Clearing the Air: California and EPA Clash Over Reclassified Waivers
On June 22, 2026, the State of California filed suit against the U.S. Environmental Protection Agency ("EPA") and Administrator Lee Zeldin in the U.S. District Court for the District of Columbia, seeking declaratory and injunctive relief. The complaint challenges EPA's June 12, 2026, assertion that four previously granted Clean Air Act ("CAA") preemption waivers—finalized as adjudicatory orders as far back as 2009—are now "rules" subject to review under the Congressional Review Act ("CRA"). This would also allow Congress to rescind these waivers through the CRA. California contends EPA lacks authority to reclassify these final actions and that its effort is designed to facilitate their invalidation. On September 2, 2026, the court granted California a preliminary injunction, denied EPA's motion to dismiss, and ordered EPA to restore the waivers to their status as adjudicatory orders.
Background: California's CAA Waiver Authority
Under Section 209 of the CAA, Congress preempted states from setting motor vehicle emission standards but directed EPA to waive that preemption with regard to California, unless record evidence supports one of three limited statutory bases for denial. This was to accommodate California's motor vehicle emissions standards that predated the CAA's amendment in 1967. California promulgates its own standards through state-level rulemaking, which it then must determine is at least as protective as EPA's in the aggregate and request a waiver, which EPA must grant absent a limited basis for denial. This "two-program structure" allows manufacturers to build either "federal cars" or "California cars," and permits other states to adopt California's standards under Section 177. EPA has granted California more than 50 waivers since the beginning of the program in the 1960s.
The Reclassification Dispute and California's Claims
On June 12, 2026, EPA announced in a press release that it was submitting four previously granted waivers to the U.S. Congress for review under the CRA. Prior to recent actions, EPA had consistently maintained—including in each of the four waiver actions at issue—that preemption waivers are adjudicatory orders, not rules, and thus not subject to the CRA. Both the Government Accountability Office (in 2023 and again in 2025) and the Senate Parliamentarian have taken the position that waiver decisions meet the Administrative Procedure Act's ("APA") definition of an "order" and are thus not rules subject to the CRA.
California asserts two claims in the case challenging this action. California first alleges violations of the APA, specifically that EPA's reclassification and submission are final agency actions that are arbitrary and capricious, taken without observance of required procedure, and in excess of statutory authority, because EPA departed from its longstanding position without acknowledgment or explanation, and no statute authorizes post-hoc reclassification of a finalized order into a rule. Second, California alleges that this action is ultra vires. Even if unreviewable under the APA, EPA has exceeded its delegated powers, which extend only to waiving preemption—not to relabeling final actions or submitting "reports" under the CRA. California seeks vacatur, declaratory relief, and an injunction restoring the status quo.
The central issue is whether an agency may reclassify a finalized adjudicatory order as a "rule" years later. California frames this as a two-pronged threat: (i) inviting Congress to disapprove the waivers under the CRA, and (ii) stripping California of the notice-and-opportunity-to-correct protections afforded to licensees under 5 U.S.C. § 558(c), thereby streamlining administrative revocation. The suit also raises federalism concerns, arguing that no state consented to the CRA as a mechanism for Congress to negate state regulations.
The court recently rejected in part EPA's arguments in reclassifying the waivers when granting California a preliminary injunction on September 2, 2026. Judge Howell held that the waivers cannot be "rules" under the CRA unless they are also classified as "rules" under the APA. The court noted that the waivers expressly state that they are not rules, and the CRA reaches only "agency rules of general applicability."
The court further rejected EPA's argument that the CRA, under 5 U.S.C. § 805, bars review of the reclassifications. It reasoned that EPA's reading would insulate an agency's choice between rulemaking and adjudication—and its choice to treat an action as a rule or order—and would effectively gut APA judicial review of final agency actions. "Congress cannot be presumed to have sub silentio eliminated judicial review under the APA, and, had Congress done so, this elimination would not have lain dormant for the thirty years that the CRA has been in effect." California v. U.S. Environmental Protection Agency, No. 26-CV-2185 (BAH), 2026 WL 2593640, at *21 (D.D.C. Sept. 2, 2026). The court thus preliminarily enjoined and stayed EPA from taking any further action to reclassify California's waiver orders as "rules," and directed EPA to take all necessary steps within the agency's control to restore the status quo as it existed before the June 12, 2026, press release as to the four waivers, including withdrawing or correcting the press release. The case remains ongoing.
Takeaways and Next Steps
These actions may indicate a larger trend. The current dispute follows on the heels of Congress's use of the CRA against other California CAA waivers in 2025. In late February 2025, the Trump administration submitted three waivers granted during the Biden administration—covering the Advanced Clean Cars II program, the Advanced Clean Trucks rule, and the Heavy-Duty "Omnibus" Low NOx regulation—to Congress for review under the CRA. After Congress passed joint resolutions of disapproval, President Trump signed the three resolutions into law on June 12, 2025. Litigation over these resolutions remains ongoing.
The outcome of these suits may reshape the durability of CAA waivers and the administrative pathways available to EPA to unwind them. Companies relying on California or Section 177 standards—or otherwise subject to the affected regulations—should evaluate compliance contingencies and continue to track developments in this and the related pending cases.
