On April 8th, the White House issued its latest pronouncement against climate change in one of its latest Executive Orders entitled "Protecting American Energy From State Overreach" – https://www.whitehouse.gov/presidential-actions/2025/04/protecting-american-energy-from-state-overreach/ (the "Order").
Key Provisions of the Executive Order:
- Challenging State Climate Policies:
The Order directs the Attorney General and the heads of all federal agencies to identify and challenge all state and local laws that burden the identification, development, siting, production or use of domestic energy resources that are or may be unconstitutional, preempted by Federal law or otherwise are unenforceable.
- Promoting Fossil Fuel Production:
The Order emphasizes the importance of domestic energy resources, particularly oil, natural gas, coal, and other fossil fuels and focuses on the supposed discrimination of out of state fossil fuel energy producers.
- Reviewing Regulations:
The Order directs the Attorney General and all heads of federal agencies, including the Environmental Protection Agency (EPA), to review and identify and potentially rescind any state law purporting to address "climate change" or involving "environmental, social and governance" initiatives, "environmental justice", "carbon or greenhouse gas" emissions and funds to collect carbon penalties or carbon taxes.
Timing:
Within 60 days of the April 8th (i.e., July 9, 2025), the Attorney General is directed to provide a report to the President regarding actions that should be taken to achieve the above stated objective and to recommend any additional Presidential or legislative action necessary to "stop the enforcement of State laws identified above that the Attorney General determines to be illegal or otherwise fulfill the purpose of the order".
Impact on State and Local Climate Policies:
The Order is very likely to lead to federal legal challenges against state and local climate change policies, which seek to weaken efforts to reduce greenhouse gas emissions and combat climate change. States with these types of laws are very likely to respond and challenge the Order as being beyond the scope of what is legally permissible by Presidential executive orders. As such, the legality of the order is very likely to find its way into court and will take some months to sort out.
Theory of the Order:
The Order asserts that certain state and local laws and civil actions have exceeded constitutional limits and/or conflict with federal policy by directly "restricting the development, production, or use of domestic energy resources".
The Order is broad in its scope but focuses specifically as well on New York's, Vermont's and California's laws in the climate change area, many of which we have commented on in earlier posts if of interest.
In short, New York is following California's lead in seeking to require companies to review and disclose certain risk factors of climate impacts on companies with over $500 Million of revenue and in requiring Scope 1, 2 and 3 emissions reporting if an enterprises makes more than $1 Billion in revenue. Vermont has passed a law which New York, California, New Jersey and Illinois are also considering that targets fossil fuel emitters and requires that such emitters pay for the damage that they have done in the applicable state. Cash payments from the historic emitters are then specifically designated to help pay for resiliency improvements to infrastructure in the applicable state. The Order also calls out California's emissions caps and carbon credit trading system, which are described as penalizing fossil fuel companies for carbon use.
According to the Order, these laws and policies create barriers to interstate commerce, raise energy costs nationally, and interfere with the federal government's role in enacting and implementing a federal energy agenda.
Green Spouts: While it was always expected that parties like the US Chamber of Commerce (who sued California for implementing SB 261 and 253) would also attempt to block Illinois, New York, New Jersey and Maryland from enacting climate disclosure requirements, I find it a bit surprising that the Trump Administration has decided to weigh in and enact a new Executive Order focusing on State rights and climate disclosure at this moment given what else is going on around the globe. Moreover, given the District Court's ruling in the California case, it appears that if similar laws are passed in Illinois and elsewhere, that the constitutional challenges raised by the Order are not likely to withstand court scrutiny. This author's view is that the various states will not back off of their own version of California's climate bill, Vermont's superfund type bill and California's cap and trade regime and will fight the April 8th Executive Order tooth and nail.
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