The future of America’s energy policy and property rights is at stake in the case of Diamond Alternative Energy, LLC, et al. v. Environmental Protection Agency, et al. This legal battle involves grassroots royalty owners and energy professionals who have taken on the Environmental Protection Agency (EPA) over its decision to allow California to set strict vehicle emission standards. These standards essentially create a national mandate for electric vehicles.
Mountain States Legal Foundation’s (MSLF) clients, the Texas Royalty Council (TRC) and the American Royalty Council (ARC), argue that the EPA’s action exceeds its authority, threatens their income streams and property rights across the country. MSLF stands with these royalty owners, challenging the EPA’s regulatory overreach, and insisting that significant policy changes, if any, should come from Congress, not just a federal agency. The outcome of the case will set a precedent for the balance of power between the government and the people it serves.
Case Background
The Biden-Harris Administration’s EPA granted the State of California a “waiver” that allows it to impose its state-based burdensome vehicle emission regulations, even if they are more burdensome than other federal or state standards. The mandates essentially force car manufacturers to transition to electric cars, as increasing limits on carbon dioxide emissions take effect. But by doing so, the EPA effectively permits California to control the national market, forcing everyone to abide by those limits. This has the obvious effect of sidestepping Congress and putting California in charge of nationwide vehicle policy. This case, however, challenges the EPA’s authority to grant such a waiver, arguing that it exceeds the agency’s statutory power, and violates the “major questions” doctrine, a legal principle that requires federal agencies to receive explicit permission from Congress to decide an issue that has significant economic or political consequences.
This problematic EPA waiver drastically reduces the demand for oil and gas, which several of the petitioners, including Diamond Alternative Energy, produce. With the demand for oil and gas decreasing, this means less revenue for those companies. As a result, royalty owners like the members of the TRC and ARC, who earn money based on the revenue generated from this fuel production, are seeing crippling decreases in their royalties, affecting their livelihood.
Unfortunately, the lower court dismissed the case on “standing” grounds.” To reach that result, the court invented a novel standard for “redressability”—the requirement that a favorable court decision would likely provide some relief to the plaintiff. In this instance, the court required non-party automakers to provide sworn statements from the automakers proving that canceling the EPA’s waiver would affirmatively result in fewer electric vehicles being made.
But this new requirement throws up unnecessary hurdles for plaintiffs—which could include fuel refiners, supply-chain companies who purchase vehicle fleets, and even royalty owners like MSLF’s clients—who are harmed by the EPA’s action and makes it harder for them to get their day in court. It also defies the intuitive logic that normally suffices in litigation: if an unlawful regulation threatens property rights, then setting aside that unlawful regulation stops—or redresses—the threat. So, if this ruling remains unchallenged, it could have far-reaching implications, potentially shielding many government actions from judicial review. This misapplication of the standing doctrine threatens the judiciary’s critical role in checking executive overreach and protecting property rights.
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The Stakeholders
At the forefront of this case are the TRC and the ARC, who represent a diverse group of royalty owners and energy professionals whose livelihoods are deeply intertwined with the oil and gas industry. TRC, a grassroots organization based in Texas, and ARC, a nationwide operation, advocate for individuals and families who derive much of their income from royalty payments. These royalty owners range from small family operations with multi-generational ties to their mineral rights to larger entities with significant investments in energy production.
The individuals represented by TRC and ARC are everyday Americans, just like you, who use their royalty income for essential expenses such as medicines, energy bills, and food. Their interests in oil and gas leases are not just economic, but are considered real property under the law, providing them with constitutional protections.
MSLF’s Role
MSLF filed an amicus curiae brief in support of the TRC and the ARC to protect the property rights of the royalty owners. A fundamental principle lies at the heart of this case: ensuring that government agencies, like the EPA, do not overstep their bounds. For MSLF, this case is about more than just emission standards. It’s about defending the constitutional protection of property rights against regulatory actions that could unfairly take away property without proper compensation. It’s about standing up to potential overreach by federal agencies, insisting that they stay within the limits set by law, and aren’t allowed to sidestep Congress. It’s about upholding the core American principle that major policy decisions, especially those with significant economic and political impacts, should be made through representative branches, and not by unelected bureaucrats.
MSLF is also fighting against the imposition of overly burdensome, unnecessary pleading requirements that make it difficult to litigate property rights issues. The lower court’s insistence that plaintiffs can’t walk into court unless they have sworn affidavits from major auto manufacturers creates an unreasonable barrier for plaintiffs seeking to challenge government actions that threatens their property interests. If allowed to stand, this precedent would pose a significant hurdle for individuals and smaller organizations just trying to protect their constitutional rights. MSLF seeks to ensure that courts remain accessible for those whose property rights are at risk, without imposing excessive evidentiary burdens at the early stages of litigation.
Ultimately, MSLF seeks to have the Supreme Court grant review of the case, overturn the D.C. Circuit’s dismissal of this case based on standing, and vacate the EPA’s waiver as unlawful. This would preserve our clients’ property rights by preventing a regulator-induced collapse in demand for oil and gas.
What’s at Stake?
For the royalty owners represented by the TRC and the ARC, the EPA’s waiver poses a serious threat to the demand for oil and gas. This could lead to a significant drop in royalty income, severely devaluing property rights in mineral and oil resources. And many ordinary citizens might lose the expected investment returns in these mineral rights. But beyond the financial impact, there’s a deeper worry about the erosion of their way of life and the sustainability of their communities, especially in rural areas that heavily depend on the oil and gas industry.
This case represents a significant shift in national transportation and energy policy, without approval from Congress. It raises crucial questions about the balance of power between federal and state authorities in setting de facto national standards, and the role of regulatory agencies in making decisions with wide-reaching economic and political impacts. Potential consequences include changes in consumer vehicle choices, possible increases in vehicle prices, and broader economic effects on the oil and gas industry, which could impact jobs and local economies nationwide.
February 2025 Update:
Mountain States Legal Foundation filed a second amicus brief in this case, this time focused on the merits of the question the Supreme Court of the United States agreed to consider, arguing that the lower court improperly created a new “redressability” standard that makes it more difficult for harmed entities to challenge harmful regulatory actions. This standard contradicts Supreme Court precedent and blocks businesses from accessing federal courts when regulations threaten their survival. The brief emphasizes that the EV Mandate was specifically designed to harm these entities and similar businesses, and they argue that the lower court’s ruling relies on procedural barriers to avoid addressing the economic and legal consequences of such regulations. Mountain States warns that this decision sets a dangerous precedent by allowing regulators to impose unchecked harm on businesses and property owners. Mountain States urges the Supreme Court to overturn the ruling and uphold access to judicial review for those harmed by regulatory overreach. For this second brief, Mountain States again represented the American Royalty Council and Texas Royalty Council, and in addition represented the National Association of Wholesaler-Distributors on the brief.
Case Timeline
- August 2024: MSLF filed amicus brief in support of TRC and ARC.
- December 2024: Supreme Court granted cert.
- February 2025: MSLF filed second amicus brief in support of TRC and ARC.
- June 2025: The Supreme Court of the United States ruled in a 7-2 decision holding that businesses suffering real, tangible harm from illegal regulatory actions have standing to challenge those actions in federal court, provided that judicial relief can address their injuries.
