Possible SCOTUS case could upend emission targets, EV plans

Vehicle emissions continue to be a point of contention between lawmakers and car manufacturers, but that dynamic could be about to change.

Why do businesses resist environmental policy?

• Penalties for failing to uphold government guidelines can be severe. In a recent example, General Motors has agreed to pay nearly $150 million in fines for failing to meet emissions standards.

• The penalty comes after a government probe comparing the company’s original compliance reports with actual performance found discrepancies. The Environmental Protection Agency (EPA) says that models made between 2012 and 2018 released greenhouse gasses at a rate 10% faster than the automaker claimed.

• As a result, not only will GM pay the massive fine, it will also lose 50 million tons-worth of carbon allowances, a punishment that could result in additional fines down the road if the manufacturer fails to implement even tighter emissions standards.

Why the tides could be changing

• While GM is preparing to make the payment, the Supreme Court is weighing whether or not to hear a lawsuit led by petroleum refiner Valero Energy over California’s emission policies, which take an even more aggressive stance than the EPA’s guidelines.

• The plaintiffs in the case hope to argue that the agency’s decision to allow the state to set its own clean air standards conflict with the Supreme Court’s 2022 ruling in West Virginia v. EPA. In that case, the court ended the long-held doctrine that federal regulators could set policies with a major impact without congressional approval.

• Should the court hear this case, there is a likelihood it will side with the plaintiffs, as it has recently taken a more critical stance of the power of federal agencies. For instance, a ruling last month upended the “Chevron” doctrine, which required courts to defer to regulator interpretations of policy.

• Multiple states have since adopted California’s standards, which aim to heavily accelerate electrification across the automotive sector. Removing their power to govern their environment could have drastic implications for the car industry.

Bottom line: Tension between government regulators and various business sectors is nothing new, especially in the realm of climate change. Unlike previously, however, industry and court interests seem to be aligning, putting electrification plans in question if the Supreme Court continues its hardline stance against the EPA.

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