US Supreme Court to decide if fuel companies can sue over California EV mandate

The US Supreme Court has agreed to decide whether the fossil fuel industry has legal standing to challenge California's authority to impose a mandate requiring manufacturers to meet sales targets for electric vehicles in the state.

In a Dec. 13 order, the court accepted a petition by Diamond Alternative Energy and others to review whether a lower court erred in rejecting a challenge by fuel sellers to the US Environmental Protection Agency's provision of a Clean Air Act waiver letting California set its own vehicle emissions standards through model year 2025. Diamond is a Valero Energy subsidiary that manufactures biomass-based liquid fuels.

The Clean Air Act bars states from imposing their own vehicle emissions standards, but it specifically grants California the right to petition the EPA for a waiver as long as the state's standards are at least as stringent as federal requirements. While California is the only state to have a waiver, its decisions have national importance, as numerous other states have adopted California's emissions standards.

Diamond joined the American Fuel & Petrochemical Manufacturers, the National Association of Convenience Stores, agricultural groups and others on July 2 in asking the Supreme Court to review an April decision by the US Court of Appeals for the District of Columbia Circuit that found the industry groups lacked standing to challenge the EPA waiver.

The DC Circuit denied the challenge, saying there was no evidence the fuel companies' complaint would be redressed even if the EPA waiver were vacated, as automakers would likely not be able to change their fleets before the waiver's expiration.

Addressing redressability

In its order, the Supreme Court said it would take up only the question of redressability and would not address the bigger question raised by Diamond and its fellow petitioners as to whether the EPA's waiver for California is lawful.

In a Dec. 16 statement, the convenience stores association's general counsel, Doug Kantor, praised the Supreme Court's decision to accept the petition. "The question of who decides vehicle standards for the nation is too important for courts to hide behind unsupported legal technicalities of 'standing,'" Kantor said. "We need a federal standard that makes the entire nation's interests in lower emissions and a strong economy its priority rather than arbitrarily picking one technology over others, regardless of results."

Meanwhile, on Dec. 16 the Supreme Court rejected a separate petition by Ohio Attorney General Dave Yost (R) and counterparts in 16 other Republican-led states asking for a review of the DC Circuit's decision. The states' petition asked the Supreme Court to rule that the Clean Air Act's provision granting California the right to set its own emissions standards is illegal because it gives California powers that other states lack and thus violates the principle that states have equal sovereignty.

In its order rejecting the states' case, the Supreme Court noted that Justice Clarence Thomas "would grant the petition."

In a Dec. 16 press release, the Environmental Defense Fund praised the California emissions waiver and said it would continue working to defend the state's emissions standards.

Policy shifts

The California waiver that Diamond and the states are challenging was first granted by the EPA in 2013 under President Barack Obama and covers vehicle model years 2015-2025. The waiver allowed the state to implement its Advanced Clean Car standards, which require that 22% of total new light-duty vehicle sales in California be zero-emission electric vehicles or plug-in hybrids by model year 2025.

However, the EPA rescinded that waiver in 2019, under President Donald Trump. The agency then reversed itself yet again following the election of President Joe Biden, reinstating the waiver in 2022.

With Trump heading back to the White House next month, more controversy over California's emissions standards seems likely. Last year the state asked the EPA for another waiver, which would expand its EV mandate through a new set of standards called Advanced Clean Car II. Under that program, California would gradually increase its EV requirement starting in model year 2026, with all new cars and light trucks sold in the state required to be electric by model year 2035. The EPA has yet to make a decision on that waiver request.