California is suing the U.S. Environmental Protection Agency (EPA) in the U.S. District Court for the District of Columbia. It alleges that EPA unlawfully reclassified the state’s Clean Air Act waivers as rules open to disapproval under the Congressional Review Act. On September 2, 2026, the court granted California a preliminary injunction, and EPA has appealed to the D.C. Circuit.
Latest development Sep 2, 2026
On September 2, 2026, the U.S. District Court for the District of Columbia granted California a preliminary injunction against the U.S. Environmental Protection Agency (EPA). It also denied EPA’s motion to dismiss and held that California was likely to succeed on its Administrative Procedure Act claim. The court ordered EPA to restore the waivers’ prior status as adjudicatory orders, and EPA has since appealed to the D.C. Circuit.
Why it matters
The dispute will decide whether the U.S. Environmental Protection Agency (EPA) can relabel California’s Clean Air Act waivers as rules open to fast-track disapproval under the Congressional Review Act. The answer affects California’s power to set stricter vehicle emissions standards, the states that adopt them, and automakers’ compliance obligations.
Background
In June 2026, the U.S. Environmental Protection Agency (EPA), under Administrator Lee Zeldin, reclassified four Clean Air Act Section 209(b) preemption waivers, some dating back to 2009. It announced that it would treat them as “rules” subject to the Congressional Review Act (CRA), not as adjudicatory orders, and submitted them to Congress for possible disapproval. The waivers let California set vehicle emissions standards stricter than federal requirements, and other states may also adopt those standards. On June 22, 2026, California, Governor Gavin Newsom, and the California Air Resources Board (CARB) sued EPA and Zeldin in the U.S. District Court for the District of Columbia. They argued that the reclassification violated the Administrative Procedure Act (APA) and exceeded EPA’s statutory authority.
On July 22, 2026, while the suit was pending, EPA reclassified two additional waivers, covering ocean-going ships and harbor craft, and California expanded its challenge. California argued that the waivers had always been final adjudicatory orders, not rules. It contended that EPA’s relabeling was designed to strip the state of APA protections and expose the waivers to CRA disapproval. Congress had already used that fast-track process in 2025 to disapprove three earlier California waivers, a dispute pending in the U.S. District Court for the Northern District of California. EPA countered that the reclassification was unreviewable and that California had no cause of action until Congress actually passed a disapproval resolution.
On September 2, 2026, Judge Beryl A. Howell granted California’s motion for a preliminary injunction and denied EPA’s motion to dismiss. She held that California was likely to succeed on its APA claim and ordered EPA to restore the waivers to their prior status as adjudicatory orders. She reasoned that the waivers could not be “rules” under the CRA unless they also qualified as rules under the APA. The ruling left open the broader question of whether Congress can use the CRA to strip California of its waiver authority. The U.S. Court of Appeals for the Sixth Circuit had answered that question differently in a related dispute.
On September 15, 2026, EPA filed a notice of appeal to the U.S. Court of Appeals for the District of Columbia Circuit. The D.C. Circuit docketed the appeal as No. 26-5336 on September 22, 2026. The merits of California’s APA and ultra vires claims remain pending before Judge Howell. The case continues alongside California’s separate Northern District of California suit over Congress’s 2025 disapproval resolutions.
Timeline 10 events
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OrderD.C. Circuit dockets EPA’s appeal as No. 26-5336
The appeal was formally docketed at the U.S. Court of Appeals for the District of Columbia Circuit, which will review the district court’s injunction.
State of California v. EPA, et al 26-5336EPA Appeals Court Ruling That Restored California Waivers Supporting EV Mandate
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AppealEPA files notice of appeal
The Trump administration appealed Judge Howell’s injunction and denial of its motion to dismiss to the D.C. Circuit.
Trump Admin Appeals Block Of EPA Repeal Of California WaiverTrump Administration Appeals Ruling Blocking EPA From Sending California Auto Emissions Rules to Congress
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AppealEPA appeals injunction to the D.C. Circuit
The Trump administration filed a notice of appeal asking the U.S. Court of Appeals for the District of Columbia Circuit to overturn the preliminary injunction.
Trump Admin Appeals Block Of EPA Repeal Of California WaiverState of California v. EPA, et al 26-5336
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JudgmentCourt grants California preliminary injunction, denies motion to dismiss
Judge Howell ruled that California was likely to succeed on its APA claim and ordered EPA to restore the waivers’ prior status. She wrote that EPA had urged the court to “engage in Orwellian doublethink.”
US Judge Bars EPA Effort to Send California Vehicle Emissions Rules to CongressCourt Stalls EPA Plan to Override California's Vehicle Pollution Standards
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JudgmentCourt grants California a preliminary injunction
Judge Howell found California likely to succeed on its APA claim, denied EPA’s motion to dismiss, and ordered EPA to restore the waivers’ prior status.
District Court Enjoins EPA From Reclassifying California's Clean Air Act WaiversJudge Blocks EPA Attempt To Repeal California Clean Air Act
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HearingCourt hears argument on preliminary injunction motion
Judge Howell heard argument from California and Justice Department attorney Robert Stander on whether the waivers were reviewable rules or unreviewable orders.
Judge set to vaporize EPA bid to end California emissions standards
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OtherEPA reclassifies two more California waivers as rules
EPA extended its reclassification to waivers covering equipment such as ocean-going vessels and commercial harbor craft, bringing the total number of affected waivers to six.
Judge Smacks Down EPA's Attempt to Revoke Six of California's Waivers
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OtherEPA reclassifies two more waivers as rules
While the suit was pending, EPA submitted a report to Congress describing two additional California waivers, covering ships and harbor craft, as rules.
District Court Enjoins EPA From Reclassifying California's Clean Air Act Waivers
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FilingCalifornia moves for a preliminary injunction
California asked the court to restore the status quo under 5 U.S.C. § 705, arguing EPA’s reclassification caused irreparable harm.
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FilingCalifornia sues EPA over waiver reclassification
California, Governor Gavin Newsom, and CARB sued in the U.S. District Court for the District of Columbia. They challenged EPA’s decision to treat four Clean Air Act waivers as rules reviewable under the CRA.
Experimental AI forecast
How it is madeHow will the D.C. Circuit resolve EPA’s appeal of the September 2, 2026, preliminary injunction (No. 26-5336) by September 30, 2027?
- D.C. Circuit upholds California injunction38%
- D.C. Circuit sets aside injunction25%
- Still pending on September 30, 202718%
- EPA appeal dismissed or mooted12%
- D.C. Circuit narrows the injunction7%
- Resolves by
- Sep 30, 2027in 12 months
- Record confidence
- Medium
The D.C. Circuit is most likely to uphold California’s preliminary injunction, at 38%, by September 30, 2027. Deferential review of a detailed ruling on a statutory question favors affirmance. A novel legal question, a related Sixth Circuit ruling pointing the other way, and the chance the appeal is mooted keep the outcome open.
How it resolves. Resolved by the D.C. Circuit’s public docket and opinions in No. 26-5336. “Affirms” means the court upholds the preliminary injunction in full. “Reverses or vacates” means the court sets aside the injunction in full. “Partly affirms” means the court upholds some of the relief and narrows, vacates, or remands the rest. “Appeal dismissed” covers dismissal as moot, for lack of jurisdiction, or by voluntary withdrawal before a merits ruling. “Still pending” applies if none of these has occurred by September 30, 2027. Rulings on stay motions alone do not resolve the question.
Reasoning
Starting point. Federal courts of appeals reviewing preliminary injunctions against federal agencies in APA cases: Appellate courts affirm most preliminary injunctions under deferential abuse-of-discretion review, roughly 60% to 70%, though government appellants fare somewhat better than private ones.
Preliminary injunctions are reviewed for abuse of discretion, and appellate courts affirm most of them, often around 60% to 70%. The district court denied EPA’s motion to dismiss and found California likely to succeed on a clear textual theory that CRA rules must also be APA rules. That posture supports affirmance. EPA’s reviewability and ripeness arguments are serious, though, and the Sixth Circuit resolved a related question differently. The order also requires EPA to restore the waivers’ prior status, which invites scrutiny of the scope of relief and supports some chance of a narrowed ruling. Interlocutory appeals of injunctions usually move faster than ordinary civil appeals, so a decision within about 12 months is more likely than not. Mootness is a real alternative, because the merits remain before the district court and a final judgment could overtake the appeal. Reversal, at 25%, is the leading alternative to affirmance.
Deferential abuse-of-discretion review of preliminary injunctions · Novel question on reviewability of EPA’s reclassification · Sixth Circuit’s contrary answer in a related dispute · District court merits ruling could moot the appeal · Mandatory scope of relief may invite narrowing
Generated automatically by Claude Opus 5.5 on Sep 26, 2026 from this case’s record on this site, and published without editorial review. The probabilities are the model’s judgment, not measured frequencies, and they are scored publicly as cases resolve. Not legal or investment advice. How the forecasts are made
What it would mean
If the D.C. Circuit upholds the injunction, no money changes hands between the parties. The six waivers would stay outside the Congressional Review Act’s fast track for now, and the car, truck, small-engine, and maritime standards they support would remain in force. Regulated industries would keep carrying those costs. CARB put the at-berth rule for ocean-going vessels at about $2.2B and the harbor craft amendments at about $1.8B to $2.0B through 2038. An affirmance would not end the case, because the merits remain in the district court.
The larger consequences follow if the D.C. Circuit sets the injunction aside. EPA could restore the “rule” labels, and Congress could then vote on resolutions to disapprove the reclassified waivers. If disapprovals passed, vessel operators could avoid much of the roughly $2.2B at-berth cost and the $1.8B to $2.0B harbor craft cost. California would lose standards that CARB says avoid about $2.3B in at-berth health harms. States that adopted California’s rules would lose them too. A new suit, like the pending Northern District of California case, would likely follow.
Money, who pays, markets and what to watch
Two steps ahead. If the district court reaches final judgment first, the injunction appeal could become moot, and the fight would restart as a merits appeal. Even an EPA win disapproves nothing by itself. Congress must still pass resolutions, and any disapproval would face the reviewability fight already pending in California. Vessel operators weighing further spending on the roughly $2.2B at-berth rule face that double contingency.
The money
- Ocean-going vessel operators: $2.2B. CARB’s published cost of the 2020 Control Measure for Ocean-Going Vessels At Berth ($2.23B). This is compliance spending by container, reefer, cruise, and other vessel operators that stays required while the waiver stands. It would be avoided only if the waiver were later disapproved and the disapproval survived challenge. It is not a transfer to California. Spread over the rule’s compliance period, which began in 2023. Some of it is already spent. The appeal itself moves no cash.[1][2]
- Commercial harbor craft operators: $1.8B to $2B. CARB’s regulatory impact assessment for the Commercial Harbor Craft amendments: $2.0B in amortized costs from 2023 through 2038, or $1.8B net of $229M in savings. The costs fall on tug, ferry, and other harbor craft operators while the waiver stands. Spread from 2023 through 2038. The appeal itself moves no cash. Costs would be avoided only after a disapproval that survives review.[3]
Who pays
- No damages are sought. The case decides whether EPA’s labels stand, so the United States pays no money award under any outcome.
- The standards’ costs fall on regulated operators. CARB estimated $2.23B for the at-berth rule and $2.0B gross ($1.8B net) for the harbor craft amendments from 2023 through 2038.[1][3]
- More than $450M has already been invested in carrying out California’s at-berth program. That money is sunk whichever way the appeal goes.[2]
- California taxpayers share part of the burden. The state set aside $60M in compliance aid for harbor craft operators and other affected groups.[4]
- Ten other states joined California’s challenge to the 2025 disapprovals. Their residents and automakers bear the effects of whether the California standards survive.[5]
Markets
- No listed company has disclosed a reserve or exposure tied to this case. The at-berth rule covers container, refrigerated cargo, and cruise vessels calling at California ports.[1]
- Industry experts estimated harbor craft compliance costs could reach $5M per vessel. A pre-pandemic estimate put the fleet-wide cost at $1.3B.[6][4]
- Vessel owners have spent an estimated $500,000 to $1.1M per ship on shore-power retrofits to meet the at-berth rule.[2]
- Credit demand had already fallen for federal reasons. Tesla’s regulatory credit revenue fell $620M, or 30%, in the first nine months of 2025. Its 10-K ties a $3.84B drop in remaining performance obligations partly to the One Big Beautiful Bill Act (OBBBA).[7][8]
Collecting
- There is no money to collect. The relief is EPA’s compliance with the order to restore the waivers’ status as adjudicatory orders, which the district court can enforce directly.
- The injunction binds EPA, not Congress. The court held it cannot interfere with legislative activity, so the threatened disapproval itself was not redressable.[9]
- As written, the injunction also bars EPA from reclassifying other waiver orders as rules. EPA can seek a stay pending appeal from the D.C. Circuit.[9]
Beyond the parties
- EPA has granted California more than 100 waivers, and none had previously been treated as rules. A D.C. Circuit ruling on relabeling old orders would bind agency cases in that circuit. The Sixth Circuit’s contrary view could invite Supreme Court review.[10]
- The related Northern District of California case covers Advanced Clean Cars II. CARB’s assessment put that rule’s cost to automakers at $30.2B from 2026 to 2040, against more than $80B in net savings.[5][11]
- California estimates that losing these standards could cost residents about $45B in preventable health care costs. CARB valued the at-berth rule’s avoided health harms at $2.32B.[12][1]
- Communities near the ports of Los Angeles, Long Beach, and Richmond are most exposed to port pollution. The at-berth program has cut emissions from covered fleets by 80%.[2][1]
What to watch
- Late 2026D.C. Circuit sets briefing in No. 26-5336 and rules on any EPA stay request
- Late 2026The district court proceeds on the merits of the APA and ultra vires claims. A final judgment could moot the appeal of the preliminary injunction.
- Late 2026Congress acts on or lets lapse the pending disapproval resolutions for the reclassified waivers before the 119th Congress (2025–2026) ends[9][13][14]
- No date setNorthern District of California rules on California’s challenge to the 2025 disapproval resolutions. The Ninth Circuit let some trade groups intervene in that case.[5]
Sources
- Control Measure for Ocean-Going Vessels At Berth ww2.arb.ca.gov
- Protect California’s At-Berth Regulation pacificenvironment.org · 2026-09
- Summary: Commercial Harbor Craft SRIA dof.ca.gov
- California Mariners Speak Out On Commercial Harbor Craft Rule waterwaysjournal.net · 2023-11-10
- California v. United States climatecasechart.com · 2026-07-21
- EPA Approves California’s Controversial Harbor Craft Emissions Rule Despite Industry Safety Concerns gcaptain.com · 2025-01-09
- Tesla, Inc. Form 10-Q for quarter ended September 30, 2025 sec.gov
- Tesla, Inc. Form 10-K for fiscal year 2025 sec.gov
- District Court Enjoins EPA From Reclassifying California’s Clean Air Act Waivers arnoldporter.com · 2026-09
- Court Stalls EPA Plan to Override California’s Vehicle Pollution Standards insideclimatenews.org · 2026-09-03
- The ZEV Program in Advanced Clean Cars II: Explained atlasevhub.com · 2022-12-14
- What Is the Congressional Review Act? How It Affects California’s Clean Air envirovoters.org · 2026-08-21
- EPA Again Fulfills Its Statutory Obligation by Transmitting Two Additional California Waiver Rules to Congress epa.gov · 2026-07-22
- H.J.Res.88, 119th Congress (2025-2026) congress.gov
Experimental AI analysis by Claude Opus 5.5 on Sep 26, 2026, built on the forecast above from this case’s record and public sources found by the model’s own web search. Figures are estimates as of the dates shown, and shares of value are computed by the site from the figures cited. Published without editorial review. Nothing here predicts the price of any security or is investment advice. How it is made