The Supreme Court considered a case where fuel producers challenged California's stringent auto emission regulations, arguing they caused reduced fuel sales. The key question was whether the producers had sufficient standing to sue, focusing on 'redressability' â whether a favorable ruling could actually remedy their injury.
Several justices suggested the fuel makers might have standing under existing precedents. However, there was significant discussion about whether a broad, categorical rule should be established to allow suits whenever a regulation indirectly affects a business.
The justices seemed to oppose the idea of a categorical rule applicable anytime government actions impede market participation. They emphasized the need for fact-specific analysis in determining standing.
The Justice Department argued that while the producers may have had standing initially, the situation changed as automakers adapted to the new standards. They claimed a win for the producers wouldn't necessarily increase fuel demand.
Justice Thomas pointed out that the reinstatement of California's standards aimed to reduce fuel demand, implying that it would be pointless otherwise. Justice Kagan highlighted California's evidence, which suggested that reversing the standards would increase greenhouse emissions.
The Court seemed unlikely to adopt a new categorical rule and instead favored adhering to existing, fact-specific standing rules. The final ruling is pending but is expected to follow this inclination.
The argument included discussion of the changing regulations under different administrations, referring to the âping-pongâ effect on fuel producers. The argument marked a significant milestone for Justice Department lawyer Edwin Kneedler, who finished his 160th argument before the court.
The US Supreme Court appeared likely to give fuel producers a narrow win on whether they can challenge government auto emissions regulations while rejecting their broader argument for a categorical rule allowing certain parties to sue whenever a regulation affects their business indirectly.
At the heart of the dispute argued on Wednesday are Californiaâs stringent pollution standards intended to tackle the climate crisis, which required a waiver of EPA emissions benchmarks. But the issue before the justices asks only whether energy companies can get their day in court.
In particular, the question is whether the fuel producers have shown that a ruling in their favor can actually âredressâ their injury of lower fuel sales they say are caused by California standards. âRedressabilityâ is one element of standing, meaning that the plaintiffs have the authority to bring a lawsuit.
Several justices suggested that the fuel makers would have standing under either the categorical rule, and the courtâs usual one, which is fact specific.
âIâm not seeing a huge gap,â said Justice Brett Kavanaugh.
Justices Amy Coney Barrett wondered why producers care which rule the court applies, except that they âwant to go for the big win.â
One issue complicating the analysis is that new administrations have reversed course several times since 2013, when the EPA first approved a waiver for California to adopt itâs own standards.
Fuel producers have been âping pongedâ around for the past several years, said Sullivan & Cromwell partner Jeffrey Wall, who represents Diamond Alternative Energy and other energy companies.
The Trump administration has said itâs reassessing the Biden administrationâs 2022 reinstatement of the waiver, after withdrawing it during Trumpâs first term. It asked the justices to put the argument on hold while that process played out. The court declined.
Justice Department lawyer Edwin Kneedler agreed that producers may have had standing in 2013. Applying the courtâs âcommon senseâ rule, he said it was reasonable for a court to assume at the time that the EPAâs waiver allowing Californiaâs more stringent standards for car manufacturers to go into effect would negatively affect fuel companies.
But thatâs not the case now, Kneedler said. Automakers have adjusted to the new standards and arenât expected to reverse course. Given that, a win for producers lifting Californiaâs rules wonât actually increase the demand for fuel, he said.
Justice Clarence Thomas noted the point of reinstating California standards during the Biden administration was to reduce fuel demand. He suggested reinstatement wouldâve been unnecessaryâand perhaps unlawfulâif it wasnât meant to actually do anything.
Justice Elena Kagan went further in saying that California actually made the producersâ case for standing for them. The stateâs own evidence said that reversal of Californiaâs standards would result in higher greenhouse emissions.
Thatâs âout of your mouth,â Kagan told California Deputy Solicitor General Joshua Klein.
But the justices appeared overwhelmingly against the argument that they needed a categorical rule that applies whenever the government impedes participation in a specific market, regardless of whether the regulations are on third parties.
By requiring car manufactures to produce more clean cars, the government has âtilted the playing fieldâ against fuel producers, Wall said.
Justices Sonia Sotomayor said an âabsolutestâ standing rule doesnât make sense. The standing inquiry is âalways a factual dispute,â she said.
Barrett suggested, for example, that producers would never have had standing if the auto companies were âon boardâ with lowering emissions standards even without government regulation.
Given that the case is likely to come out the same way, Kagan wondered why the court wouldnât just âstickâ with its usual rule rather than adopt a new one.
At the end of the argument, Chief Justice John Roberts noted that Kneedler had just completed his 160th argument at the court, calling it a modern record. Roberts also noted the argument was likely Kneedlerâs last. The longtime DOJ attorney announced his retirement after several decades in the Solicitor Generalâs Office.
The case is Diamond Alternative Energy LLC v. Environmental Protection Agency, U.S., No. 24-7, argued 4/23/25.
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