Diamond Alternative Energy, LLC v. EPA

In a 7-2 decision, the U.S. Supreme Court reversed the D.C. Circuit Court of Appeals and ruled that fuel producers had standing to challenge the Clean Air Act preemption waiver granted by the U.S. Environmental Protection Agency (EPA) for California’s Advanced Clean Cars I program regulations. The regulations impose fleet-wide limits on greenhouse gas emissions and mandate that automakers’ vehicle fleets sold in California include a certain percentage of zero emission vehicles. EPA granted a preemption waiver for the regulations in 2013 that was withdrawn in 2019. The fuel producers challenged the Biden administration’s 2022 rescission of the 2019 waiver withdrawal. EPA and California argued that the fuel producers did not have standing to challenge the waiver because setting it aside and invalidating the California regulations would not result in automakers manufacturing more gasoline-powered vehicles and would therefore not redress the fuel producers’ alleged injury. The Court described the injury and causation elements of standing as “straightforward,” finding that the regulations “likely cause” decreased purchases of gasoline and other liquid fuels and therefore “likely cause” monetary injuries to the fuel producers. Regarding the disputed element of redressability, the Court found that setting aside the preemption waiver and invalidating the California regulations “would likely redress at least some of the fuel producers’ monetary injuries” by resulting in more revenue from additional liquid fuel sales. The Court reasoned that it was not necessary to determine whether the fuel producers had standing based on their possible status an “object” of the California regulations. Instead, the Court found that the fuel producers “readily demonstrated” standing by applying “commonsense economic principles” regarding the impacts of regulation on the automobile market supplemented with record evidence from the fuel producers, EPA, California, and vehicle manufacturers. The Court rejected EPA and California’s argument that the fuel producers should be required to produce additional evidence regarding the impact of invalidating California’s regulations and also found that the case “does not present the unusual scenario where invalidating a challenged government restriction on businesses in a competitive market is not likely to have any effect.” Noting that its decision did not concern the merits of the fuel producers’ case, the Court remanded to the D.C. Circuit for further proceedings. Justice Sotomayor dissented, writing that the D.C. Circuit’s decision on the fuel producers’ standing was based on a factual misunderstanding that the entirety of the California regulations expired with vehicle model year 2025. She therefore would have vacated and remanded to the D.C. Circuit for reconsideration of the redressability analysis. Justice Jackson also dissented, writing that by agreeing to hear, and rendering a decision in, a case that was “largely moot already” and would soon be moot due to the Trump administration’s anticipated withdrawal of the waiver, the Court “gives fodder to the unfortunate perception that moneyed interests enjoy an easier road to relief in this Court than ordinary citizens.” Justice Jackson said the Court’s “insistence on resolving the standing question in this case strains our usual case-selection standards, which are highly selective,” and that the Court’s ruling, while it amounted “to little more than error correction in the context of a dispute that all agree will be over soon in any event,” would “no doubt aid future attempts by the fuel industry to attack the Clean Air Act.” Justice Jackson wrote that the Court’s standing analysis “also invites questions about inconsistent decisionmaking and whether this Court is holding business litigants to the same standards as everyone else.”

–

–

–

Eleven amicus briefs were filed in support of the fuel producers. Our Children’s Trust, the public interest law firm representing the plaintiffs in Juliana v. United States, filed an amicus brief, along with Public Justice, in support of neither petitioners nor respondents. They argued that the redressability element of standing could be satisfied where a plaintiff requests prospective relief “at least as coercive as a declaratory judgment.”

–

–

–

The Supreme Court granted a certiorari petition filed by fuel producers to the extent the petition sought review of the D.C. Circuit’s conclusion that the fuel producers lacked standing to challenge the U.S. Environmental Protection Agency’s (EPA’s) grant of a preemption waiver for California’s Advanced Clean Car Program regulations because they failed to allege that a successful challenge to the waiver would redress their alleged economic injuries. The Court granted review of the question of whether a party can establish the redressability component of standing “by relying on the coercive and predictable effects of regulation on third parties,” in this case, third-party automakers. The fuel producers argued that the preemption waiver would have the “obvious” and “predictable” effect of causing automakers to make and sell more electric vehicles, and that elimination of the waiver would result in automakers making more vehicles that run on liquid fuel.