Washington D.C., June 20, 2025 - In a decision of broad impact for the nation's environmental and regulatory future, the U.S. Supreme Court ruled yesterday that fossil fuel companies, along with 17 Republican-led states, do have standing to sue against California's environmental exemption under the Clean Air Act.
This waiver, in place since 1967, allows the state to apply more stringent vehicle emissions standards than federal standards. In 2022, the Environmental Protection Agency (EPA) reaffirmed that prerogative. However, companies such as Diamond Alternative Energy, owned by Valero, along with several states, claimed that these standards hinder their operations and hurt their business.
By a 7-2 majority, the Court reversed a lower court's decision and concluded that these companies have sufficient direct interest to litigate, although it did not rule on the merits of the case. Californians and environmental advocates warned that this could unleash a cascade of legal challenges aimed at weakening or blocking the state's climate regulation.
In a vehement dissent, Justice Ketanji Brown Jackson stated that this ruling reinforces the perception that the Court favors “powerful economic interests” over citizen welfare.
Legal analysts agree that this ruling does not disable California's rules for now, but it does allow oil companies to raise specific challenges in federal courts. At the heart of the case is the debate over whether the state can set standards different from those of the federal government without explicit congressional approval.