harms of regulations to prove standing? If petitioners can show ‘just one dollar’ of economic harm based on health care costs or other personal expenses, will that be compelling to the Court?
- Will court extend the approach endorsed here to find standing based on non-economic injuries as well?
- Will this approach to standing for industry petitioners with de minimis likely economic harm from a regulation result in a wider set of federal courts hearing challenges to federal regulations?”