Imagine you’re an automaker. The federal government says your gas-powered vehicles are fine. But California steps in—with EPA approval—and tells you they’re not. Who gets to challenge that? Only the fuel suppliers footing the bill? Or the manufacturers whose fleets are directly targeted?
According to the U.S. Supreme Court: both.
That’s more or less what happened in Diamond Alternative Energy LLC v. EPA, a case about electric vehicle mandates masquerading as a fight about standing. On June 20, the Court ruled that fuel companies have standing to challenge a 2022 EPA decision allowing California to enforce tougher emissions standards than the federal government. The decision didn’t settle who’s right on the merits—but it cleared the way for a fight that could reshape national climate policy and the auto industry’s future, at least during the Trump administration.
And it all hinges on California’s decades-old hall pass from the Clean Air Act.
California’s “Golden Ticket”
Most states have to follow the EPA’s emissions rules. California does not. Thanks to an obscure provision in the Clean Air Act, California can ask the EPA for permission to set its own, stricter vehicle emissions standards—on the theory that the state faces “compelling and extraordinary conditions.” Smog-choked valleys? Sure. Global climate change? That’s where it gets spicy.
Over the last 20 years, California has repeatedly used its waiver authority to push automakers toward electrification. Sometimes the EPA says yes. Sometimes no. And depending on the administration, yes can become no, and no can become yes again.
Here’s the timeline whiplash:
- 2008 (Bush): EPA says no—you can regulate local smog, not the global climate.
- 2013 (Obama): EPA says yes—bring on the EV mandates.
- 2019 (Trump): EPA says no again.
- 2022 (Biden): EPA says yes, and adds even more teeth through 2035.
Each reversal comes with hundreds of pages of federal register entries. (For the masochists: 28 Fed. Reg. 10319; 73 Fed. Reg. 12156-57, 12168; 78 Fed. Reg. 2112; 84 Fed. Reg. 51328; 87 Fed. Reg. 14333.) But here’s the headline: California’s EV mandates are in effect again—at least for now.
Why Fuel Companies Sued (And Why the Supreme Court Let Them)
In Diamond, a group of fuel producers sued the EPA for giving California the green light. Their complaint? That EPA overstepped its authority by approving California’s regulations targeting global climate change—when the Clean Air Act only permits California to regulate emissions tied to local air quality problems.
Of course, the plaintiffs also had practical concerns. Seventeen other states have already opted to follow California’s standards instead of the EPA’s. So what starts in Sacramento doesn’t stay in Sacramento—and fuel producers (and manufacturers) know it.
The EPA responded with a shrug: Relax—automakers would be going electric anyway.
SCOTUS wasn’t buying it.
Writing for the majority, Justice Kavanaugh put it this way: if the rules don’t matter, why enforce them? The very point of California’s regulations is to push the market harder and faster toward electrification than it would go on its own.
So who’s harmed by that extra push? Not just automakers, but the fuel companies supplying the gasoline those cars won’t need. The Court pointed to a basic principle: when the government restricts Company A from using Company B’s product, both companies may be “objects” of regulation—and thus have standing to sue.
As the opinion put it: ban aluminum bats in Little League, and it’s not just the teams that can complain. The bat makers can too.
So What Now?
The Supreme Court didn’t rule on the legality of California’s EV mandates—it just said the plaintiffs can proceed. The case now heads back to the D.C. Circuit to decide whether EPA was right to approve California’s plan in the first place.
But the stakes are enormous. This case is about more than who sets tailpipe standards. It’s about who gets to shape the national energy economy.
If the plaintiffs win, California’s ability to lead the charge on climate regulations could be clipped. If they lose, expect more states to follow California’s model—maybe even leapfrogging federal policy entirely.
Why General Counsel Should Care
If you’re a GC for an automaker, a logistics firm, a fuel supplier, or even a fleet-heavy business in a California-following state—this case is worth tracking. The outcome could determine which vehicles you can sell, build, or operate in nearly half the country.
And if the EPA’s regulatory pendulum keeps swinging every four years, the bigger legal question may not be environmental—it may be constitutional. How far can one agency go in delegating environmental authority to a single state?
Watch This Space
The D.C. Circuit hasn’t yet ruled on the merits. But the table is set. We’ll be watching to see whether California’s EV mandate survives—or whether the Supreme Court winds up answering a much bigger question than standing.
Because in environmental law, as in Little League, it’s not just the players who get to sue. It’s anyone who’s benched by the rules.
Cover photo by Michael Marais on Unsplash