Supreme Court Allows Fuel Producers to Contest California’s Emissions Rules
For decades, California has been granted unique deference in setting Clean Air Act (CAA) emissions limitations for California-sold vehicles through use of a state-specific waiver.
California’s state-specific waiver allows the state to impose stricter emission standards than those issued at the federal level. In recent years, California has aggressively used this state-specific waiver to target greenhouse gas emissions and mandate a shift toward electric vehicles (EVs). This approach has been controversial and — unsurprisingly — led to litigation as product manufacturers of all kinds factor in California regulatory particularities in determining their nationwide mix of products.
We have chronicled recent, though frequent, push-and-pull between states like California seeking stricter environmental controls and others favoring less regulations. (e.g.,here and here.) And if you have been following the ongoing saga of state-led climate regulation, the US Supreme Court’s new decision in Diamond Alternative Energy, LLC v. EPA is a must-read. It addresses environmental policy, federalism, and the question of who gets to challenge government action in court. Below, we break down what happened and why it matters to the regulated community.
CAA and California’s Climate Ambitions
California has long been the nation’s laboratory by enacting aggressive vehicle emissions standards. Under the CAA, the US Environmental Protection Agency (EPA) sets nationwide emissions rules for new cars, but it allows California, as a result of US Congress recognizing its unique air quality challenges like smog, to seek a waiver to impose stricter CAA standards. Other states can then choose to adopt California’s rules but are not permitted by CAA to unilaterally create their own rules in the same manner as does California. The rules, as currently in effect, require automakers to sell more EVs and limit average greenhouse gas emissions across their fleets. As of now, 17 other states and Washington, DC, have followed California’s lead, together representing about 40% of the buyers in the US auto market.
The Legal Challenge: Who Gets to Sue?
Enter the fuel producers — companies that make and sell gasoline, diesel, and ethanol. Before the Court, fuel producers argue that California’s rules, by reducing the number of gas-powered cars on the road in favor of EVs which can meet California’s requirements, directly hurt their bottom line because less demand for gasoline means less revenue. The litigation focuses on EPA’s approval of California state-specific waiver, claiming the agency overstepped its authority by greenlighting state rules aimed at global climate change rather than addressing local air quality.
As with many challenges, before reaching the merits, reviewing courts needed to determine if fuel producers had standing to sue. Legal standing requires plaintiffs to show that they have suffered a concrete injury, that the injury is caused by the challenged action and that a favorable court decision would likely redress that injury. “Injury in fact,” causation, and redressability are often referred to as the three prongs of standing analysis. The Supreme Court frequently reviews standing. Last term, the Court reviewed the organizational standing case FDA v. Alliance for Hippocratic Medicine (for more, see here).
The Court’s Decision
The DC Circuit Court of Appeals determined that the challengers lacked standing because they depended on claims that automakers could have asserted but did not pursue. It reasoned that even if it struck down EPA’s approval of California’s rules, the holding might not lead automakers to actually build more gas-powered cars. After all, consumer demand for EVs is surging, and manufacturers have already invested heavily in electrification. Without clear evidence that the market would shift back toward gasoline vehicles, the court found the fuel producers’ alleged injury too speculative.
The Supreme Court, in a 7-2 decision authored by Justice Brett Kavanaugh, disagreed. The majority held that the fuel producers had standing to challenge EPA’s approval. Here is why:
Injury in Fact: The Court found it “straightforward” that fuel producers are financially harmed by regulations designed to reduce gasoline consumption. Indeed, it noted that the point of the rules was to compel a transition away from gasoline-powered vehicles.
Causation: It ruled that the link between California’s regulations and reduced fuel sales is direct. The regulations compel automakers to build more EVs and fewer cars that use gas or other liquid fuels, something that directly affects the fuel producers.
Redressability: Here, the Court pushed back hardest against the circuit court’s decision. The majority reasoned that it’s “predictable,” based on common sense and the record, that if the regulations were invalidated, at least some automakers would build more gas-powered cars leading to more fuel sales. The Court emphasized that even a small increase in sales would satisfy the legal standard.
The Court also rejected the idea that plaintiffs must provide expert affidavits or direct evidence from automakers about how they would respond to regulatory changes. Instead, it noted that it is enough for plaintiffs to show a “predictable chain of events” based on economic logic and the government’s own statements about the regulations’ impact.
Practical Takeaways
This ruling is significant for several reasons:
Broader Access to the Courts: The decision may lower the bar for industry plaintiffs to challenge environmental regulations, especially when they can show a direct economic impact — even if the market is complex and third-party behavior is involved. Justice Ketanji Brown Jackson’s dissent argues that the Supreme Court does not apply standing doctrine “evenhandedly” and notes that allowing petrochemical companies to sue here is inconsistent with precedent and “comes at a reputational cost for the Court, which is already viewed as being overly sympathetic to corporate interest.” Justice Jackson concluded that the Court should have refrained from deciding this case.
Increased Regulatory Uncertainty: By allowing fuel producers to challenge EPA’s approval of California’s rules, the Court has injected new uncertainty into the future of state-led climate initiatives. If the fuel producers ultimately prevail on the merits, it could upend California’s (and other states’) ability to push the auto industry toward electrification of changing the kinds of cars they sell.
A Signal to Agencies and States: The Court’s skepticism toward arguments that regulations are “irrelevant” because the market has already shifted should be taken as a warning to regulators. If an agency is still enforcing and defending a rule, do not expect courts to believe it has no real-world effect.
The Bottom Line
The decision did not determine whether California’s rules are lawful; that fight is ongoing in the courts, in Congress, and at EPA. But by clearing the way for fuel producers to have their day in court, the justices have set one stage for a high-stakes battle over the future of vehicle emissions regulation, the scope of state authority, and the role of courts in refereeing these disputes. For anyone monitoring the intersection of climate policy, industry, and the law, this is a case worth following.
Upcoming OSHA and U.N. Meetings May Trigger Changes in U.S. Hazard Communication Standards
On June 24, 2025, the Occupational Safety and Health Administration (OSHA) will conduct a virtual public meeting to discuss the United Nations’ Globally Harmonized System of Classification and Labelling of Chemicals (GHS). The primary focus of this meeting is to gather stakeholder input and prepare for the upcoming forty-eighth session of the United Nations Economic and Social Council’s Sub-Committee of Experts on the GHS, which will take place in Geneva, Switzerland, from July 7 to July 9, 2025.
OSHA is expected to provide updates on recent regulatory activities, discuss potential changes to the Hazard Communication Standard (HCS) to align with the latest GHS revisions, and solicit feedback from industry representatives, labor organizations, and other interested parties. Key topics will include hazard classification, labelling requirements, safety data sheets, and the impact of GHS updates on U.S. regulations and workplace safety.
Quick Hits
On June 24, 2025, OSHA will hold a virtual public meeting to discuss updates to the United Nations’ Globally Harmonized System of Classification and Labelling of Chemicals (GHS) and gather stakeholder input.
The upcoming meeting of the United Nations’ Sub-Committee on the GHS will be a key forum for discussing and adopting revisions to the GHS, which OSHA will later evaluate and incorporate into U.S. regulations.
OSHA aims to improve chemical hazard communication and facilitate international trade by aligning U.S. regulations with the latest GHS updates, ensuring clarity and consistency for workers and emergency responders.
OSHA’s Hazard Communication Standard is explicitly designed to align with the GHS, which is an internationally agreed-upon system for classifying and labelling chemicals. The GHS is periodically revised and updated by the U.N. Sub-Committee based on new scientific information, stakeholder input, and evolving best practices. The July 7–9, 2025, Geneva, Switzerland, meeting is one of the key forums where such revisions are discussed and adopted by consensus among participating countries, including the United States.
When the Sub-Committee adopts new or revised criteria, label elements, or safety data sheet (SDS) requirements, OSHA reviews these changes to determine how best to incorporate them into U.S. regulations. This process ensures that U.S. chemical safety standards remain harmonized with those of major trading partners and reflect the latest scientific and technical knowledge.
Following the Geneva meeting, OSHA is expected to evaluate the adopted GHS revisions and initiate the rulemaking process to update the HCS as necessary. This may include:
revising hazard classification criteria for physical, health, or environmental hazards;
updating required label elements, such as signal words, pictograms, hazard statements, and precautionary statements;
modifying the format and content requirements for safety data sheets and
addressing new or emerging hazards identified at the international level.
For example, OSHA’s most recent update to the HCS (finalized in 2024) was based on the seventh revised edition of the GHS, with select elements from the eighth edition. This update was informed by previous UN GHS sub-committee meetings and reflects the ongoing process of international harmonization.
After the Geneva meeting, OSHA is expected to engage with U.S. stakeholders—including industry representatives, labor organizations, and safety professionals—to gather input on how the new GHS provisions should be implemented domestically. OSHA relies on the stakeholders’ input to update regulations that are designed to be practical, effective, and tailored to the needs of U.S. workplaces.
OSHA also provides transition periods for compliance, allowing chemical manufacturers, importers, distributors, and employers time to update their hazard communication programs, labels, and SDSs in accordance with the new requirements.
By incorporating the outcomes of the Geneva meeting into U.S. regulations, OSHA aims to:
improve the clarity, consistency, and effectiveness of chemical hazard communication for workers and emergency responders;
reduce confusion and compliance burdens for companies operating in multiple countries; and
facilitate international trade by ensuring that U.S. chemical products meet global labelling and classification standards.
Employers that work with materials that fall under GHS probably will not see dramatic changes in the regulations they must abide by. Instead, those changes will likely be incremental and will first be seen by those that bear the responsibility for labelling chemicals.
EPA Announces Availability of Updated Interim Maps Developed under Its Endangered Species Protection Program
On June 12, 2025, the U.S. Environmental Protection Agency (EPA) announced the availability of updated refined interim core maps that identify areas that EPA states are important to 12 threatened or endangered (listed) species and their critical habitats as designated by the U.S. Fish and Wildlife Service (FWS). These refined interim maps are based on information developed by FWS and were developed by EPA’s Office of Pesticide Programs (OPP), the Center for Biological Diversity (CBD), and Compliance Services International (CSI). The maps identify areas where listed species are likely to be located and areas where they are not, thus attempting to ensure that measures to protect listed species are only required in the areas where listed species are located. According to EPA, releasing these maps is “another important step to reduce potential impacts to farmers while continuing to protect endangered species.” EPA states these maps will be used for developing pesticide use limitation areas (PULA), which EPA notes will allow it to protect listed species from the use of pesticides through geographically specific mitigations.
According to EPA, when developing a PULA for a specific species, it starts by developing a core map identifying areas where listed species need additional protection. A core map may include information regarding:
The species range;
Its designated critical habitat; or
Other locations where the species is known to occur.
If existing range maps are broad and include areas where a species is no longer thought to exist, the core maps would only include areas within the species range where the species are likely to occur. After developing a core map for a species, EPA states it would develop a PULA that accounts for pesticide movement from a use site, such as spray drift and run-off, by adding adjacent areas to the core map. Developing a core map or a PULA does not alter FWS’s range maps.
According to EPA, it released its mapping process in anticipation of public interest in developing species maps. If a draft map was not developed specifically by EPA, it will review the draft map to ensure that (1) the map and documentation are consistent with EPA’s process; (2) areas included or excluded from the map are consistent with the biology, habitat, and/or recovery needs of the species; (3) data sources are documented and appropriate; and (4) the Geographic Information System (GIS) data and mapping process are appropriate and are identifying the types of areas that the map developer is intending to identify.
The maps released are considered interim maps, which means that “the maps were developed using EPA’s process and that EPA has reviewed them and agree that the maps are reasonable and can be used to develop pesticide use limitation areas.” These maps will be considered final after review by FWS species experts.
Information on the interim core maps can be found on EPA’s “Process EPA Uses to Develop Core Maps for Pesticide Use Limitation Areas” and maps can be viewed here. EPA notes it expects that dozens more refined maps will be released within the next several months.
Commentary
The maps, and then the PULAs, are among the more potentially controversial elements of the developing EPA program. If the PULA is too large, there will be criticism that EPA has “over-regulated” restricting pesticide use providing no additional species protection. If the PULA is too small (e.g., missing some of the habitat that should be included), then there will be criticism that the EPA plan would not be sufficiently protective. The maps and how they are proposed, evaluated, and refined may be the most fluid element of EPA’s proposed label restrictions. Where EPA might propose restrictions in an area that some current product users believe is essential for their cropping system, the appropriateness of the PULA will be subject to more scrutiny and possible changes. Not unlike what EPA has done historically when human health “risk-cup” issues arose, EPA’s conservative assessments will be subject to refinement before final mitigation restrictions are imposed on the revised label as part of registration reviews.
Maryland Court Rules EPA’s Termination of Environmental Justice Grants Violates APA
Changes in presidential Administration often mean changes in policy priorities and budgeting, but a Maryland federal district court recently held that the executive branch’s ability to pivot on policy has limits.
The decision in Green & Healthy Homes Initiatives, Inc., et al. v. EPA determined that the Trump Administration violated the federal Administrative Procedure Act (APA) when it cancelled all of the environmental justice (EJ) grants issued by the Biden Administration.
The decision interpreted the APA to constrain executive action and protect the integrity of federal grant programs. For grant recipients, the ruling affirms that statutory mandates cannot be set aside by administrative fiat and that courts will enforce the procedural and substantive limits imposed by US Congress. As the court noted, agencies must engage in reasoned, individualized decision-making and respect the boundaries of their delegated authority to ensure that properly issued federal grants are not casualties of shifting political winds.
Below, we break down the decision and takeaways for federal grant recipients inside and outside the EJ space.
Case Background
In 2022, as part of President Biden’s Inflation Reduction Act, Congress amended the Clean Air Act to create the Environmental and Climate Justice Block Grants program, appropriating $3 billion for grants to support pollution remediation, climate resilience, and related activities benefiting disadvantaged communities. (For more, see here.) The statute required the US Environmental Protection Agency (EPA) to use these funds for specified purposes and to award grants to eligible entities, including nonprofit organizations and local governments.
Pursuant to this mandate, EPA selected 10 Regional Grantmakers — including the plaintiffs in this case — and awarded them multi-year, multi-million-dollar grants to administer subgrant programs. However, earlier this year following a change in Administration, EPA announced that “environmental justice” was no longer an agency priority and terminated all grants under the program. (For more, see here.) The agency’s termination letters cited a lack of alignment with new agency priorities but provided little substantive explanation or individualized analysis.
The Green & Healthy Homes Decision
It was predictable that the whipsawing between the Biden Administration’s commitments to address EJ issues and the Trump Administration’s desire to “cancel” EJ (including these grants) would lead to litigation. In Green & Healthy Homes Initiative, the Minneapolis Foundation and Philanthropy Northwest filed suit challenging the termination of the grant funding under the APA, arguing that EPA’s actions were arbitrary and capricious, exceeded statutory authority, and violated their constitutional rights. The court agreed, holding that EPA’s terminations were both “in excess of statutory jurisdiction, authority, or limitations” and “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” as prohibited by 5 U.S.C. § 706(2)(A), (C). The court vacated EPA’s terminations and remanded the grant cancellation to the agency to be reevaluated, declining to issue a permanent injunction but making clear that the agency could not lawfully terminate the grants on the same grounds.
The ruling provides critical guidance on how the APA applies to federal grant terminations and clarifies the boundaries of executive discretion in administering congressionally mandated programs. Four primary takeaways include the following.
The statutes authorizing or requiring grant issuance can preclude the executive branch from reconsidering grant issuance. Similar to how courts have evaluated Trump Administration funding freezes (for more see here), the executive branch cannot unilaterally change Congress’s spending priorities. To be sure, the executive can unwind certain policies — prior Administration Executive Orders, as an example — without Congress. But agencies cannot terminate grants based solely on a change in Administration priorities where Congress directed that funds be used for specific purposes. For people or entities seeking to vindicate rights embodied in statutes, the APA serves as a check, ensuring that executive agencies cannot unilaterally override legislative directives.
Here, the court emphasized that Congress’s directive in the Clean Air Act was clear and mandatory; EPA “shall use” appropriated funds to support environmental and climate justice activities. The agency’s decision to terminate grants solely because the new Administration disagreed with the statutory purpose was found to be an impermissible override of congressional will. The court stated, “the President and federal agencies may not ignore statutory mandates or prohibitions merely because of policy disagreement with Congress.”
The APA’s “arbitrary and capricious standard” may apply to grant cancellations. Federal agencies must provide a reasoned explanation for terminating grants, supported by the administrative record and tailored to the facts of each case. Boilerplate justifications or reliance on generalized policy shifts often will not satisfy the APA’s standards.
Here, the court found that EPA’s process for terminating the grants contained no meaningful analysis or explanation. The agency relied on boilerplate language and a template letter, failed to provide individualized reasons for each termination, and did not consider the reliance interests of the grantees. The administrative record revealed that the only articulated rationale was a change in “administration priorities,” which the court deemed insufficient under the APA’s requirement for reasoned decision-making.
The executive branch lacks constitutional authority to terminate grants unless it has statutory discretion to do so. Green & Healthy Homes Initiatives reaffirms that courts can review grant terminations under the APA unless Congress has explicitly committed the matter to agency discretion. Even where regulations provide for termination based on agency priorities, that discretion is cabined by statutory mandates.
In this case, where federal regulations including 2 C.F.R. § 200.340 allow agencies to terminate grants that no longer effectuate program goals or agency priorities, that authority is expressly limited to the extent authorized by law. The court held that where Congress has imposed a specific, mandatory obligation on an agency, the executive branch cannot invoke general regulatory language or internal policy shifts to circumvent statutory requirements.
Reliance interests matter. Finally, agencies must consider the reliance interests of grantees, especially where significant investments have been made in reliance on multi-year federal funding. Here, EPA was required to provide a detailed justification for its policy priorities in light of preexisting, multi-year commitments made by grant makers.
New Jersey BPU Launches Multi-Phase Energy Storage Incentive Program
Key Takeaways:
PJM-ready projects are a must. Eligible projects must (1) be transmission-connected (PJM bulk power system) and located in a New Jersey transmission zone; (2) have PJM interconnection approval (or capacity interconnection rights (CIRs) from a deactivating facility); and (3) commit to a commercial operation date (COD) within 30 months of application period close (plus a 150-day grace period). To reach a COD, the project must be fully constructed and interconnected to the PJM transmission network.
Site control and permitting matter as developers must demonstrate they are ready to secure all required approvals.
Brownfield redevelopment, community benefits and environmental attributes may be favored over lower bid levels.
The New Jersey Board of Public Utilities (BPU) approved Phase 1 of the Garden State Energy Storage Program (GSESP) after two years of stakeholder engagement. Rules related to the GSESP were also approved for publishing in a future New Jersey Register. Phase 1 is the first of a new, multi-phase incentive program to support the development of 2,000 megawatts (MW) of energy storage by 2030, as required under the Clean Energy Act of 2018 (P.L. 2018, c.17). This is a significant milestone in New Jersey’s energy policy, allowing the integration of intermittent renewable energy sources and a critical opportunity for energy storage developers to secure long-term, fixed-price incentives.
Phase 1 targets transmission-scale, front-of-the-meter energy storage systems. Distributed storage incentives will follow in Phase 2 (expected in 2026). Below is a comprehensive breakdown of what developers need to know.
Phase 1: Transmission-Scale Storage Solicitation
To align with the pending New Jersey Assembly Bill A-5267 that would require the BPU to establish a transmission-scale energy storage procurement and incentive program, the BPU limited Phase 1 incentives to transmission-scale energy storage systems, directly interconnected to the bulk transmission system. Both standalone storage and storage additions to existing solar, solar-plus-storage and other Class I renewable energy resources (solar, geothermal electric generation, landfill gas, biogas, etc.) are eligible provided they are not already receiving incentives from the Competitive Solar Program. Despite a call for increased utility involvement and ownership of energy storage systems, the BPU will limit Phase 1 incentives to private (non-EDC) and governmental entities.
Additional components of Phase 1 include:
Final awards will determine eligible projects and the size of each project’s incentive award.
Payments will be made annually over a 15-year term.
“Pay-as-bid” model bidding process where developers propose a fixed annual incentive (e.g., $/MW/year) for providing energy storage capacity. The projects awarded funding are those that offer the lowest incentive cost per MW, promoting cost-effectiveness.
Initial solicitation (“Tranche 1”) aims to procure 350–750 MW.
Total Phase 1 goal is 1,000 MW of transmission-scale storage.
The prequalification review for deficiencies for Phase 1 applications opens on June 25, 2025, with a deadline for guaranteed review of July 23, 2025. Final bids are due by August 20, 2025. The BPU will announce awards in October 2025.
Phase 2: Distributed Storage Coming in 2026
Developers with behind-the-meter or distribution-level assets should prepare for Phase 2 in 2026. Expected features include distributed fixed incentives (capacity-based), distributed performance incentives (likely grid-service or dispatch-based), participation from distributed energy resource aggregators and systems co-located with rooftop solar and EVs, and prioritization of projects that serve overburdened communities or improve distribution system resilience.
Trump Administration SEC Withdraws Proposed Anti-Greenwashing Rule
On June 17, the SEC officially withdrew a proposed rulemaking undertaken by the Biden Administration that sought to combat greenwashing in ESG (or similarly labeled funds). Specifically, the proposed rule would have “facilitate[d] enhanced disclosure of ESG issues to clients and shareholders” (according to the SEC) by mandating “more specific disclosures . . . based on the ESG strategies [that funds and advisers] pursue” including that “[f]unds focus[ing] on environmental factors generally would be required to disclose the greenhouse gas emissions associated with their portfolio investments.” In essence, the SEC would have required funds to provide disclosures demonstrating that these funds actually conformed to their proclaimed ESG strategy. This rule had been proposed in tandem with the SEC “Names Rule” (which was finalized and entered into effect), each of which sought to address perceived problems with greenwashing in the investment space.
The policy decision by the Trump Administration’s SEC to withdraw this proposed rule is unsurprising and is in accordance with a number of other recent initiatives by the Trump Administration that effectively rolled back various Biden Administration initiatives focused on climate, including the mandatory climate disclosure rule promulgated by the SEC (that the Trump Administration is no longer defending in the courts). Still, even if this particular move was expected, it nonetheless demonstrates further the U-turn that the Trump Administration has effectively tried to implement with respect to climate policy, especially concerning the various efforts to promote climate disclosures by companies and business organizations.
Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment The Securities and Exchange Commission (“Commission”) is formally withdrawing certain notices of proposed rulemaking issued between March 2022 and November 2023. The Commission does not intend to issue final rules with respect to these proposals. If the Commission decides to pursue future regulatory action in any of these areas, it will issue a new proposed rule.
www.sec.gov/…
APHIS Announces Updated Pre-Application Questionnaire in APHIS eFile
On June 13, 2025, the U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) announced that its Biotechnology Regulatory Services (BRS) has launched an updated Pre-Application Questionnaire that will replace the BRS Permitting Assistant in APHIS eFile. According to APHIS, applicants using APHIS eFile will experience:
An interface that leads applicants through a series of questions to determine if their application qualifies for a notification or if a permit is required;
A quick, direct path to apply for a permit when an applicant knows their application does not qualify for a notification; and
Links to additional support for submitting notification and permit applications.
APHIS notes that to assist applicants with using the Pre-Application Questionnaire, BRS updated its APHIS 2000 Permit Application and Compliance Reporting Job Aid and training resources at APHIS eFile Training.
Supreme Court Clarifies Venue Rules for Clean Air Act Challenges
US Supreme Court Clean Air Act (CAA) decisions often result in big-picture changes to administrative law. Two CAA decisions this term deal with CAA’s venue-related provisions which specify where cases challenging US Environmental Protection Administration (EPA) determinations can be filed.
These rulings — EPA v. Calumet Shreveport Refining, L.L.C. and Oklahoma v. EPA — resolve longstanding confusion over whether such cases belong in the DC Circuit or regional federal appellate courts.
Below is a high-level summary of CAA’s venue provisions, the two decisions, and key takeaways for CAA-regulated parties. In general, when taken together, the decisions illustrate a willingness of courts to look for substance over form in evaluating venue issues. With this in mind, as part of the administrative process, parties may want to work to build into the administrative record evidence needed to support preferred venue and to coordinate with other challengers to ensure consistent application of CAA’s venue provisions.
The Clean Air Act’s Venue Framework
The CAA is cooperatively implemented by federal and state regulators. CAA has been described as “an experiment in federalism” that establishes “an intergovernmental partnership to regulate air quality in the United States.” CAA channels judicial review of EPA actions to either the DC Circuit or a regional circuit, depending on the nature of the action: More specifically, CAA Section 607(b)(1) identifies three types of “final actions” and specifies which courts have jurisdiction to hear each of them:
Actions that are “nationally applicable” (i.e.,those with binding effect across the entire country) are reviewable in the DC Circuit.
Actions that are “locally or regionally applicable” (i.e.,those affecting only specific states or regions) are reviewable in the regional circuits.
The third category is an exception to the second and provides that “locally or regionally applicable” actions must be reviewed in the DC Circuit if, and only if, the final action is based on “a determination of nationwide scope or effect” and the administrator publishes a finding to that effect.
The third category is where much of the dispute centers, i.e., when an EPA action considers locality specific issues as it applies a purportedly national standard.
EPA v. Calumet Shreveport Refining
EPA v. Calumet Shreveport Refining illustrates that a series of locally or regionally applicable actions can constitute a determination that is of “nationwide scope or effect” when refinery-specific facts play only a peripheral role. Calumet Shreveport Refining followed EPA’s denial of 105 small refinery exemption petitions from renewable fuel blending requirements, issuing two omnibus notices. EPA’s denials were based on two core, nationwide determinations: (1) that “disproportionate economic hardship” means hardship directly caused by compliance, and (2) that compliance costs are fully passed through to consumers (the “RIN passthrough” theory).
EPA asserted that these denials should be reviewed only in the DC Circuit on the grounds that EPA’s nationwide statutory interpretation and economic theory were the primary drivers of the relevant decisions. While the Fifth Circuit accepted this argument and denied EPA’s motion to transfer venue, EPA appealed and the Supreme Court overturned the Fifth Circuit decision and directed future courts to independently assess whether a nationwide determination is the true basis for EPA’s action, rather than deferring to EPA’s characterization of local issues into involving “nationwide” issues.
Oklahoma v. EPA
Oklahoma v. EPA stems from EPA’s disapproval of State Implementation Plans (SIPs) from 21 states, including Oklahoma and Utah, for failing to comply with the CAA’s “Good Neighbor” provision, which addresses cross-state air pollution where emissions from one state generate exceedances in a non-emitting state. EPA grouped these disapprovals into a single omnibus rule and asserted that challenges belonged in the DC Circuit, either as a nationally applicable action or under the “nationwide scope or effect” exception. States and industry petitioners challenged the SIP disapprovals in regional circuits. Of five circuits to resolve EPA’s motions to dismiss or transfer, four found regional venue proper, leaving only the Tenth Circuit as having accepted EPA’s characterization that the bundle of actions constituted a single nationally applicable action because it covered “21 states across the country” and reflected EPA’s application of “a uniform statutory interpretation and common analytical methods.”
In Oklahoma v EPA, the Supreme Court rejected the Tenth Circuit’s approach and held that each SIP disapproval is a separate, state-specific action, “the prototypical ‘locally or regionally applicable’ action.” The fact that EPA bundled multiple disapprovals into one rule does not make the action nationally applicable. The Court further found that the “nationwide scope or effect” exception did not apply because EPA’s decisions were driven by state-specific, fact-intensive analyses, not by a single nationwide determination.
In general, Oklahoma v. EPA indicates that that future challenges to EPA’s approval or disapproval of individual state SIPs should be filed in the relevant regional circuit, not the DC Circuit, unless the action is truly based on a nationwide determination. Critically, whether an EPA action constitutes a “nationwide determination” is not determined by how EPA frames the action, nor how it packages or aggregates its decisions in the Federal Register. Rather, the Court in Oklahoma directs that the underlying statutory authority and the geographic scope of the action are determinative of whether an action is nationwide.
Takeaways for the Regulated Community
Taken together, Calumet Shreveport Refining and Oklahoma v. EPA emphasize the importance of addressing venue as part of initial case strategy for CAA challenges. The distinction between a fact-specific, local action and one driven by a nationwide policy is now critical.
Evaluating venue requires scrutinizing the basis for EPA’s decision. Do national methods predominate over state or facility-specific facts? When EPA published the determination to be challenged in the Federal Register, did it expressly find and publish, with sufficient reasoning, why the action was “based on a determination of nationwide scope or effect,” and why that determination is the primary driver of the action? Indeed, parties who believe that they may be in a close case may want to provide comments on the local versus national issues as part of the pre-publication regulatory comment process. The choice of venue can significantly affect the outcome of litigation, given differences in judicial philosophy and precedent among the circuits. Factor venue analysis into overall litigation strategy from the outset.
By proactively addressing venue issues, the regulated community can more effectively ensure that challenges to EPA actions are heard in appropriate and ideally favorable, forums.
Federal Jurisdiction and Review Standards at Issue in Cases Ranging from Terrorism to Tobacco – SCOTUS Today
With six more decisions, the U.S. Supreme Court decided no fewer than 11 cases in two business days last week, following 12 others over the previous two weeks.
In other words, summer vacation is upon us, as the Court’s term is likely to end soon.
The most recent decisions are, as predicted, more controversial than the spate of unanimous or near-unanimous decisions of earlier weeks. None of the newest decisions, nor indeed any of the cases yet to be decided, are likely to provoke the level of public attention given to the Court’s decision in United States v. Skrmetti, upholding a state’s law prohibiting certain medical treatments for transgender minors.
However, the latest batch of decisions offers considerable guidance to litigators with respect to the level of review that federal courts may exercise under several very active statutory regimes and as to important procedural issues such as standing and venue.
Justice Barrett delivered the Court’s opinion in Food and Drug Administration v. R.J. Reynolds Vapor Co., upholding the right of retailers who would sell new tobacco products if not for the order of the Food and Drug Administration (FDA) denying approval to seek judicial review. Justice Jackson, joined by Justice Sotomayor, dissented. The issue in the case was whether retailers, as opposed to manufacturers, were “person[s] adversely affected” by an FDA ruling under the terms of the Family Smoking Prevention and Tobacco Control Act (TCA). One might fairly say, albeit with tongue slightly in cheek, that this is a “liberal” decision from a “conservative” Court. In any event, the Court applied traditional standing analysis in determining that the plaintiff retailers were within the “zone of interests” that the statute protects. “Adversely affected,” as well as variations such as “adversely affected or aggrieved,” are terms of art with a “long history in federal administrative law.” Many statutes, including the Administrative Procedure Act (APA), use the term, which entitles anyone “adversely affected or aggrieved by agency action within the meaning of a relevant statute . . . to judicial review.”
The Court interpreted “adversely affected” broadly as covering anyone even “arguably within the zone of interests to be protected or regulated by the statute . . . in question.” Thus, the Court rejected the argument of the FDA that the capacious understanding of “adversely affected” is unique to the APA but should not apply to the TCA, which, it argues, requires that a person “actually”—not “arguably”—fall within the statute’s zone of interests. Accordingly, the Court interpreted the TCA as echoing the APA and that retailers “fit the bill” of persons who may petition for judicial review. As the Court notes, “If the FDA denies an application, the retailers lose the opportunity to profit from the sale of the new tobacco product—or, if they sell the product anyway, risk imprisonment and other sanctions. . . . Accordingly, the retailers are ‘adversely affected’ by a denial order and are therefore proper petitioners. . . .”
The dissenters read the TCA, as did the FDA, as only empowering manufacturers to appeal. The majority countered that the term “any” suggests a congressional intent to cover a more expansive category of potential plaintiffs. The FDA argued for the first time in the Supreme Court that each petitioner in a joint petition for review must independently establish venue. However, the Court notes that the FDA did not make that argument in the U.S. Court of Appeals for the Fifth Circuit, and the Supreme Court refused to address an argument raised for the first time before itself. The dissenters decried the fact that the decision allows manufacturers and others to do an “end run” around the TCA’s venue restrictions to courts of corporate residence or the D.C. Circuit, as well as forum shop to the perceived most favorable Circuits, thus avoiding the effect of earlier adverse rulings.
Author’s note: As many readers of this blog over the last several terms of the Court might recall, the Court has been increasingly strict in the assessment of standing and venue. This is not to debate the issue of consistency but to suggest that the Court’s decision affording standing to parties whose alleged harm is derivative of the direct harm of a primary party, i.e., a retailer, as opposed to an applicant manufacturer, is likely to add fuel to regulatory challenges brought not only under the APA, but also under other statutes.
Esteras v. United States is another 7–2 decision, this one also written by Justice Barrett, with Justices Alito and Gorsuch dissenting. The case involved a convict, Edgardo Esteras, who had pleaded guilty to conspiring to distribute heroin and was sentenced to imprisonment for 12 months, followed by six years of supervised release. While in the latter status, Esteras was arrested and charged with domestic violence and other crimes. The U.S. District Court for the Northern District of Ohio then revoked Esteras’s supervised release and ordered him reimprisoned for 12 months, explaining that his revocation was intended to “promote respect for the law.”
However, the Supreme Court rejected this view and held that a decision to revoke release may not be based on an excluded section of the statute applied here, “which covers retribution vis-à-vis the defendant’s underlying criminal offense.” While the statute sets forth 10 factors that govern initial sentencing, it excludes two of them from the factors to be considered as to revocation. One of those two excluded factors is the one applied by the trial court, which “references ‘the need for the sentence imposed . . . to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense.’ . . . This provision speaks to the retributive purpose of punishment.”
The Court held that the structure of the statute, excluding from consideration in a revocation proceeding two of the 10 factors available at original sentencing, confirms the negative inference that the excluded factors cannot be considered in assessing revocation for the limited universe of supervised release. With an impermissible factor that was used to support the revocation decision as to Esteras and others having been rejected by the Court, the case was remanded for other proceedings, apparently allowing the consideration of permissible factors.
McLaughlin Chiropractic Associates, Inc. v. McKesson Corp. involved a statute, the Telephone Consumer Protection Act (TCPA), that this writer has litigated at both the trial and appellate levels, so the Court’s decision lands on fertile ground. This one was a 6–3 decision with a stereotypical division between jurisprudential conservatives and liberals. Writing for the Court over the dissents of Justices Kagan, Sotomayor, and Jackson, Justice Kavanaugh opined that the Hobbs Act (the statute governing appeals of agency action, discussed recently in this blog in another context) does not bind a district court in a civil enforcement proceeding to an agency’s interpretation of a statute. Much as was the case with Loper Bright, which overturned the Chevron doctrine, the Court held that “[d]istrict courts must independently determine the law’s meaning under ordinary principles of statutory interpretation while affording appropriate respect to the agency’s interpretation.”
The TCPA protects against intrusive telemarketing by banning unsolicited advertisements to fax machines without providing an opt-out, allowing recipients to avoid receiving future faxes. The statute provides for private rights of action and statutory damages per violation. The health care company, McKesson, through a subsidiary, sent unsolicited fax advertisements without the required opt-out notices to various medical practices, including the petitioner. The petitioner then sued, seeking certification of a class of fax recipients who received the advertisements in question either on personal fax machines or through online fax services. While the lawsuit was pending, the company petitioned the Federal Communications Commission (FCC) for a declaratory ruling on whether the TCPA applies to faxes received through online fax services.
Months after class certification, the FCC issued an order that interpreted “telephone facsimile machine” in the TCPA to exclude online fax services. The Northern District of California deemed the order binding and granted summary judgment to McKesson on claims involving online fax services, and the Ninth Circuit affirmed. It then decertified the class, leaving the petitioner to contest 12 faxes received through traditional machines. The Supreme Court accepted the case to decide whether the Hobbs Act bound the district court to the agency’s interpretation.
In reaching the conclusion that it did not, Justice Kavanaugh, who appears to have succeeded the retired Justice Breyer as the Court’s most authoritative voice on administrative law matters, opined that pre-enforcement review statutes such as the Hobbs Act that are silent about judicial review in both pre-enforcement and enforcement proceedings, but that don’t prohibit it, are subject to a default rule. Accordingly, the case was remanded for independent consideration by the district court.
The disagreement between the Court’s majority and minority turned on the application of the default rule to enforcement proceedings. That rule mandates that “district courts must independently determine whether an agency’s statutory interpretation is correct, rather than being bound by the agency’s interpretation.” The dissent argues that application of the rule to enforcement proceedings that might occur years after promulgation of the contested action to the benefit of a party that declined to seek judicial review at the outset reads into the Hobbs Act language inconsistent with the statute’s understood meaning that it prevents “later, collateral attack on agency orders that could have been challenged at the time they issued.” Notwithstanding that the majority did not adopt this thinking, an attorney would do well to consider advising early challenges, though pre-enforcement actions come with their own difficulties.
Diamond Alternative Energy, LLC v. Environmental Protection Agencywas yet another Clean Air Act (CAA) case (the Court having decided two others the same week) and another in which the Court considered the issue of standing. Justice Kavanaugh again wrote for the Court, and this time, only Justices Sotomayor and Jackson dissented. Pursuant to the CAA, the Environmental Protection Agency (EPA) approved California regulations requiring automakers to manufacture more electric vehicles and fewer gasoline-powered ones, with the goal of decreasing toxic emissions. Producers of gasoline and other liquid fuels sued, arguing that the EPA’s approval of the California regulations violated the CAA.
The issues before the Court were whether those producers had standing and, if so, whether they could state a claim that was redressable. As Justice Kavanaugh stated, “This case presents the ‘familiar’ circumstance where government regulation of one business ‘may be likely’ to cause injuries to other linked businesses. Alliance for Hippocratic Medicine, 602 U. S., at 384. California’s regulations force automakers to manufacture more electric vehicles and fewer gasoline-powered vehicles, likely causing downstream economic injuries to fuel producers,” in that “fuel producers make money by selling fuel. Therefore, the decrease in purchases of gasoline and other liquid fuels resulting from the California regulations hurts their bottom line. Those monetary costs ‘are of course an injury’ United States v. Texas, 599 U. S. 670, 676 (2023). . . . As for redressability, invalidating the California regulations would likely redress at least some of the fuel producers’ monetary injuries.”
The majority and minority disagreed over whether the case should have been taken in the first place, given the dynamism of the market. As the dissent puts it, “The Court shelves its usual case-selection standards to revive a fuel-industry lawsuit that all agree will soon be moot (and is largely moot already). And it rests its decision on a theory of standing that the Court has refused to apply in cases brought by less powerful plaintiffs. This case gives fodder to the unfortunate perception that moneyed interests enjoy an easier road to relief in this Court than ordinary citizens.” The majority, however, found enough immediacy to compel the current review.
Stanley v. City of Sanford was a case that will particularly interest practitioners of employment law. The case concerned whether a retired employee who neither held nor sought a job was a “qualified individual” under Title I of the Americans with Disabilities Act (ADA). The statute defines such a person who is protected against discrimination on the basis of disability to be “an individual who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires.”
Karyn Stanley was a firefighter for the city. When she was first hired, the city offered health insurance until age 65 to those who retired with 25 years of service and those who retired earlier because of a disability. The city later changed that policy as to individuals who retired before age 65 because of disability, now limiting them to 24 months of insurance unless the retiree started receiving Medicare benefits sooner. Stanley retired with a disability before she had 25 years of service and before she was 65. Thus, she was subject to the 24-month limitation on insurance.
She brought suit under the ADA, claiming that she was being discriminated against because her employer provided different benefits to those who retire with 25 years of service and those who retire because of disability. However, the district court dismissed her ADA claim, reasoning that the alleged discrimination occurred after she retired, when she was not a “qualified individual” under Title I of the ADA, and no longer held or sought a job with the defendant. The Eleventh Circuit affirmed, and, resolving a split among the circuits, so did the Supreme Court, with enough Justices attaching themselves to various parts of a decision written by Justice Gorsuch to form a majority that affirmed the holding of the Eleventh Circuit.
Perhaps of special interest to employment law specialists, the majority made the natural comparison between Title I of the ADA and the more widely known Title VII of the Civil Rights Act of 1964. It found that this comparison reinforced its reading of the ADA to the detriment of Stanley’s position. Title VII protects “employee[s] . . . without temporal qualification, sometimes covering former employees.” But where Title VII links “employee” to present-tense verbs referring to current employees, the story is different. Here, “the ADA’s ‘qualified individual’ yoked to present-tense verbs suggests current job holders or seekers. Court precedent supports this interpretation.”
In seeking what some might argue to be judicial legislation, Stanley invoked the ADA’s purpose of eradicating disability-based discrimination and argued that this purpose would be served by a judicial extension of Title I’s coverage to retirees. Several Justices seemed at least sympathetic to this policy argument. But Justice Gorsuch brought this argument up short while nevertheless noting that other laws besides the ADA may protect retirees from discrimination and “[i]f Congress wishes to extend Title I to retirees, it can do so. “
Fuld v. Palestine Liberation Organization dealt with several lawsuits filed under the Antiterrorism Act of 1990 (ATA). The ATA creates a federal civil damages action for U.S. nationals injured or killed “by reason of an act of international terrorism.” The respondents are the Palestine Liberation Organization (PLO) and the Palestinian Authority (PA), organizations responsible for the functions of government for parts of the West Bank and Gaza Strip.
The question presented to the Court was “whether the exercise of personal jurisdiction over respondents under the Promoting Security and Justice for Victims of Terrorism Act (PSJVTA) violates the Due Process Clause of the Fifth Amendment.” All the Justices agreed that the answer to that question is “no.” The Chief Justice wrote for all of the other Justices, save for Justices Thomas and Gorsuch, who concurred with the result.
The PSJVTA cites the PA and PLO specifically and provides that they “shall be deemed to have consented to personal jurisdiction” in ATA cases under two circumstances. The first of these relates to respondents’ paying salaries to terrorists in Israeli prisons and to families of deceased terrorists—conduct Congress has condemned as “an incentive to commit acts of terror.” The second ties jurisdiction to respondents’ activities on U.S. soil. The petitioners alleged that the respondents engaged in conduct triggering both jurisdictional predicates. Reversing the Second Circuit, the Supreme Court held that “[t]he PSJVTA’s personal jurisdiction provision does not violate the Fifth Amendment’s Due Process Clause because the statute reasonably ties the assertion of jurisdiction over the PLO and PA to conduct involving the United States and implicating sensitive foreign policy matters within the prerogative of the political branches.”
The Court’s opinion is lengthy, but its fundamental principle is concise and quite recognizable to any law student learning civil procedure. “The Fourteenth Amendment personal jurisdiction framework derives from International Shoe Co. v. Washington, 326 U. S. 310, and requires that a defendant have sufficient ‘contacts with the forum State so that maintaining suit is ‘reasonable’ and ‘does not offend traditional notions of fair play and substantial justice.’” General jurisdiction lies in the forum of the defendant’s domicile or “home.” That would not apply to the PLO and PA. “Specific jurisdiction is different: It covers non-resident defendants less intimately connected with a State, but only as to a narrower class of claims . . . so long as there exist ‘minimum contacts’ between the defendant and the forum State.” The requisite contacts “for this kind of jurisdiction often go by the name ‘purposeful availment.’” That means taking some act by which a defendant “purposefully avails itself of the privilege of conducting activities within the forum State.” And actionable claims must be connected with those activities.
But while the terms of the due process clauses of the Fifth and Fourteenth Amendments are nearly identical, the Court’s opinion was based on the Fifth Amendment, with the Court declining to import the minimum contacts analysis of the Fourteenth into the Fifth. “Rather, the Due Process Clause of the Fifth Amendment necessarily permits a more flexible jurisdictional inquiry commensurate with the Federal Government’s broader sovereign authority.” Much of the Court’s discussion of the relationship between the two amendments would seem academic. Indeed, the demands of the Fifth Amendment could end up being on the same constitutional footing as the more expansive Fourteenth. But even if they do,
the PSVJTA easily comports with the factors we have previously applied to determine “the reasonableness of the exercise of jurisdiction” even under the Fourteenth Amendment. . . . Reasonableness, . . . will depend in each case “on an evaluation of several factors,” including “the burden on the defendant, the interests of the forum State, and the plaintiff ’s interest in obtaining relief.” . . . The PSJVTA ticks all three boxes.
The Court continued. “For largely the same reasons that we conclude there is a close connection between the PSJVTA’s predicate conduct and the United States, it follows that the forum sovereign has a substantial interest in adjudicating the dispute.” The United States has “an exceedingly compelling interest” in thwarting international terrorism and holding terrorists accountable for their actions against Americans. The defendants also have a history of being able to litigate ATA suits and do not claim that compelling them to do so in the United States “would force them to bear an unfair or unmanageable burden.” And “the PSJVTA reasonably ties the assertion of federal jurisdiction over the PLO and PA to conduct that involves the United States and implicates sensitive foreign policy matters within the prerogative of the political branches.” Accordingly, the Supreme Court held that the personal jurisdiction provision of the statute comports with the Due Process Clause of the Fifth Amendment. This decision disposes of the instant case and two others of a similar nature.
This week could be as busy as what we’ve just seen. Be ready for it.
Texas Targets Proxy Advice Based on Nonfinancial Factors With SB 2337
On June 20, 2025, Texas Governor Greg Abbott signed into law Senate Bill 2337 (SB 2337), which imposes new regulations on proxy advisory firms — such as ISS and Glass Lewis — when providing voting recommendations and other proxy advisory services concerning Texas public companies. The new law, which takes effect on September 1, 2025, applies to proxy advisory services involving any public company that is incorporated in Texas, has its principal place of business in Texas, or has proposed redomiciling in Texas. SB 2337 requires proxy advisors to provide detailed disclosures when their recommendations are based, in whole or in part, on nonfinancial factors — including environmental, social or governance (ESG) principles or diversity, equity and inclusion (DEI) considerations — or when they diverge from management’s recommendation or provide conflicting advice across clients. Any violation of the new law constitutes a deceptive trade practice under the Texas Business & Commerce Code and is actionable by the company that is the subject of the recommendation, any of its shareholders, advisory clients, and the Texas Attorney General.
Scope and Applicability of SB 2337
SB 2337 will apply to “proxy advisory services” provided in connection with or in relation to any public company that:
is organized or created under the laws of Texas;
has its principal place of business in Texas; or
has made a proposal in its proxy statement to redomicile in Texas.
SB 2337 defines “proxy advisory services” as:
advice or a recommendation on how to vote on a shareholder proposal or company proposal;
proxy statement research and analysis regarding a shareholder proposal or company proposal;
a rating or research regarding corporate governance; or
development of proxy voting recommendations or policies, including establishing default recommendations or policies.
Disclosure Triggers for Nonfinancial Voting Recommendations
Under SB 2337, a proxy advisory service is subject to enhanced disclosure requirements if it:
is wholly or partly based on or, or otherwise takes into account, one or more nonfinancial factors, including those based on environmental, social or governance (ESG) principles, diversity, equity or inclusion (DEI), social credit or sustainability factors or scores or membership in or commitments to groups that wholly or partly bases its evaluation on non-financial factors;
involves providing a voting recommendation with respect to a shareholder proposal that (A) is inconsistent with the voting recommendation of the board of directors or a board committee composed of a majority of independent directors and (B) does not include a written economic analysis of the financial impact on shareholders of the proposal;
is not based solely on financial factors and subordinates the financial interests of shareholders to other objectives, including sacrificing investment returns or undertaking additional investment risk to promote nonfinancial factors; or
advises against a company proposal to elect a director unless the proxy advisor affirmatively states that the proxy advisory service solely considered the financial interest of the shareholders in making such advice.
Mandatory Disclosure Obligations for Proxy Advisors
If a proxy advisor provides a proxy advisory service that meets any of the foregoing qualifications, the proxy advisor must:
disclose to each shareholder (or entity acting on behalf of a shareholder receiving the service) a conspicuous statement that the service is not being provided solely in the financial interest of the company’s shareholders and explain, with particularity, the basis of the proxy advisor’s advice concerning each recommendation and that the advice subordinates the financial interests of shareholders to other objectives, including sacrificing investment returns or undertaking additional investment risk to promote one or more nonfinancial factors;
immediately provide a copy of the disclosure to the company that is the subject of the recommendation; and
include a conspicuous disclosure on the home or front page of the proxy advisor’s website that its proxy advisory services include advice and recommendations that are not based solely on the financial interest of shareholders.
Notice Requirements for Conflicting Voting Recommendations
SB 2337 also includes enhanced notice requirements for a proxy advisor that recommends that one or more clients vote on a proposal in opposition to the recommendation of the company’s management or that one or more clients who have not expressly requested services for a nonfinancial purpose vote differently from one or more other clients on a proposal or director nominee. If so, the proxy advisor is required to:
if applicable, comply with the disclosure requirements for proxy advisory services not solely based on financial interests (as described above);
provide written notice to each shareholder receiving the recommendation, the company that is the subject of the recommendation and the Texas Attorney General; and
disclose which of the conflicting advice or recommendations is provided solely in the financial interest of the shareholders and supported by any specific financial analysis performed or relied on by the advisor.
Enforcement and Remedies
SB 2337 provides that any violation of its provisions is a deceptive trade practice under the Texas Business & Commerce Code, and names the recipient of the proxy advisory services, the company that is the subject of the proxy advisory services and any of the company’s shareholders as affected parties that are entitled to bring a claim for injunctive relief. The bill also authorizes the Texas Attorney General to intervene in such a claim. Additionally, the consumer protection division of the Attorney General’s office may pursue civil penalties for violations of SB 2337.
Legislative Context
SB 2337 is the latest in a series of pro-business corporate governance reforms, which we discussed in our two previous alerts concerning Senate Bills 29 and 1057 and Senate Bill 2411, aimed at positioning Texas as a jurisdiction of choice for public companies. By requiring proxy advisory firms to disclose when their voting recommendations are based on ESG, DEI or other nonfinancial factors, the Texas Legislature has reaffirmed its commitment to a business-first approach that prioritizes transparency and shareholder financial interests.
Texas and Arizona Progress Toward Class VI UIC Primacy While Louisiana Primacy Survives Judicial Review
Last month saw several developments in the U.S. Environmental Protection Agency’s (EPA) ongoing efforts to authorize states to implement Class VI of the federal Underground Injection Control (UIC) program under the Safe Drinking Water Act (SDWA) for geologic sequestration of carbon. This push toward state primacy is an important development for the rapidly growing carbon capture and sequestration (CCS) industry, for which Class VI permits are the critical construction and operating permit. Currently, there are 62 CCS projects – including many with multiple wells – with permit applications pending with EPA. Project proponents anticipate that permitting will be faster if administered by the state instead of EPA. The latest developments last month include: (1) EPA’s proposal to grant primacy to Arizona; (2) EPA’s proposal to grant primacy to Texas; (3) a federal court decision rejecting a challenge to EPA’s earlier grant of primacy to Louisiana; and (4) an ongoing challenge to West Virginia’s recently granted primacy.
Arizona
On May 19, 2025, the US Environmental Protection Agency (EPA) published a federal notice of proposed rulemaking (NPRM) to grant primacy to Arizona for all well classes under the federal UIC program, including Class VI. 90 Fed. Reg. 21264 (May 19, 2025). Unlike other states that have sought Class VI primacy thus far, Arizona is unique in not currently having primacy over any UIC well classes. If finalized, EPA’s proposal would give Arizona Department of Environmental Quality (ADEQ) authority to regulate all underground injection of carbon dioxide for long-term geological sequestration within Arizona’s jurisdiction, excluding Indian lands. There has never been a Class VI permit issued in Arizona, and there are no pending Class VI permit applications in the state at this time. EPA will hold one virtual public hearing on June 25, 2025, on the proposed grant of primacy to Arizona during the comment period, which ends on July 3, 2025. Based on recent precedent from West Virginia’s Class VI primacy, we expect the final grant of primacy to be issued within a few months.
Texas
As we previously reported, on June 9, 2025, EPA issued a proposal to give Texas primacy over the Class VI program. EPA is taking public comment on the proposal through July 31, 2025, and will hold a public hearing on July 24, 2025. A final rule granting Class VI primacy for Texas is expected in Fall 2025.
When EPA issues final rules, Arizona and Texas would become the fifth and sixth states with primacy over Class VI wells, joining North Dakota (granted primacy in 2018), Wyoming (2020), Louisiana (2023), and West Virginia (2025). Meanwhile, other states’ Class VI primacy grants are facing lawsuits, including Louisiana and West Virginia.
Louisiana
On May 21, 2025, the United States Court of Appeals for the Fifth Circuit rejected the petition for review of the final rule granting Louisiana Class VI authorization by three environmental organizations, who asserted that EPA’s approval of Louisiana’s primacy did not follow proper procedure and that the transfer liability could potentially lead to environmental harm. Deep South Center for Environmental Justice v. EPA, No. 24-60084, 2025 WL 1452098 (5th Cir. 2025). The Fifth Circuit found that the ENGOs did not have standing to challenge the final rule granting primacy for Louisiana. This decision may signal that it will be challenging for opponents to successfully challenge EPA’s decision to grant Class VI primacy.
West Virginia
EPA is also currently facing a challenge to its Class VI primacy grant to West Virginia in the Fourth Circuit Court of Appeals. Petition for Review, West Virginia Surface Owners’ Rights Organization v. Zeldin, No. 25-1384 (4th Cir. filed Apr. 11, 2025). The challenge is based on concerns that there may not be sufficient resources or expertise available to properly regulate the wells. Briefing on the case is scheduled to begin next month.
Ultimately, EPA’s Class VI primacy grants to both Louisiana and West Virginia are likely to be upheld. This marks a continuation of the administration’s cooperative federalism approach to accelerating grants of primacy. As more states take primacy in issuing Class VI permits, project proponents anticipate that the Class VI permitting process will move more quickly, allowing more projects to move forward.
*Manasvini Venkatesh is not a lawyer.
What Regulated Businesses Should Know About the Supreme Court’s Recent NEPA Decision
The National Environmental Policy Act (NEPA) is a federal statute that outlines how federal agencies must review the environmental impacts of their regulatory actions. The regulated community has often viewed NEPA as an obstacle to a broad range of federal actions in areas ranging from energy permitting to agriculture.
This term, the US Supreme Court issued a landmark decision that represents a win for the regulated community. In Seven County Infrastructure Coalition et al. v. Eagle County, Colorado, et al. the Court determined that federal agencies were entitled to substantial deference in how they decided to implement NEPA and to what extent they must consider the environmental effects of upstream and downstream projects separate from the proposed action. As we discuss below, the decision, which aligns with other recent cases including Loper Bright v. Raimondo, opens the door for federal NEPA processes to occur faster and with greater predictability for developers and other groups, a victory for all entities operating under time constraints.
Case Background
The Seven County Infrastructure Coalition is a public entity created to help build public infrastructure in Utah. The Coalition sought approval from the US Surface Transportation Board (STB) to construct and operate an 88-mile railroad line in Utah’s Uinta Basin. The project aimed to connect the oil-rich region to the national rail network, facilitating the transport of crude oil from Utah to Gulf Coast refineries. NEPA required the Board to prepare a comprehensive Environmental Impact Statement (EIS) analyzing the project’s direct environmental effects. But the EIS did not fully analyze all attenuated potential environmental impacts from the project, particularly from increased upstream oil drilling in the Uinta Basin or downstream oil refining. The Board approved the project, and Eagle County, Colorado, and several environmental groups challenged the Board’s approval, arguing that NEPA required broader analysis. The DC Circuit agreed and vacated the EIS and project approval, prompting the Court’s review.
The Court’s holding in favor of the petitioners interprets the scope of a federal agency’s responsibility in implementing NEPA and clarifies courts’ role in reviewing that implementation.
Writing for a five-Justice majority, Justice Brett Kavanaugh reversed the DC Circuit and reinstated STB’s approval of the railroad project. The decision rejected the notion that the STB’s EIS was faulty for not sufficiently considering environmental effects of projects other than the railroad line itself, namely, the environmental effects of future increased oil drilling in the Uinta Basin and increased refining of crude oil that may occur once the railroad line is in place. The Court emphasized the substantial deference owed to federal agencies’ implementation of NEPA, including the extent to which agencies must consider the environmental effects of upstream and downstream projects separate from the proposed action.
Discussed more here, NEPA is a “purely procedural” statute that prescribes the necessary process for an agency’s review of environmental impacts of a proposed action. Because NEPA does not impose any substantive constraints, the Court emphasized that reviewing courts must confirm only that the agency has addressed environmental impacts and feasible alternatives of the project, and the adequacy of that analysis is relevant only to assess whether the agency adequately explained its final action. The Court determined that agencies are owed substantial deference because of their scientific and regulatory expertise on questions like the amount of detail required in the EIS, the relevant facts, and the environmental impacts and feasible alternatives the agency identified.
Critically, the Court instructed that courts should defer to an agency’s judgment about which indirect environmental effects to address and whether its assessment should include future projects, so long as those choices “fall within a broad zone of reasonableness.” Thus, going forward, NEPA does not compel agencies to analyze the environmental effects of other projects that are “separate in time or place” from the proposed action or that are outside the scope of the agency’s jurisdiction. The Court also suggested that, even if a court exercising the appropriate level of deference found an agency’s analysis in an EIS to be deficient, it should not automatically vacate the underlying agency approval. Rather, vacatur is appropriate only if the court is persuaded that the agency might disapprove, or materially alter, the project once it cures the deficiency. Applying those principles, the Court emphasized that the STB lacks regulatory authority over oil exploration or refining, and therefore upstream or downstream impacts stemming from the railroad project were not relevant to STB’s NEPA analysis.
Justice Sonia Sotomayor, joined by Justices Elena Kagan and Ketanji Brown Jackson, concurred in the judgment. The concurrence concluded that the STB was not required to analyze the upstream and downstream impacts identified by the DC Circuit because those oil drilling and refining activities were outside the scope of the STB’s jurisdiction, a principle that the Court’s precedents have long endorsed. (See, e.g. here.) As a result, the agency did not act arbitrarily by not reviewing a potential impact outside of the agency’s jurisdiction.
Key Takeaways
Deference After Loper Bright — A Nuanced Landscape
As we have discussed, Loper Bright ended Chevron deference — the principle that courts should defer to agencies’ decisions about the scope of their statutes. Seven County illustrates how Loper Bright applies in practice. The Court noted its holding that NEPA confers substantial discretion on federal agencies was “demanded by the statutory text,” evidently tracing back to the “purely procedural” function of the statute. In other words, NEPA presents an example of the exception to the Loper Bright rule that courts interpret statutes de novo and reinforces that agencies’ technical and scientific judgments are still owed substantial respect, if the agency provides a reasonable explanation.
Potential for More Streamlined Agency Processes
The Seven County decision could also speed up environmental reviews, reduce costs for agricultural product development and projects, reduce litigation risk, and offer more predictability and certainty. By narrowing the range of effects that agencies must analyze, and conferring significant discretion on agencies to determine the relevant facts and the level of detail required, the decision may streamline environmental reviews and expedite approval timelines.
Significantly, the Court’s discussion of remedy can also provide regulated entities more certainty on the durability of agency approvals. The Court clarified that an EIS is only one input into an agency’s ultimate approval. Thus, even if a court finds flaws in the environmental review of a particular action, it should not automatically vacate the underlying agency approval. This approach may reduce the risk that minor procedural missteps will derail innovations that take years and significant investment to develop. This reasoning may also challenge plaintiffs raising NEPA arguments in an effort to stymie agricultural and biotechnology innovations. Developers that rely on agency approvals should continually reassess their NEPA and litigation strategies in light of Seven County. While agencies retain broad discretion, maintaining a transparent record that ties each scoping decision to statutory authority and practical needs will be essential for developers to securing, and sustaining, approvals and withstanding legal challenges.
In line with the Court’s decision and as part of the Administration’s efforts to streamline environmental reviews, the White House Council on Environmental Quality recently released a detailed plan to accelerate NEPA reviews by implementing new technology standards, data sharing, and process automation across federal agencies.
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