On June 20, 2025, the Supreme Court issued it opinion in Diamond Alternative Energy v. EPA, holding fuel producers had standing—and had specifically demonstrated redressability—to challenge California-specific regulations EPA approved under the Clean Air Act.  The Court’s opinion  reversing and remanding to the D.C. Circuit left the merits of the case for another day, but acknowledged that the regulations at issue may be rescinded shortly, mooting most, if not all, of the parties’ controversy.

The California-specific regulations challenged were first adopted in 2012, and generally required automakers to limit greenhouse gas emissions in the cars sold in California and to manufacture a certain percentage of electric vehicles for their California fleet.  EPA allowed the regulations to go into effect in 2013, but in 2019, EPA rescinded its approval of the regulations.  In 2022, EPA reinstated approval of the regulations and fuel producers brought the instant case.  The fuel producers’ core objection to the regulations was that demand for their products—gasoline, diesel, and ethanol—is depressed by the regulations.  Indeed, California noted the regulation was likely to reduce demand for gasoline by over $10 billion by 2030.

Initially, EPA did not challenge standing, but California did so after their motion to intervene and defend the regulations in the D.C. Circuit was granted.  Once in the case, California argued that the fuel producers lacked standing because they had not established that automobile manufacturers would change course if the regulations were vacated.  The D.C. Circuit agreed, finding the fuel producers failed to cite any evidence of record or file affidavits supporting their position that automakers would produce fewer electric and more gas-powered vehicles if the regulations were invalidated.  Without such evidence, the D.C. Circuit concluded that redressability was lacking and thus the fuel producers lacked standing.

Justice Kavanaugh, writing for the seven-Justice majority, reversed, and began the Court’s analysis by noting that only the redressability element was at issue; causation and injury-in-fact were not meaningfully disputed.  With respect to redressability for parties not specifically regulated, the Court noted that regulations have upstream and downstream effects in the market, and that “commonsense economic principles” were all that was needed to support the fuel producers’ standing.  That is, standing was established because “commonsense economic inferences about the operation of the automobile market—combined with the statements of the fuel producers, California, EPA, and the vehicle manufacturers—make is sufficiently ‘predictable’ that invalidating California’s regulations would likely redress the fuel producers’ injury.” 

In so holding, the Court dismissed EPA and California’s arguments that the fuel producers should have been required to introduce evidence from the automakers, expert economists, or others demonstrating how invalidation of the regulation would redress their injury.  Rather, pointing to a “predictable chain of events” that would likely result from judicial relief is all that is required.  The Court further cautioned that the redressability requirement should not be misused “to prevent targets of government regulations from challenging regulations that threaten their businesses” and that “the government generally may not target a business or industry through stringent and allegedly unlawful regulation, and then evade the resulting lawsuits by claiming that the targets of its regulation should be locked out of court as unaffected bystanders.” 

The Diamond Alternative Energy v. EPA decision provides a strong basis for both regulated entities as well as upstream and downstream entities affected by regulations to establish to challenge regulatory effects in court.  While evidence supporting how a regulation affects the party seeking relief is recommended, those parties may also rely on commonsense assumptions about markets to support the right to their requested relief. 

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