Supreme Court Says Fuel Groups Have Standing to Fight Emissions Waiver

WASHINGTON — The Supreme Court on Friday held that fuel industry groups can challenge the Clean Air Act waiver granted by the Environmental Protection Agency that allowed California to set its own greenhouse gas emissions standards for vehicles.

A lower court, the D.C. Circuit, had ruled the industry groups did not have standing because they had failed to show that invalidating California’s emission standards would actually redress their claimed injury — namely a reduced demand for fuel.

However, writing for the 7-2 majority on Friday, Justice Brett Kavanaugh said the D.C. Circuit was mistaken and sent the case back so that it could consider the merits of the fuel producers’ legal claims.

The case strikes at a key provision of the Clean Air Act that has been in place since President Lyndon B. Johnson signed it into law in 1963. Its goal was to “protect and enhance the quality of the nation’s air resources so as to promote the public health and welfare and the productive capacity of its population.”

One of the ways the act sought to achieve that goal was by requiring all “new motor vehicles or new motor vehicle engines” sold in the United States to comply with certain emissions standards established by the Environmental Protection Agency.

To ensure that automakers would not have to comply with a competing patchwork of emissions standards set by various states, the act preempts state efforts to regulate vehicle emissions.

However, that provision contains an exception for the state of California, which was the only state whose efforts to regulate auto emissions predated the Clean Air Act.

Recognizing “California’s unique problems and pioneering efforts,” Congress allowed California to adopt more stringent emissions standards than the federal government.

As a result, under the current statute, California can obtain a pre-emption waiver that allows it to adopt emissions standards that are, “in the aggregate, at least as protective of public health and welfare as applicable federal standards.”

The EPA can override California’s standards, but only if it finds the state rules are “arbitrary and capricious,” not necessary to “meet compelling and extraordinary conditions” or incompatible with specific statutory requirements.

In the decades since, the agency has granted California dozens of preemption waivers for its emissions programs, including a 2013 waiver targeting greenhouse gases that is at the heart of the current lawsuit.

California’s program had two main components. First, it required automakers to ensure that a certain percentage of their vehicle fleets for model years 2017 to 2025 was composed of electric vehicles.

Second, it imposed fleet-wide limits on average greenhouse gas emissions; those fleet-wide emissions limits would gradually increase in stringency through model year 2025, at which point the limits would remain at 2025 levels permanently.

Nobody challenged the waiver in court, and California’s program went into effect without incident.

That changed during the first Trump administration, when in 2019 the EPA changed course and rescinded the waiver. It did so based on a finding that the program was not necessary to “meet compelling and extraordinary conditions.”

Three years later, during the Biden administration, EPA reversed its position again asserting the 2019 decision rested on an incorrect understanding of federal law.

Petrochemical companies and the fuel industry groups’ lawsuit followed shortly thereafter.

In their complaint, the plaintiffs argued EPA’s 2022 decision contravened the Clean Air Act and exceeded the agency’s statutory authority.

They also claimed the revival of California’s emissions standards would injure them by suppressing the sale of gas-powered vehicles and tamping down consumer demand for their fuel products.

During oral arguments, attorneys for California argued the fuel producers lacked standing because automobile manufacturers would not change course if EPA’s decision were vacated given the “surging consumer demand” for electric vehicles.

The majority, which besides Kavanaugh, included Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito, Jr., Elena Kagan and Amy Coney Barrett, agreed that the fuel producers had in fact suffered a monetary injury.

Justices Sonia Sotomayor and Ketanji Brown Jackson authored dissents.

In his opinion, Kavanaugh wrote that the fuel producers’ injury “in fact and causation are straightforward and undisputed.

“The fuel producers make money by selling fuel, so decreased purchases of gasoline and other liquid fuels resulting from California’s regulations constitute monetary injury,” he continued.

“EPA’s approval authorized California and 17 other states to enforce regulations requiring lower emissions and vehicle electrification, thereby reducing liquid fuel purchases.

“The regulations likely caused the fuel producers’ monetary injuries because reducing gasoline and diesel fuel consumption is the whole point of the regulations,” he said.

Kavanagh also took issue with the arguments put forth by California and the Biden-era EPA that the vehicle market had developed to the point that automakers committed to making electric vehicles would not manufacture more gasoline-powered cars even if the state regulations were invalidated.

“This argument is undermined by their own actions — if invalidating the regulations would change nothing, why are they enforcing and defending them?” Kavanaugh wrote. “The whole point of the regulations is to increase electric vehicles beyond what consumers would otherwise demand and manufacturers would otherwise produce.

“Record evidence confirms that invalidating the regulations would likely redress the fuel producers’ monetary injury,” he continued. “First, the fuel producers’ declarations quote California’s own estimates of substantial reductions in gasoline demand and note California’s recognition that fuel providers would be ‘most adversely affected.’

“Second, California stated in 2021 that the regulations are ‘critical’ for future emissions reductions and submitted expert declarations in 2022 stating that without the regulations, fewer electric vehicles would be sold and more gasoline-fueled vehicles would be sold,” he said.

In their dissents, both Sotomayor and Jackson note that the Trump administration is likely to withdraw the challenge rules, rendering the underlying case moot.

“I would simply have vacated the case and remanded it to the D. C. Circuit to reconsider its redressability analysis, keeping in mind the now corrected timeline for the challenged vehicle-emissions programs,” Sotomayor said.

As for Jackson, she worried where the ruling left the issue of standing as a matter of doctrine.

“Standing is a constitutional doctrine meant to promote judicial restraint,” she wrote. “By design, it ‘prevent[s] the judicial process from being used to usurp the powers of the political branches’ and ‘helps safeguard the Judiciary’s proper— and properly limited—role in our constitutional system.’

“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.,” Jackson said.

“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,” she continued. “The court shelves its usual case-selection standards to revive a fuel-industry lawsuit that all agree will soon be moot (and is largely moot already). And it rests its decision on a theory of standing that the court has refused to apply in cases brought by less powerful plaintiffs.

“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,” she concluded.

Dan can be reached at [email protected] and on X @DanMcCue