Highlights
- President Donald Trump recently issued an executive order (EO) that seeks to "unleash" domestic energy sources.
- The EO directs the U.S. Attorney General to identify all state and local laws, regulations, causes of action, policies and practices (collectively, State Laws) that are burdening the identification, development, siting, production or use of domestic energy resources.
- It also calls for prioritizing the identification of State Laws purporting to address "climate change" or involving "environmental, social, and governance" (ESG) initiatives, "environmental justice," carbon or "greenhouse gas" emissions, and funds to collect carbon penalties or carbon taxes.
President Donald Trump on April 9, 2025, issued an executive order (EO) titled "Protecting American Energy from State Overreach." The EO aims at "unleashing American energy" by removing legal restrictions imposed by state laws and policies related to climate change that are unconstitutional or preempted by federal law.
The EO directs the U.S. Attorney General (AG) to identify all state and local laws, regulations, causes of action, policies and practices (collectively, State Laws) that are burdening the identification, development, siting, production or use of domestic energy resources, and prioritize the identification of State Laws purporting to address "climate change" or involving "environmental, social, and governance" (ESG) initiatives, "environmental justice," carbon or "greenhouse gas" emissions, and funds to collect carbon penalties or carbon taxes.
The EO directs the AG to "expeditiously" bring cases against such State Laws "that are or may be unconstitutional, preempted by federal law, or otherwise unenforceable," take actions necessary to halt the enforcement of and continuation of any civil actions under such laws, and submit a report within 60 days (i.e., by June 7, 2025) regarding the actions taken. The EO also directs the AG to recommend any additional executive or legislative action necessary to stop the enforcement of these State Laws.
Though the EO does not identify specific State Laws or policies that will be subject to potential legal attack, it does provide examples of specific policies that are "burdensome and ideologically motivated" and "that threaten American energy dominance and our economic and national security." For example, the EO notes that the states of New York and Vermont have enacted laws or created or promoted causes of action that penalize energy producers or impose "retroactive penalties" due to climate change. The EO refers to the California cap and trade program as "impossible" to comply with and "radical." The EO also points to state nuisance and tort causes of action that impose climate change-related damages on energy producers. The EO concludes that these State Laws and actions violate principles of federalism and are unconstitutional overreaches by states.
Broad Scope of State Laws That May Be at Issue
The EO is written broadly and may capture a variety of state law initiatives aimed at combating climate change. In particular, the EO expressly takes issue with state cap and trade programs and programs requiring compensation for past greenhouse gas emissions. States with cap and trade programs currently in place include California, Washington and the 10 Eastern states currently participating in the Regional Greenhouse Gas Initiative (RGGI). Oregon also has a more limited version – the Climate Protection Program – that focuses only on fuel suppliers, natural gas suppliers and large users of natural gas. New York is in the process of drafting rules for a cap and trade program that is mandated by state statute.
However, many of the programs likely to be subject to scrutiny have already survived constitutional challenges from the federal government and other affected parties. California's cap and trade program was challenged by the federal government under theories that its linkage with Quebec's cap and trade program violated the Treaty Clause, Compact Clause, foreign affairs doctrine and foreign Commerce Clause. RGGI was also challenged on the basis of the Compact Clause. Though potentially a lower priority, state low carbon fuel standards (LCFS) could also be interpreted to be covered by the EO. California's LCFS program was also previously challenged pursuant to the dormant Commerce Clause and under a theory that it was preempted by the federal Renewable Fuel Standard. Each of these challenges failed at different stages of litigation for different reasons, but in each case a renewed challenge or application of the same theories to analogous programs would face significant hurdles.
The EO is also aimed at State Laws that may delay permitting and could call into question state "Climate Superfund" laws such as those in Vermont and New York. Modeled after the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) Superfund statute for cleaning up contaminated sites, these new State Laws extend the "polluter pays" principle to climate impacts, holding fossil fuel companies strictly liable for an apportioned share of global greenhouse gas emissions. The Vermont and New York laws aim to collect billions of dollars in climate change-related costs. As with the Western states' programs, multiple federal lawsuits have been filed against these laws by state AGs and industry trade associations. The cases raise a host of constitutional challenges, including the claim they are preempted by the federal Clean Air Act. As a result of the EO, it is likely that the U.S. Department of Justice will seek to intervene in at least some of those existing cases or file new lawsuits of its own. Similar Superfund legislation has been proposed in several other states, including California.
The EO is also likely to present additional obstacles for claims brought by cities and states against fossil fuel producers. Numerous states, cities and tribes have brought actions against oil and gas companies due to the companies' role in contributing to climate change. The EO empowers the AG to take action to prevent these suits.
A broader set of climate laws not expressly mentioned in the EO could also be targeted. Prominent examples include California's slate of climate disclosure laws – SB 253 (the Climate Corporate Data Accountability Act), SB 261 (the Climate-Related Financial Risk Act) and AB 1305 (the Voluntary Carbon Market Disclosures law) – as well as building energy performance standards (BEPS) laws that are in effect in numerous state and local jurisdictions around the country. This list is by no means exhaustive, and any number of climate and climate-adjacent laws could be impacted.
Further, though the EO specifically targets State Laws aimed at climate change or environmental justice, the EO's language is broadly worded to cover any State Laws that are burdening the siting, development, production, investment in or use of domestic energy resources. Accordingly, State Laws not specially designed to address climate issues may be subject to scrutiny under the EO to the extent that those State Laws inhibit or penalize domestic energy production.
Conclusion
The EO and its enforcement through the AG will likely be subject to legal attack, and the resulting litigation could delay the full implementation of the EO.
Holland & Knight will continue to evaluate the potential impacts of this action and track developments. If you have any questions, please contact the authors.
Trump's 2025 Executive Orders: Updates and Summaries
Holland & Knight's Public Policy & Regulation Group is actively monitoring and reviewing President Trump's executive orders and other actions. View a comprehensive tracking chart of executive order summaries on our website.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
