Supreme Court lets fuel producers challenge California’s limits on car emissions and production of gas-powered vehicles
Case Name and Number: Diamond Alternative Energy, LLC v. EPA., No. 24-7
Introduction: Today, the Supreme Court held in a 7-2 decision that fuel producers not directly regulated by California vehicle emissions standards have Article III standing to challenge EPA’s approval of those standards.
Background:. The Environmental Protection Agency (EPA) granted California a Clean Air Act waiver to implement regulations that require automakers to manufacture more electric vehicles and fewer gasoline-powered vehicles and lower emissions. Gasoline producers sued EPA, arguing that it lacked authority to grant the waiver. California and other states intervened, arguing that the fuel producers lacked Article III standing because judicial relief would not redress their alleged injury—decreased gasoline purchases as a result of California’s regulations. The D.C. Circuit held that the fuel producers lacked standing because the evidence in the record did not show that automakers would produce more vehicles requiring gasoline and fewer electric vehicles if the regulations were invalidated.
Issue: Whether a party that is not the direct object of government regulation may establish the redressability component of Article III standing based on the predicted effects of that regulation.
Court’s Holding: In an opinion written by Justice Kavanaugh, the Supreme Court held that the fuel producers satisfied the redressability component of standing by submitting evidence that automakers would likely manufacture more gasoline-powered vehicles if a court vacated EPA’s waiver grant for the California regulations.
The Court held that the fuel producers’ injury is redressable even though the California regulations do not regulate them directly. The Court explained that invalidating the regulations would “likely” impact the fuel producers sales for several reasons: the fuel producers’ declarations pointed to historic reduction in fuel sales from California’s emissions regulations; California had predicted that the regulations would reduce the demand for gasoline and increase electric vehicle sales; EPA had said the regulations would reduce fuel consumption; and automakers supporting the regulations were seeking to protect their investments in electric vehicles.
The Court also acknowledged that there are “rare instances” where market changes may be relevant in determining the indirect impact of regulations. The Court explained that it is difficult for courts to predict the impact of regulations on market participants.
The Court rejected a standing requirement, propounded by California and EPA, that the fuel producers submit evidence on the regulations’ effect from expert economists or automakers. The Court reasoned that showing a predictable causal chain is enough to establish redressability.
Justices Sotomayor and Jackson each authored dissenting opinions, suggesting that the court should not have addressed the standing issue and vacated the case, given that that EPA is very likely to soon withdraw California’s waiver.
The Court’s decision will make it easier for industry plaintiffs to challenge environmental standards that do not directly regulate them by demonstrating downstream economic injuries from those standards.
Read the opinion here.