US Supreme Court threatens California’s law-making authority on EVs

Tony Verhelle

June 24, 2025

The US Supreme Court issued a ruling contesting the right of the State of California to have more stringent emission standards /US Supreme Court

The US Supreme Court has revived a challenge by fuel producers against California’s strict vehicle emissions rules, casting doubt on the state’s planned 2035 ban on new gasoline cars. The ruling could significantly impact EV policy leadership in the largest US car market.

The conservative-dominated Supreme Court has granted fuel producers the right to challenge California’s authority to impose its own emissions standards, potentially upending one of the most progressive and far-sighted EV adoption plans in the country.

The court’s decision allows the legal challenge to proceed against a 2022 Environmental Protection Agency (EPA) waiver that had reinstated California’s autonomy under the federal Clean Air Act.

This comes after oil and gas companies, along with 17 Republican-led states, challenged the waiver, which allowed the Golden State to enforce stricter emission standards than the federal level. These standards included the state’s plan to end sales of new gasoline-powered vehicles by 2035, like in the EU.

Justice Brett Kavanaugh, writing for the majority, stated: “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.”

Contesting regulations

The question is straightforward: can entities, such as Valero Energy’s alternative fuels subsidiary, have the legal standing to contest regulations that, while aimed at reducing emissions and promoting EVs, indirectly affect fuel producers’ business models? The Supreme Court reversed a lower court ruling that had dismissed the suit on those grounds.

The EPA’s authority to grant California more stringent standards stems from decades of precedent under the Clean Air Act, which has allowed the state, due to its severe air quality challenges and market size, to serve as a de facto national policy driver. California has historically been granted over 100 such waivers.

This latest ruling by the Supreme Court is part of a broader trend of clipping the power of regulatory agencies in environmental policy domains. Already in 2022 and 2023, under the Biden administration, several rulings have weakened the EPA’s authority over environmental issues, such as carbon emissions and water protections.

The Supreme Court, which has a 6-3 conservative majority, has taken a skeptical view of broad authority for federal regulatory agencies and has restricted the EPA’s powers in some important rulings in recent years.

In 2024, the court blocked the EPA’s ‘Good Neighbor’ rule aimed at reducing ozone emissions that may worsen air pollution in neighboring states. In 2023, the court hobbled the EPA’s power to protect wetlands and fight water pollution. In 2022, it imposed limits on the agency’s authority under the Clean Air Act to reduce carbon emissions from coal- and gas-fired power plants.

Liberal Justices Ketanji Brown Jackson and Sonia Sotomayor dissented from Friday’s decision. Jackson, in her dissent, criticized the court for taking on and deciding the case when the electric-vehicle mandate “will terminate in just a few months.”
Noting the powerful corporate interests involved, Jackson said, “The court’s remarkably lenient approach to standing in this case contrasts starkly with the stern stance it has taken in cases concerning the rights of ordinary citizens. This case gives fodder to the unfortunate perception that moneyed interests enjoy an easier road to relief in this court than ordinary citizens.”

California’s leading role

The decision arrives just weeks after President Donald Trump signed a congressional resolution to overturn California’s 2035 combustion vehicle ban, an action that has already drawn legal fire from California and a coalition of supportive states.
For electric mobility, the consequences could be significant. The news agency Reuters notes that California accounts for nearly 12% of all US car sales. Moreover, its EV policies have set the pace for nationwide OEM strategies and supply chain investments. A court-sanctioned rollback of California’s authority could inject uncertainty into long-term decarbonisation efforts, ZEV credit programs, and OEM planning.
“While we are disappointed by the Supreme Court’s decision to allow this case to go forward in the lower court, we will continue to defend California’s authority under the Clean Air Act vigorously,” California Attorney General Rob Bonta said in a statement on Friday.
“Congress intended for California to be able to regulate emissions from new vehicles sold in our state, and we remain firmly committed to advancing and implementing strong standards that safeguard public health and reduce climate pollution. The fight for clean air is far from over,” Bonta said.

Legal ambiguity

Fossil fuel producers argue the EPA has overstepped, claiming the waiver tilts the market unfairly by artificially suppressing liquid fuel demand. California and environmental advocates counter that the state’s policies are crucial for achieving its climate targets and scaling up electric vehicle (EV) adoption.
This case now returns to lower courts for full consideration, potentially prolonging legal ambiguity as automakers continue electrification efforts under a cloud of regulatory instability.
With federal emissions rulemaking already contested and fragmented across states, the decision deepens the fault lines in America’s e-mobility landscape at a critical moment.

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