Trump Administration Rolling Back Consideration of Environmental Justice in Federal Decision-Making
President Donald Trump issued a flurry of executive orders (EOs) in his first hours and days in office. The numerous EOs cover a range of topics, many of which impact environmental regulation and related areas. While many of President Trump’s EOs will be—and already are—facing litigation challenges, and others will require congressional approval prior to full implementation, the EOs nevertheless signal the intention and direction of the Trump administration in the environmental law realm and beyond. One key area at the center of these policy changes is the dismantling of environmental justice (EJ) initiatives and related policymaking. The Trump administration is widely gutting consideration of EJ in federal decision-making, primarily through EO: Ending Illegal Discrimination and Restoring Merit-Based Opportunity and EO: Initial Rescissions of Harmful Executive Orders and Actions, as well as through rescinding a swath of prior EOs, including:
EO 13985: Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.
EO 13990: Protecting Public Health and the Environment and Restoring Science To Tackle the Climate Crisis.
EO 14008: Tackling the Climate Crisis at Home and Abroad.
EO 14091: Further Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.
EO 14096: Revitalizing Our Nation’s Commitment to Environmental Justice for All.
EO 14052: Implementation of the Infrastructure Investment and Jobs Act.
EO 14082: Implementation of the Energy and Infrastructure Provisions of the Inflation Reduction Act of 2022.
History of Pursuing EJ
EJ has been defined as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws, regulations and policies.”1 In 1994, President Bill Clinton issued EO 12898, which was the first time federal agencies were directed to develop strategies for implementing EJ. Clinton’s EO has long been seen as the backbone of modern EJ policymaking in the United States. On 20 January 2025, President Trump revoked Clinton’s EO as part of an overall directive under EO: Ending Illegal Discrimination and Restoring Merit-Based Opportunity, which has a stated purpose of protecting Americans from discrimination by ending the use of diversity, equity, and inclusion (DEI) policies and programs. In repealing the Clinton-era mandate, President Trump said the policies violate federal civil rights laws and “deny, discredit, and undermine the traditional American values of hard work, excellence, and individual achievement in favor of an unlawful, corrosive, and pernicious identity-based spoils system.”
Biden’s EJ Legacy Dismantled
President Joe Biden and his administration enacted unprecedented and sweeping EJ policy reforms, including an expansion of President Clinton’s EO. This expansion established the “Justice40 Initiative” aimed at ensuring that marginalized or disadvantaged communities received at least 40% of federal benefits relating to the environment, housing, economic development, and other areas. Additionally, the expansion required federal agencies to develop equity action plans to detail their efforts to advance DEI to the agencies’ internal and external activities. On his first day back in office, President Trump rescinded a swath of Biden administration EOs aimed at promoting federal EJ programs. These include: EO 13985, EO 13990, EO 14008, EO 14091, EO 14096, EO 14052, and EO 14082. Some key highlights of these now-rescinded EOs are:
EO 13985 is President Biden’s day-one initiative establishing government-wide initiatives to advance racial equity and support for underserved communities in federal policies and programs.
EO 14008 established the Justice40 Initiative and created the White House Environmental Justice Advisory Council and the White House Interagency Environmental Justice Advisory Council. It also required the Council on Environmental Quality to create the Climate & Economic Justice Screening Tool to spatially define “disadvantaged communities” based on various climate, public health, transportation, and energy justice indicators.
EO 14091 directed federal agencies to undertake additional efforts to advance EO 13985 and required federal agencies to assemble agency equity teams led by a senior official to support equity training and leadership development for staff.
EO 14096 focused on incorporating EJ into the decision-making of all executive branch agencies and established the White House Office of Environmental Justice, which is responsible for coordinating EJ efforts across the federal government.
Key Takeaways
As expected, President Trump’s return to the White House is substantially shifting the federal government’s approach to EJ. While additional future federal efforts to roll back Biden-era EJ initiatives are likely, the focus on EJ by many states will continue. Importantly, states’ EJ laws will not be immediately impacted by the actions of the Trump administration; instead, we expect the rollback of EJ at the federal level will likely encourage many states to more aggressively enact and enforce EJ standards and policies. Indeed, the regulated community should prepare for “blue state”-led regulators and attorney generals to pursue a vigorous counter-response to the Trump administration’s policies, which may include heightened enforcement actions, new state and local EJ rules, and added staffing for state environmental agencies. The firm has assembled a task force that is closely watching EJ developments under the new administration, including impacts at the state level, and is ready to work with clients to understand how these and other changes may impact their businesses.
Footnotes
1 https://www.epa.gov/environmentaljustice.
D.C. Circuit Vacates PHMSA’s LNG-by-Rail Rule
On 17 January 2025, the D.C. Circuit Court of Appeals vacated a 2020 Pipeline and Hazardous Materials Safety Administration (PHMSA) rule—the “Hazardous Materials: Liquefied Natural Gas by Rail Rule” (the LNG-by-Rail Rule)—that allowed for the transportation of liquefied natural gas (LNG) on rail cars.1 The LNG-by-Rail Rule was challenged by a collection of environmental organizations, state governments, and tribal governments for failing to adequately consider the environmental impact of allowing LNG transport by rail. The decision to limit the domestic transportation of LNG conflicts with President Trump’s “American Energy Dominance” agenda and the stated intentions of the nominee for secretary of energy to expand US LNG infrastructure.2 In light of the D.C. Circuit vacating a PHMSA natural gas pipeline safety rule in August 2024 and the published-but-paused 17 January 2025 PHMSA final rule on pipeline methane emission detection requirements, this decision adds yet another element of regulatory uncertainty for domestic natural gas transportation as the second Trump administration prepares to implement its energy agenda.3
History of the LNG-by-Rail Rule
The LNG-by-Rail Rule was first promulgated by PHMSA during the Trump administration in October 2019 and permitted LNG to be transported subject to specific rail car tank requirements and operational controls.4 PHMSA determined that the LNG-by-Rail Rule would not trigger the preparation of an environmental impact statement (EIS) pursuant to the National Environmental Policy Act (NEPA).5 The final rule was published in July 2020 but was promptly suspended in 2021 by President Biden in a series of executive actions that reconsidered various Trump administration rules and actions that were deemed inconsistent with the Biden administration’s climate policies.6 PHMSA implemented the suspension before LNG transport by rail could occur, and directed that the suspension would last until 30 June 2025 or until PHMSA completed rulemaking amending the LNG-by-Rail Rule, whichever occurred first.7
Despite the suspension of the LNG-by-Rail Rule, the Biden administration continued to defend the LNG-by-Rail Rule against challenges from environmental groups, state governments, and tribal governments.8 During oral argument, the federal government claimed that it had no intention of modifying the LNG-by-Rail Rule—meaning that the suspension would lift in 2025 and the LNG-by-Rail Rule would retake effect. Petitioners challenged, among other issues, PHMSA’s decision to forgo the preparation of an EIS as arbitrary and capricious. The D.C. Circuit agreed, vacating the LNG-by-Rail Rule and remanding to PHMSA for further proceedings.9
Summary of the LNG-by-Rail Rule
In October 2019, PHMSA issued the Notice of Proposed Rulemaking in consultation with the Federal Railroad Administration after the Association of American Railroads (AAR) petitioned for a review of existing regulation concerning the transportation of LNG by rail.10 In its petition, the AAR cited the commercial interest in shipping LNG by rail, specifically from Pennsylvania to New England and between the US-Mexico border.11 The AAR noted that shipment by rail was “undeniably safer” that over-the-road transportation of LNG and compared LNG to the other, similar cryogenic liquids that PHMSA permits to be transported by rail.12 The petition specifically suggested that the DOT-113C120W (DOT-113) rail car be used for the shipment of LNG.13
Nine months later, PHMSA published the final rule authorizing the transportation of LNG by rail in DOT-113 tank cars.14 DOT-113 cars are designed to carry cryogenic liquids and have “numerous safety features that reduce the risk of an explosion or the release of cargo.”15 DOT-113 rail cars have typically been used to transport refrigerated ethylene and argon, and PHMSA required a number of safety and operational updates for DOT-113 cars used for transporting LNG.16 First, The LNG-by-Rail Rule required several physical updates to tank cars transporting LNG, including increased tank thickness, improved steel quality, the installation of remote monitoring devices, and advanced braking technology.17 Second, the LNG-by-Rail Rule increased the maximum filling density of each tank to reduce the number of rail cars needed for LNG transport and required railroads to adopt routing safety requirements for analyzing LNG transportation routes.18 Notably, the LNG-by-Rail rule did not include speed limits or tank car-per-train limits for trains transporting LNG.
PHMSA published an Environmental Assessment (EA) that “touted the demonstrated safety record” of the DOT-113 tank car and determined that the LNG-by-Rail Rule did not have a “significant impact on the human environment” and would therefore not require an EIS under Section 102(2) of NEPA.19
Challenges to the LNG-by-Rail Rule
A group of environmental petitioners, a collection of 15 states, and the Puyallup Tribe all petitioned the D.C. Circuit Court of Appeals to review the LNG-by-Rail Rule.20 The D.C. Circuit consolidated the appeals and reviewed petitioners’ arguments against the LNG-by-Rail Rule. Although the petitioners challenged the LNG-by-Rail Rule on multiple grounds, the D.C. Circuit only ruled on the question of whether PHMSA’s decision to forgo an EIS was arbitrary and capricious.21
Petitioners argued that PHMSA “disregarded” the DOT-113 tank car’s history of failure and ignored significant risk by failing to include car limits or speed limits for rail cars transporting LNG.22
The D.C. Circuit Court Ruling
The D.C. Circuit sided with petitioners and vacated the LNG-by-Rail Rule. Judge Florence Pan authored the opinion, joined on the panel by Judges Patricia Millet and A. Raymond Randolph. Even though the LNG-by-Rail Rule was suspended and there was at least the theoretical possibility of pending rulemaking, the court concluded that the case was ripe for review. The court found that transporting LNG by rail poses a “low-probability but high-consequence risk” to the environment in the case of a derailment.23 The spread of a “suffocating vapor cloud” or an “explosion” of the flammable material were “real possibilities” that PHMSA failed to consider in its EA, according to the decision.24 The court held that PHMSA should have considered the history of DOT-113 car derailments—two derailments in the last four years—and concluded that the risk of another derailment was “neither remote nor speculative.”25 Given the small number of DOT-113 cars in use and the history of failure, the court held that PHMSA’s assessment of environmental risk was insufficient.
Additionally, The D.C. Circuit held that by failing to impose a speed limit on rail cars transporting LNG or limit the number of LNG tank cars per train, the LNG-by-Rail Rule increased the risk of environmental impact from derailment.26 Although PHMSA did impose additional safety controls and mandated upgrades to the DOT-113 car, the court was unsatisfied by the safeguards and noted that PHMSA failed to explain how specific procedures were “adequate to address the extreme dangers associated with a derailment.”27
The D.C. Circuit concluded that the risk of an accident while transporting LNG by rail under the LNG-by-Rail Rule was sufficiently significant to require an EIS and remanded the LNG-by-Rail Rule to PHMSA for further proceedings.28 The court noted that the LNG-by-Rail Rule “raise[d] substantial environmental questions” that may require further review once an EIS was prepared, but expressed no opinion on the “wisdom of any particular set of safety protocols” for transporting LNG by rail.29
Revisiting the LNG-by-Rail Rule: The Trump Administration
The D.C. Circuit’s ruling—which came down the Friday before President Trump’s inauguration—will add another layer of complexity to any effort to reinstate the LNG-by-Rail Rule. For now, this hurdle remains procedural. To reinstate the LNG-by-Rail Rule, PHMSA will have to prepare an EIS and take into account the environmental risks before approving the transportation of LNG by rail. And while the D.C. Circuit expressed “no opinion on the wisdom of any particular set of safety protocols,” it left the door wide open to later challenges, explaining that “future legal challenges to the substance of that decision would . . . be brought under some other statute, not NEPA.”30
The Trump administration has not made any comment on the D.C. Circuit ruling or the LNG-by-Rail Rule specifically. However, the new administration has taken several actions indicating a substantial departure from the Biden position on natural gas. President Trump’s day-one executive orders have directed federal agencies to begin reviewing any policies that affected domestic energy production. The “Unleashing American Energy” and the “Declaring a National Energy Emergency” executive orders identify the development, transportation, and export of natural gas as a top priority.31
As the second Trump administration begins to take form and implement its “American Energy Dominance” agenda, regulating the domestic and international transportation of natural gas will remain a prominent focus. Over the coming months, the incoming leadership at the Departments of Energy, Interior, and Transportation are likely to act on a series of pressing natural gas policy questions. PHMSA will likely review major pipeline-related policies like the “Pipeline Safety: Gas Pipeline Leak Detection and Repair” rule finalized in the last days of the Biden administration but paused subject to President Trump’s “Regulatory Freeze Pending Review” executive order.32 Agencies have been granted emergency authority to “facilitate” domestic energy transportation, specifically on the West Coast, in the Northeast, and in Alaska.33 The Firm will continue to monitor this rapidly developing area of policy and provide relevant updates on our page.
Footnotes
1 Sierra Club, et al., v. U.S. Dep’t of Transp., et al., 2025 WL 223869 (D.C. Cir. 2025).
2 Timothy Gardner, Trump’s Energy Department Pick Calls for More LNG and Nuclear Power, Reuters (Jan. 15, 2025), https://www.reuters.com/business/energy/trumps-energy-department-pick-call-more-lng-nuclear-power-2025-01-15/.
3 David Wochner, Tim Furdyna, Stuart Robbins, D.C. Circuit Vacates New PHMSA Rules Related to Natural Gas Pipelines, K&L Gates (Aug. 28, 2024), https://www.klgates.com/DC-Circuit-Vacates-New-PHMSA-Rules-Related-to-Natural-Gas-Pipelines-8-28-2024; Pipeline Safety: Gas Pipeline Leak Detection and Repair, Pipeline and Hazardous Materials Safety Administration, Docket No. PHMSA-2021-0039 (Jan. 17, 2025).
4 Unleashing American Energy, The White House (Jan. 20, 2025), https://www.whitehouse.gov/presidential-actions/2025/01/unleashing-american-energy/.
5 Hazardous Materials: Liquefied Natural Gas by Rail, 85 Fed. Reg. 44994 (Jul. 24, 2020).
6 Exec. Order No. 13,990, 86 Fed. Reg. 7,037 (Jan. 20, 2021); Sierra Club at 10.
7 Sierra Club at 11.
8Id., at 10.
9 Id., at 24.
10 85 Fed. Reg. at 44996.
11 Petition for Rulemaking to Allow Methane, Refrigerated Liquid to be Transported in Rail Tank Cars, Association of American Railroads, PHMSA-2017-0020-0002 (Jan. 17, 2017) at 2.
12 Id., at 2-3.
13 Id., at 4.
14 85 Fed. Reg. at 44994.
15 Sierra Club at 6.
16 Id., at 20-21.
17 Id., at 9.
18 Id., at 9.
19 85 Fed. Reg. at 45027.
20 Sierra Club at 10 (Environmental petitioners included the Sierra Club, Center for Biological Diversity, Clean Air Council, Delaware Riverkeeper Network, Environmental Confederation of Southwest Florida, and Mountain Watershed Association; State petitioners included Maryland, New York, California, Delaware, the District of Columbia, Illinois, Massachusetts, Michigan, Minnesota, New Jersey, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington).
21 Id., at 17 (Petitioners also brought claims under NEPA’s public participation requirement, the Hazardous Materials Transportation Act safety standards, the Administrative Procedure Act, and PHMSA’s failure to consider greenhouse gas emissions and environmental justice communities).
22 Id., at 17.
23 Id., at 19.
24 Id., at 19.
25 Id., at 20.
26 Id., at 22.
27 Id., at 23.
28 Id., at 24.
29 Id., at 23-24.
30 Id. at 23-24 n. 6.
31 Unleashing American Energy, The White House (Jan. 20, 2025), https://www.whitehouse.gov/presidential-actions/2025/01/unleashing-american-energy/; Declaring a National Energy Emergency, The White House (Jan. 20, 2025), https://www.whitehouse.gov/presidential-actions/2025/01/declaring-a-national-energy-emergency/.
32 Regulatory Freeze Pending Review, The White House (Jan. 20, 2025), https://www.whitehouse.gov/presidential-actions/2025/01/regulatory-freeze-pending-review/.
33 Declaring a National Energy Emergency, The White House (Jan. 20, 2025), https://www.whitehouse.gov/presidential-actions/2025/01/declaring-a-national-energy-emergency/.
NY DEC Proposes Environmental Justice-Focused Amendments to SEQRA and UPA—Potential Impacts on Project Permitting
On Jan. 29, 2025, the New York State Department of Environmental Conservation (DEC) proposed amendments to its State Environmental Quality Review Act (SEQRA) (6 NYCRR Part 617) and the Uniform Procedures Act (UPA) (6 NYCRR Part 621) regulations to integrate environmental justice (EJ) considerations into environmental reviews. These amendments, mandated by Environmental Conservation Law (ECL) Article 8, build upon DEC’s final Division of Environmental Permits Policy “Permitting and Disadvantaged Communities” (DEP-24-1), which replaced the draft DEP-23-1 and has guided DEC permit applicants in assessing disproportionate burdens on disadvantaged communities (DACs) since its finalization on May 9, 2024. However, the proposed regulations would expand the scope of these requirements beyond DEC-regulated programs by incorporating disproportionate burden assessments into SEQRA, which applies to all lead agencies conducting environmental reviews, not just DEC. These amendments also align with New York’s 2023-2024 environmental justice siting law, which strengthened EJ protections in state permitting decisions. By codifying and broadening these EJ considerations, the amendments seek to ensure that projects located in or impacting DACs do not exacerbate existing pollution burdens, potentially influencing permitting outcomes and project timelines.
Disproportionate Pollution Burden in SEQRA Determinations
The proposed rule adds a new criterion to the determination of significance under SEQRA: an action that “may cause or increase a disproportionate pollution burden on a disadvantaged community that is directly or significantly indirectly affected by such action” (6 NYCRR § 617.7(c)(1)(xiii)). Under the existing regulatory framework, government actions resulting in at least one significant adverse environmental impact warrants a determination of significance, triggering the preparation of an Environmental Impact Statement (EIS) on the proposed action. Under the proposed changes offered by DEC, a determination of significance may be warranted based on potential disproportionate burdens to an associated DAC, even in the absence of significant adverse environmental impacts, triggering the need to prepare an EIS. Thus, the question of what constitutes a “disproportionate burden” becomes paramount for applicants seeking government funding or approvals subject to SEQRA.
Mandated Cumulative Impact Assessments and DEC Assessment Tools
DEC’s proposed regulations also facilitate preparation of required disproportionate burden analyses. Agencies must now evaluate whether an action would result in an increased burden on DACs by considering “reasonably related long-term, short-term, direct, indirect, and cumulative impacts” (6 NYCRR § 617.7(c)(2)). The proposed rule updates DEC’s Environmental Assessment Forms (EAFs) to require applicants to analyze and disclose potential disproportionate pollution burdens on DACs (6 NYCRR § 617.2(l)). These changes apply to both the Short Environmental Assessment Form (Appendix A) and Full Environmental Assessment Form (Appendix B). The revised EAF requirements place a greater responsibility on project sponsors to conduct detailed environmental justice assessments before submitting applications, which could add to project planning costs and development timelines.
The Role of the Disadvantaged Community Assessment Tool (DACAT)
To facilitate the implementation of cumulative impact assessments, DEC has introduced the Disadvantaged Community Assessment Tool (DACAT), a screening tool designed to identify DAC census tracts at risk of increased pollution burdens. Utilizing data from the Climate Justice Working Group (CJWG) DAC map, DACAT compares disadvantaged communities to statewide and regional non-DAC benchmarks and flags census tracts with a 25% higher pollution burden score for increased scrutiny. Thus, this tool is intended to help applicants and lead agencies identify DACs with existing pollution burdens. Rather than assessing project-specific impacts, DACAT relies on available data to flag areas based on historical environmental burdens, ensuring a standardized approach. Additionally, the tool designates all Indigenous lands as DACs, aligning with the finalized DAC map created by the CJWG, though this approach may prompt discussions about its regulatory implications. The proposed use of pre-set percentile scores to identify pollution burden provides certainty but may also invite feedback during the comment process regarding its flexibility. DEC will need to balance these factors as it evaluates the tool’s implementation.
Increased Permitting Hurdles
While a project’s environmental justice impacts have been considered under SEQRA, the proposed regulations require a more fulsome review of impacts to the surrounding community by requiring that an applicant assess whether a project or action poses a “disproportionate burden” on a DAC and, if so identified, include mitigation measures or alternative project designs.
Additional Substantive EJ Obligations Contained in Amendments to the Uniform Procedures Act (UPA)
In addition to SEQRA, DEC is proposing amendments to its Uniform Procedures Act, 6 NYCRR Part 621 (UPA), which governs how the agency processes permit applications, to further integrate environmental justice considerations into New York’s permitting reviews. These changes expand the scope of required environmental justice reviews by formalizing how “existing burden reports” are prepared in connection with certain DEC permit applications, including air facility permits, water discharge permits and solid waste permits. This change is required by the 2023 amendment to ECL Article 70, enacted as Chapter 49 of the Laws of 2023, which mandates that permit applicants prepare an existing burden report where the applicable permit “may cause or contribute more than a de minimis amount of pollution to any disproportionate pollution burden on a disadvantaged community.” ECL 70-0118(2)(a). Applications for permit renewals and modifications are also required to prepare existing burden reports, though DEC may exempt the applicant from such requirement if it determines that “the permit would serve an essential environmental, health, or safety need of the disadvantaged community for which there is no reasonable alternative.” ECL 70-0118(2)(b). See GT Alert,“New York Regulator Releases Draft Policy to Implement Environmental Justice Provisions of NY Climate Law,” October 2023.
Pursuant to ECL 70-0118, DEC must consider the existing burden report when considering any new permit application and provides that the agency “shall not issue an applicable permit for a new project if it determines that the project will cause or contribute more than a de minimis amount of pollution to a disproportionate pollution burden on the disadvantaged community.” ECL 70-0118(3)(b). Neither the amended statute nor the proposed regulations define that level of pollution as greater than de minimis. For permit renewals and modifications, the statute and proposed implementing regulations would preclude DEC from issuing permit renewals or modifications when permit renewal or modification “would significantly increase” the disproportionate burden on the DAC. ECL 70-0118(3)(c) and (d).
The proposed regulations also emphasize community participation, requiring applicants to demonstrate how they will mitigate disproportionate pollution impacts and engage with affected communities. Under the proposed rule, applicants must “provide opportunities for meaningful community engagement” and incorporate public feedback into project designs (6 NYCRR § 621.4(f)). This provision introduces potential new legal and regulatory risks for developers, as failure to meet these standards could result in permit challenges or denials.
As proposed by DEC, the amendments to SEQR and UPA could present challenges to applicants seeking air, water discharge or solid and hazardous waste permits implicating non-de minimis impacts on DACs. However, the recent statutory changes, as implemented by the draft regulations, could also impact projects in or near that DACs that aren’t commonly understood as burdensome to a community. Although these proposed regulations attempt to clarify the process DEC will apply for preparing and considering existing burden reports, many permittees may find themselves in uncharted waters under the new regulatory framework.
For example, renewable energy projects such as solar farms or wind turbines are generally considered environmentally beneficial, yet under the proposed framework, their siting within or near a DAC may trigger heightened scrutiny. While these projects aim to reduce carbon emissions, they could still introduce localized environmental concerns, such as land use changes, noise, or other cumulative burdens, requiring additional evaluation. Similarly, infrastructure improvements, including road expansions or public transit enhancements, may face greater regulatory hurdles. Although these projects often provide public benefits, their potential to contribute to temporary construction-related pollution, increased traffic congestion, or altered community dynamics could necessitate a more comprehensive review process.
While the draft regulations seek to provide clarity regarding how DEC will assess existing burden reports, many permit applicants may find themselves navigating an increasingly complex regulatory landscape. As a result, projects that historically may not have raised significant environmental justice concerns could now be subject to more stringent review, adding new layers of uncertainty to the permitting process. See N.Y. Dep’t of Envtl. Conservation, Program Policy DEP 24-1: Permitting and Disadvantaged Communities (2024).
EPA Extends Comment Period on Draft TSCA Risk Evaluation for 1,3-Butadiene
The U.S. Environmental Protection Agency (EPA) announced on January 31, 2025, that it is extending the public comment period on the draft risk evaluation for 1,3-butadiene under the Toxic Substances Control Act (TSCA). 90 Fed. Reg. 8798. Comments that were due February 3, 2025, are now due March 5, 2025. EPA states in its announcement that to give the peer reviewers on the Science Advisory Committee on Chemicals (SACC) time to review any additional comments received, it is in the process of rescheduling the February 4, 2025, virtual preparatory meeting and the February 25-28, 2025, peer review meeting for the draft risk evaluation. EPA will announce the new dates for these meetings once they have been selected.
Deadline for Filing Annual Pesticide Production Reports — March 1, 2025
The March 1, 2025, deadline for all establishments, foreign and domestic, that produce pesticides, devices, or active ingredients to file their annual production for the 2024 reporting year is fast approaching. Pursuant to Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 7(c)(1) (7 U.S.C. § 136e(c)(1)), “Any producer operating an establishment registered under [Section 7] shall inform the Administrator within 30 days after it is registered of the types and amounts of pesticides and, if applicable, active ingredients used in producing pesticides” and this information “shall be kept current and submitted to the Administrator annually as required.”
Reports must be submitted on or before March 1 annually for the prior reporting year’s production and distribution. The report, filed through the submittal of the U.S. Environmental Protection Agency (EPA) Form 3540-16: Pesticide Report for Pesticide-Producing and Device-Producing Establishments, must include the name and address of the producing establishment, as well as pesticide production information, such as product registration number, product name, and amounts produced and distributed. The annual report is always required, even when no products are produced or distributed.
EPA has created the electronic reporting system to submit pesticide-producing establishment reports using the Section Seven Tracking System (SSTS). Users will be able to use SSTS within EPA’s Central Data Exchange (CDX) to submit annual pesticide production reports. Electronic reporting is efficient, saves time by making the process faster, and saves money in mailing costs and related logistics. EPA is encouraging all reporters to submit electronically to ensure proper submission and a timely review of the report.
Links to EPA Form 3540-16, as well as instructions on how to report and how to add and use EPA’s SSTS electronic filing system, are available below:
EPA Form 3540-16: Pesticide Report for Pesticide-Producing and Device-Producing Establishments;
Instructions for Completing EPA Form 3540-16 (available within the ZIP file); and
Electronic Reporting for Pesticide Establishments.
Further information is available on EPA’s website.
US Withdrawal From the Paris Climate Accord and its Impact on the Voluntary Carbon Market
Introduction: A Withdrawal with Broad Implications
On January 20, 2025, President Donald Trump issued a series of executive orders on energy and environmental topics that included initiating a US withdrawal from the Paris Climate Accords, a move consistent with his previous term’s policy and a central promise of his campaign.
This order was an anticipated “day one” action, as President Trump withdrew from the Paris Agreement during his first term and clearly stated his intention to repeat the action upon taking office again. The executive order references Trump’s distaste for international agreements that do not properly balance domestic economic and energy-sector development with environmental goals.
To formally pull the United States out of the Paris Agreement, the Trump administration will need to formally submit a withdrawal letter to the United Nations, which administers the pact. The withdrawal would become official one year after the submission. The formal withdrawal of the United States and subsequent changes to agreements under the UN Framework Convention on Climate Change cannot be transmitted to the United Nations until President Trump’s nominee to be US Ambassador to the UN, Rep. Elise Stefanik (R-NY), is confirmed by the Senate. She appeared before the Senate Committee on Foreign Relations on January 21, 2025, for a confirmation hearing, and the Senate is expected to vote on her confirmation this week.
This announcement coincided with the declaration of a national energy emergency under another executive order, as well as several other executive orders issued on the same day or since that together emphasize a refocus on hydrocarbon production and energy independence without mention of any correlative offset commitments.
Indirect Impacts on the Voluntary Carbon Market
The withdrawal raises key questions about the future of the voluntary carbon market (VCM), particularly in light of the Paris Climate Accords’ role in driving offset demand.
Under the Biden administration, the US government’s strong support for carbon markets included endorsement of guiding principles to bolster integrity, CFTC guidance to facilitate the scaling of carbon credit trading on derivative markets and fostering private sector confidence in the VCM. In contrast, the Trump administration’s decision to withdraw from the Paris Agreement and its general dissatisfaction with ESG and climate disclosure initiatives may undermine confidence in the VCM by reducing the impetus for corporate and national net-zero commitments.
Without the federal endorsement of climate goals, corporate strategies might shift away from investing in carbon offsets, diminishing demand for carbon credits. Furthermore, uncertainty surrounding federal support could delay or derail the development of new VCM projects that depend on long-term revenue from carbon credit sales. If federal support for the VCM is lacking, the private sector may follow suit.
Lessons From the First Withdrawal: Resilience of the Market
Under President Trump’s first term, the VCM subsisted under an administration that did not support the Paris Accord from the beginning. In that period, the United States was actually only “out of” the Paris Agreement for about 100 days — despite the withdrawal being initiated at the beginning of that term — with the federal messaging to the market clear from the outset (if not fully in effect). The delay was due to the signatory countries only being able to give a notice to withdraw from the Paris Agreement within the first three years of its start date — which, for the United States, was November 4, 2016 — with a subsequent one-year withdrawal process to follow. The United States therefore formally withdrew on November 4, 2020, the day after Joe Biden won the election, and re-entered the Paris Agreement under President Biden on February 19, 2021.
It should be emphasised that President Trump’s first withdrawal from the Paris Climate Accord did not significantly hinder the VCM. In fact, the market grew during that period, with robust private-sector demand for offsets driving progress. Between 2016 and 2021, the VCM experienced notable expansion, both in terms of transaction volume and the range of projects receiving funding. Carbon credit issuances from the four main registries increased in volume significantly from 2017 to 2021 (by more than 300 percent). There was then a dip after 2021 with the chief causal suspects being the scrutiny over market robustness, slow progress under the annual UN COP gatherings (in particular regarding the roll out under Article 6.4 of an international UN-backed trading mechanism for carbon credits) as well as the expected market vagaries of a young, developing trading system. Few attributed the cause to the delayed impact from the first US withdrawal from the Paris Climate Accords years before the dip. The resilience of the VCM suggests that federal policy is not the sole determinant of its trajectory.
Furthermore, the market is global in nature and likely to grow with international offset trading, further insulating it from shortfalls in federal support. The increasing integration of international carbon trading mechanisms provides additional stability and opportunity for the VCM, independent of domestic policy shifts. COP 29 made significant advances with respect to the Article 6.4 trading mechanism and, when operational, this is expected to bolster the VCM globally.
Additionally, the voluntary nature of the VCM means it operates largely outside regulatory frameworks, relying instead on private-sector leadership and investment. In this context, a lack of government support could incentivize corporations to independently bolster the market, particularly as international competition for climate leadership intensifies.
A Pro-Market Administration: Contradictions and Possibilities
To be sure, the Trump administration’s broader climate stance creates potential headwinds for the VCM, a point that is underscored by the administration’s other early moves to pull back from federal initiatives that underpin investment in projects that could generate voluntary carbon credits (discussed below). However, in addition to the points outlined above, there are other reasons to believe that the VCM could thrive despite what might be perceived to be a federal withdrawal. As a “pro-markets” administration, Trump’s economic policies prioritize private-sector growth and innovation. The VCM represents a burgeoning industry with significant economic potential, aligning with the administration’s stated commitment to fostering successful markets. In this context, the VCM should not pose a risk to the economic interests or energy security of the United States, which are the main concerns that the executive orders seek to address.
Supporting the VCM could also serve as a strategic response to growing foreign competition in the carbon trading space, ensuring US companies remain competitive globally.
Other Potential Executive Order Headwinds for VCMs
In addition to withdrawing the United States from the Paris Climate Accord, President Trump has so far directed the government not only to emphasize and clear the way for new hydrocarbon production and infrastructure, but also to take aim at Biden-era regulations, grants and loan programs that encourage non-hydrocarbon energy and energy transition projects.
For example, President Trump has issued executive orders and related memoranda:
pausing federal funding streams under existing law and the disbursement of additional funds through the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) (including some that currently flow to energy transition projects);
withdrawing offshore areas from future wind energy leasing;
freezing, at least for now, the issuance of awards and permits for wind projects; and
rescinding the Biden administration’s priorities and coordination efforts for implementing the IIJA and the IRA.
However, within a few days of the announcement of the pause on federal funding streams, this action was temporarily stayed by at least two federal judges pending review and a memorandum detailing the funding to be frozen was subsequently rescinded by the White House.
The pause in authorized and appropriated clean energy spending has been criticized on constitutional grounds. As noted above, preliminary court challenges have resulted in some setbacks for the new administration on this front. However, it is anticipated that the administration will continue to press its agenda calling into question new governmental expenditures for certain disfavoured technologies or projects.
The above actions may reduce developer appetite (and if the actions are fully realized, federal funding) for projects that could play a role in generating credits for the VCM, and that may in turn reduce its liquidity and viability. However, the reasons for potential resilience of the VCM discussed above also apply to these administration actions. Due in part to the differences in how voluntary carbon offsets are generated as compared with federal tax credits, not all transactions and projects involved in the creation or trading of offset in the VCM are impacted by these actions, and the administration’s pursuit of new infrastructure and energy production may ultimately benefit such projects.
Conclusion: Competing Factors and an Uncertain Future
The US withdrawal from the Paris Climate Accord under President Trump and the new administration’s actions seeking to roll back existing incentives for energy transition and climate-focused new projects introduces potential challenges for the VCM, from reduced federal support to weakened corporate commitments to offsets. However, the market’s unregulated nature, historical resilience and alignment with private-sector growth could offset these challenges. The ultimate trajectory of the VCM will depend on the interplay between federal initiatives, private-sector leadership and international climate efforts. As the global demand for carbon offsets continues to rise, the US VCM may well find pathways to growth despite a shifting domestic policy landscape.
Proposition 65: California’s Office of Environmental Health Hazard Assessment Adopts Changes to the “Short-Form” Warning
California’s Safe Drinking Water and Toxic Enforcement Act of 1986, Health & Safety Code Section 25249.5 et seq. (“Proposition 65”) prohibits manufacturers, suppliers, distributors, retailers, and other entities in the stream of commerce from knowingly and intentionally exposing California consumers to certain listed chemicals above a safe harbor level without first providing a “clear and reasonable” warning to such individuals. (Health & Safety Code § 25249.6). The law applies to consumer product exposures, occupational exposures, and environmental exposures that occur in California. Presently, there are approximately 900 listed chemicals known by the State of California to cause cancer, reproductive harm, or both.
Since 2016, many businesses selling to California consumers have utilized “short-form warnings” on products, which alert consumers to possible risks of cancer or reproductive harm without identifying the specific chemical in the product. These abbreviated warning labels have remained popular for businesses because they streamline the process of providing necessary warnings to consumers while also protecting the businesses from costly enforcement actions brought either by the California Attorney General or private enforcers.
Following several years of failed attempts by California’s Office of Environmental Health Hazard Assessment (“OEHHA”) to limit the use of short-form warnings to products contained in or on small packaging, on December 6, 2024, OEHHA amended Proposition 65 to require companies to add at least one chemical name to the warning language—or the name of two chemicals, if the warning covers both cancer and reproductive toxicity, unless the same chemical is listed for both endpoints. While the changes are effective as of January 1, 2025, OEHHA is providing a three-year runway for companies to comply (until January 1, 2028). Importantly, products manufactured and labeled prior to January 1, 2028 using the old short-form warning do not have to be relabeled thereby providing an effective unlimited sell-through period.
These amendments do make an important concession to companies selling into California, however. Businesses now have the option to use words in the warning labels to clarify that they are specifically limited to California. But while this does allay years of concerns expressed by companies within and outside of California that the warning labels confused out of state consumers, the short-form is not really all that short anymore. Businesses selling products with truly small packaging will need to identify creative ways to label products with limited real estate.
These 2025 amendments also make explicit that: (1) short-form warnings may be used to provide safe harbor warnings for food products but do not require the yellow triangle symbol; (2) provide a 60-day transition period during the three-year implementation period for retailers to update online short-form warnings after notice from a manufacturer; and (3) provide new tailored safe harbor warnings for passenger or off-highway motor vehicle parts and recreational marine vessel parts.
While businesses in all consumer product industries have quite a bit of time to update their short form warning labels, it is important to make sure that business partners and affiliates all along the supply chain are aware of the upcoming changes and align their quality assurance testing and labeling processes to ensure timely compliance. Moreover, while the amendments do allow a lengthy sell off period for products manufactured and labeled on or before December 31, 2027, there is no doubt private enforcers will be on the hunt for non-compliant labeling. Therefore, if businesses do decide to sell off old labeling into 2028 and beyond, meticulous records should be kept of the manufacturing and labeling date on those products to allow for ease of tracking and use as an affirmative defense.
President Trump Orders Additional Tariffs on Imports from Canada, China, and Mexico
On 1 February 2025, President Trump announced that the United States plans to impose additional tariffs on imports from Canada, China, and Mexico to address “the sustained influx of illicit opioids and other drugs” into the United States which is having “profound consequences on our Nation, endangering lives and putting a severe strain on our healthcare system, public services, and communities.”
In sum, the US tariffs will:
Increase tariffs on goods from Canada and Mexico to 25% (oil imports from those countries will be subject to a 10% additional tariff);
Increase existing tariffs on imports from China (such as normal customs duties and Section 301 duties) by a 10% additional tariff; and
Should Canada, China, or Mexico impose retaliatory tariffs, the US tariffs will be increased further.
The US tariffs will go into effect at 12:01 am ET on 4 February 2025. Goods in transit as of 12:01 am ET 1 February will not be subject to the additional tariffs.
Duty drawback will not be allowed on subject imports, and subject imports will not be eligible for the Section 321 “de minimis” exception for small shipments to individual consumers valued at less than $800.
Retaliation by the impacted countries is likely to also take effect shortly, pending a resolution of the disputes.
The text of the first of the Executive Orders (EO) to be released, addressing tariffs on imports from Canada, is available here: https://www.whitehouse.gov/presidential-actions/2025/02/imposing-duties-to-address-the-flow-of-illicit-drugs-across-our-national-border/. A fact sheet issued by the White House explaining the rationale for the tariffs is available here: https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-imposes-tariffs-on-imports-from-canada-mexico-and-china/.
Of particular note for companies and investors with interests in US energy, metals, transportation, and manufacturing markets, the Canada tariff EO defines the scope of “energy” and “energy resources” covered by the 10% duty rate by reference to section 8 of EO 14156 of 20 January 2025. EO 14156, in turn, defines “energy” and “energy resources” as:
crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals, as defined by 30 U.S.C. 1606 (a)(3).
“Critical minerals” within the meaning of 30 U.S.C. 1606(a)(3), in turn, are currently defined by regulations issued by the US Geological Survey (via determination issued in 2022) as any of:
aluminum, antimony, arsenic, barite, beryllium, bismuth, cerium, cesium, chromium, cobalt, dysprosium, erbium, europium, fluorspar, gadolinium, gallium, germanium, graphite, hafnium, holmium, indium, iridium, lanthanum, lithium, lutetium, magnesium, manganese, neodymium, nickel, niobium, palladium, platinum, praseodymium, rhodium, rubidium, ruthenium, samarium, scandium, tantalum, tellurium, terbium, thulium, tin, titanium, tungsten, vanadium, ytterbium, yttrium, zinc, and zirconium.
Thus, the latest EO has the effect of re-imposing 10% duties on aluminum imports from Canada. It also means that the 25% duties on steel products from Canada have returned (because steel is not currently defined as a “critical mineral.”) In 2018, President Trump imposed tariffs of 25% and 10%, respectively, on steel and aluminum imports from Canada and Mexico under the authority of Section 232 of the Trade Expansion Act of 1962. Those Section 232 tariffs were withdrawn in 2018 following agreements with Canada and Mexico.
Lastly, in a late-night press conference on 1 February outgoing Canadian Prime Minister Trudeau gave some details on the retaliatory measures Canada will take. These will reportedly include 25% tariffs on $155 billion (Canadian) in US imports into Canada. $30 billion of these tariffs will be imposed on 4 February 2025. A further $125 billion will be imposed on 21 February to allow Canadian companies to find alternatives to US sources. The tariffs will be “far reaching” and will specifically target imports that Canada believes to be politically sensitive in the United States, including Canadian imports of US beer, wine, and bourbon, fruits, orange juice, consumer products, appliances, lumber, and plastics. In addition, Canada is considering with the governments of the Canadian provinces and territories several non-tariff measures including several related to critical minerals. Canada is coordinating with Mexico in response to US tariffs. Lastly, Prime Minister Trudeau called for Canadians to avoid purchasing US products and going to the United States for travel.
Growing Role of Natural Gas in Supporting Hyperscale AI Data Center Development
Data centers are foundational to the artificial intelligence (AI) ecosystem, providing the computational power necessary to train complex algorithms and manage massive data flows. The surge in data center construction across the United States is estimated to require an additional 47 gigawatts of power capacity by 2030.
Notably, approximately 60 percent of this U.S. demand is expected to be met by natural gas, creating significant growth opportunities for oil and gas suppliers. Globally, the demand for natural gas is projected to rise substantially, with some analysts forecasting up to 50 percent market growth over the next five years.
Oil companies, which historically produced electricity solely to support their own operations, are now poised to enter the broader power market amidst surging demand. This increased demand is driven in part by the rapid growth of technologies such as generative AI, which is expected to push U.S. electricity consumption to unprecedented levels in 2025 following two decades of stagnation.
In response to this growing need for power, the U.S. energy sector has invested heavily in new natural gas infrastructure and advocated for delaying the retirement of fossil-fuel power plants.
For major oil companies, this presents a promising opportunity. Some oil giants have already emphasized that the future of AI will depend as much on natural gas production from areas like the Southwest’s Permian Basin as it will on technological innovation in Silicon Valley. While data center developers have historically demonstrated a strong interest in using renewable energy sources, the intermittent nature of renewables and the slow pace of their buildout pose significant challenges. As a result, developers – particularly those constructing hyperscale data centers– are increasingly prioritizing energy solutions that offer speed and reliability.
This shift presents substantial growth opportunities for midstream natural gas transmission companies, which possess extensive pipeline networks capable of delivering consistent and efficient energy to meet the demands of large-scale data centers. By leveraging these established infrastructure assets, midstream companies are well-positioned to address the pressing energy needs of the rapidly expanding data center industry, even as the sector continues to explore pathways toward long-term sustainability.
Key Applications
One key area of impact is the advancement of battery technologies. These innovations can store surplus energy from renewable sources and provide reliable backup power during outages. Additionally, the industry’s knowledge of optimizing energy transmission networks can minimize energy losses and ensure maximum power delivery to data centers. Through strategic partnerships with technology companies, the energy sector is playing an essential role in creating more sustainable and efficient AI data centers.
Another critical contribution is the application of carbon capture and storage (CCS) technologies to reduce AI data centers’ environmental footprint. These facilities, which support large-scale AI models and applications, consume vast amounts of energy and contribute to greenhouse gas emissions. By implementing CCS solutions, energy companies can capture and store CO2 emissions generated by data centers, significantly reducing their carbon footprint. This approach aligns with the broader goals of both industries to lower environmental impact and transition toward cleaner energy solutions.
The intensifying competition for electricity has also led some major technology companies to reconsider their climate-focused commitments, which previously emphasized reliance exclusively on renewable energy sources, such as wind and solar, for powering energy-intensive AI data centers. This shift underscores the tension between the rising energy demands of emerging technologies and efforts to achieve sustainability goals.
Building an AI data center facility is a complex and capital-intensive endeavor that requires careful planning and working with trusted collaborators in multiple areas, including infrastructure, power, cooling, networking, tax considerations, security, and compliance. Site selection considerations include choosing a location with access to reliable power, cooling, and minimal risk of natural disasters that close to research hubs, cloud regions, or high-tech industries. Government incentives, raising capital, tax breaks and local data protection laws are also factors that play into data center growth and expansion.
Takeaways
The collaboration between the energy and technology sectors offers mutual benefits. The energy industry’s expertise in infrastructure, energy management, and renewable technologies can optimize AI data center operations, drive cost efficiencies, and support the shift toward greener energy. Simultaneously, technology companies can achieve more sustainable and energy-efficient facilities, advancing their environmental objectives. This partnership not only fosters innovation, but also contributes to a more sustainable future in both the energy and technology landscapes.
IRA Update: Recent Regulations Potentially at Risk in Second Trump Administration
With the inauguration of President Donald Trump and the Republican Party taking control of both houses of Congress, the renewable energy industry is faced with great uncertainty, including the potential for immediate impacts on the regulatory environment based on recent executive action.
On January 20, 2025, President Trump issued a memorandum instructing federal agencies to freeze pending rulemaking activity and consider postponing the effective date of new or pending rules until a member of the Trump administration has reviewed such rules. The issuance of this memorandum was widely expected, and similar actions have been taken by incoming administrations going back to at least the George W. Bush administration. The memorandum defines “rules” broadly to not only include those issued through the Administrative Procedures Act, but also (1) “any substantive action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking” and (2) “any agency statement of general applicability and future effect that sets forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statutory or regulatory issue.”
In particular, the memorandum instructs federal agencies to:
Not propose or issue, or send for publication in the Federal Register, any rule until it has been reviewed and approved by a member of the Trump administration (subject to limited carveouts for emergencies, urgent circumstances, or statutory or judicial deadlines);
Withdraw any rules that have been sent for publication in the Federal Register but have not been published (subject to the same limited carveouts described above); and
Consider postponing for 60 days the effective date for any published rules or any other rule that has been issued in any manner but not yet taken effect.
In addition to the regulatory freeze described above, recently finalized rules can be made ineffective through a fast-tracked act of Congress under the Congressional Review Act. While since its enactment in 1996, the Congressional Review Act has rarely been used, it is notable that according to the Government Accountability Office, roughly 75% of regulations nullified under the Congressional Review Act were those finalized during the last months of the Obama administration and nullified in the first months of the first Trump administration. Although determining the lookback window for finalized rules that can be overturned requires a detailed review of the House and Senate calendars, the Congressional Research Service estimates the period likely began around August 1, 2024.
As described further below, some major regulations and guidance related to the Inflation Reduction Act may be subject to the regulatory freeze and/or the Congressional Review Act.
Perhaps pursuant to the regulatory freeze, the following items of sub-regulatory guidance have not yet been published in the Internal Revenue Bulletin, which could limit their precedential value.
IRS Notice 2025-08 (regarding the first updated elective safe harbor for the domestic content bonus).
Rev. Proc. 2025-14 (regarding greenhouse gas emission rates for 45Y and 48E credits).
While the plain text of the regulatory freeze memorandum arguably does not cover currently effective guidance, such as the above, some industry participants believe the freeze has blocked their publication, which may limit their precedential value. However, as of this post, we are still in the relatively normal delay period between the release of guidance and publication in the IRB. If the above is not published next week in the IRB, practitioners may need to consider the limited precedential value of unpublished sub-regulatory guidance. Interested parties should continue to monitor the IRB (posted online each Friday and printed the following week) to check if the above have been published.
The following published and effective final rules are subject to potential nullification pursuant to the Congressional Review Act:
Election To Exclude Certain Unincorporated Organizations Owned by Applicable Entities From Application of the Rules on Partners and Partnerships (direct pay guidance), published in the Federal Register at Vol. 89, Page 91552, and effective on January 19, 2025.
Section 45Y Clean Electricity Production Credit and Section 48E Clean Electricity Investment Credit, published in the Federal Register at Vol. 90, Page 4006, and effective on January 15, 2025.
Guidance on Clean Electricity Low-Income Communities Bonus Credit Amount Program, published in the Federal Register at Vol. 90, Page 2482, and effective on January 13, 2025. Note that the additional guidance published in Rev. Proc. 2025-11 may also be subject to the Congressional Review Act. This area of the law is undeveloped.
Credit for Production of Clean Hydrogen and Energy Credit, published in the Federal Register at Vol. 90, Page 2224, and effective on January 10, 2025.
Advanced Manufacturing Production Credit, published in the Federal Register at Vol. 89, Page 85798, and effective on December 27, 2024.
Definition of Energy Property and Rules Applicable to the Energy Credit, published in the Federal Register at Vol. 89, Page 100598, and effective on December 12, 2024.
In addition to the above, the change in administrations is likely to impact proposed rules, including the Section 45W Credit for Qualified Commercial Clean Vehicles rule, which remains open for comment through March 17, 2025.
Further, while this post only covers regulations related to the Inflation Reduction Act, readers should check the Federal Register for other rules that may have been delayed pursuant to the regulatory freeze (including some regulations issued by the EPA). Additionally, the Trump administration’s broad spending freeze, which has caused widespread confusion, has significant broader impacts. While the OMB memorandum announcing the spending freeze has been withdrawn, as of publication, there is continued confusion over current policy, as the White House announced that the withdrawal of the memo “is NOT a rescission of the federal funding freeze.” Of note, as of publication, Solar for All funding appears to be frozen.
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2024 In Review: California Climate Change Legislation, Policy and Regulation
As we enter 2025 amid the devastating Los Angeles fires[1] and with a new presidential administration, we continue our series of yearly reviews of the most significant governmental actions taken by the state of California relevant to climate change in the previous year.[2]
Unless otherwise specified, the legislation discussed herein is effective as of January 1, 2025.
Climate Corporate Data Accountability Act
Senate Bill (SB) 219 amends the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261)[3] and consolidates both under the unified title of the Climate Corporate Data Accountability Act (CCDAA).
Specifically, SB 219 delays the deadline for the California Air Resources Board (CARB) to establish regulations implementing the CCDAA from January 1, 2025, to July 1, 2025. It further amends the previous legislation to authorize, instead of require, CARB to partner with third-party emissions or climate reporting organizations to collect and make relevant data publicly available. SB 219 also provides additional flexibility concerning the reporting of Scope 3 emissions – previously required to be reported within 180 days of Scope 1 and Scope 2 emissions – by allowing CARB to set a separate timeline for the reporting of Scope 3 emissions as part of its rulemaking process. Finally, SB 219 permits reporting entities to consolidate their emissions reports at the parent company level and allows payment of the statutory annual fee at any time, as opposed to at the time of filing.
Geothermal and Gas
Streamlining Geothermal Projects
Assembly Bill (AB) 1359 amends Section 3715.5 of the Public Resources Code to streamline the environmental review process for geothermal exploratory projects under the California Environmental Quality Act (CEQA). AB 1359 is classified as an urgency statute and, as such, took effect upon signature by Governor Gavin Newsom on September 27, 2024, to help accelerate the deployment of geothermal energy projects as part of California’s renewable energy generation goals.
This bill simplifies the process for applicants of “geothermal exploratory projects”[4] by allowing counties to take on lead agency roles, potentially expediting project approvals. The Geologic Energy Management Division (CalGEM) is designated as the lead agency for geothermal exploratory projects. However, upon request, the county where the project is located must assume lead agency responsibilities (as defined by CEQA), regardless of whether it has a geothermal element in its “General Plan.” If a county takes on the lead agency role, it must work with CalGEM to ensure all necessary information for environmental review is included, supporting CalGEM’s role as a responsible agency (as defined by CEQA). The previous requirement for counties to complete lead agency duties within 135 days has been removed, allowing more flexibility in managing project timelines.
Reforming Approach to Idle Oil and Gas Wells
AB 1866 amends sections of the Public Resources Code to address issues related to idle oil and gas wells in California. The bill increases fees for operators of idle wells, including those idle for less than 3 years, with fees escalating based on the duration a well has been inactive. Operators must file a management plan for all idle wells (not just long-term idle wells) by May 1st each year, focusing on prioritizing wells for plugging and abandonment based on specific criteria, such as proximity to sensitive receptors and potential threats. Wells that cannot be accessed or are subject to more stringent court-approved settlement agreements are exempt from these requirements.
Local Control Over Oil and Gas Operations
AB 3233 empowers local governments, such as cities and counties, to impose their own restrictions, including on method or location, or prohibitions on oil and gas operations within their jurisdictions through local ordinances. These local regulations can be more stringent than state laws, particularly in areas related to public health, climate, and environmental protection. If a local entity chooses to limit or prohibit these operations, responsible operators must adhere to existing regulations concerning the plugging and abandoning of wells and the decommissioning of production facilities.
Overall, AB 3233 represents a significant shift in California’s regulatory framework by decentralizing authority and enhancing local control over oil and gas operations.
Transportation
Ban of Gasoline Car Sales by 2035
On December 18, 2024, the United States Environmental Protection Agency (EPA) granted California the authority to move ahead with the state’s “Advanced Clean Cars II” program, which includes the much-publicized ban on the sale of new gasoline-powered cars after 2035.[5] As discussed in our 2023 in Review article, the EPA waiver allowing California to set its own vehicle emission standards at a more stringent level than federal standards had been granted as a matter of course until 2019, when the EPA (under the first Trump administration) revoked the waiver. Such revocation was subject to legal challenges before being reinstated by the Biden administration. The waiver was officially granted in April 2024, after the DC Court of Appeals affirmed the DC Circuit Court’s decision that the waiver did not present any constitutional issues.[6] The United States Supreme Court then denied certiorari on December 16, 2024.
It must be noted that the waiver was only approved for the Advance Clean Cars II program, not the state’s sister programs for medium and heavy-duty vehicles and locomotives. Anticipating rejection of the waivers by the incoming Trump administration, CARB withdrew its requests for these additional waivers on January 13, 2025.[7] It is also anticipated that the Trump administration will again attempt to revoke the waiver granted for the Advance Clean Cars II program, which will likely lead to additional litigation and a period of limbo for California and the 11 states (representing nearly 40% of the nation’s population) that choose to follow California’s emissions standards.[8]
Potential Mandate for Bidirectional Electric Vehicles
SB 59 grants the California Energy Commission (CEC) authority to require that battery electric vehicles of any weight class be bidirectional-capable (capable of both receiving and discharging electricity). This decision is contingent upon the CEC, in collaboration with CARB and the California Public Utilities Commission, identifying a vehicle weight class in which both the vehicle operator and the electrical grid would benefit from the mandate. In making this determination, the relevant agencies are required to assess vehicle readiness and the operational demands of vehicles used by essential service providers.
Interested parties should follow the agencies’ ongoing research and look for opportunities to contribute to any potential rulemaking on this topic.
CARB updates Low Carbon Fuel Standard
In November 2024, after several rounds of public hearings and comments, CARB approved significant updates to the Low Carbon Fuel Standard (LCFS), aiming to drive private investment in clean transportation fuels and zero-emission infrastructure. The amendments set targets of 30% reduction in the carbon intensity of transportation fuels by 2030 and 90% by 2045, while supporting the growth of electric vehicle (EV) charging stations, hydrogen refueling infrastructure, and clean fuels for medium- and heavy-duty vehicles.
These proposed updates were submitted to the California Office of Administrative Law (OAL) on January 3, 2025. OAL has until February 18, 2025, to make a final determination on the proposals.
Proposition 4 – Climate Preparedness Bond
Proposition 4 was passed through the State’s November 5, 2024 general election and authorizes California to sell a $10 billion bond to fund natural resources and climate-related initiatives. The bond will support projects in 8 key areas, including water supply and flood management ($3.8 billion). About half of this funding ($1.9 billion) would be dedicated to improving the availability and quality of water for public use, forest health and wildfire prevention ($1.5 billion), coastal restoration and sea-level rise mitigation ($1.2 billion), land conservation ($1.2 billion), energy infrastructure development ($850 million), park expansion and maintenance ($700 million), extreme heat mitigation ($450 million), and sustainable farming practices ($300 million). At least 40% of the funds must benefit low-income or climate-vulnerable communities, and there will be regular public reporting on the spending.
Statewide Mobile Monitoring Initiative
In November 2024, CARB announced the launch of the Statewide Mobile Monitoring Initiative (SMMI) in connection with the Community Air Protection Program (CAPP) originally established in 2017 by AB 617. The CAPP’s purpose is to identify communities most at risk of air pollution within California and develop strategies to mitigate and reduce such pollution. The SMMI is designed to address the challenges of detecting elusive pollutants that pose serious health risks, particularly to disadvantaged and frontline communities. The SMMI is funded by a $27 million appropriation from the California Climate Investment program.
The SMMI focuses on detecting greenhouse gases, toxic air contaminants, and criteria pollutants, with a strong emphasis on community involvement. The initiative aims to empower local entities by providing data that validates community-reported pollution concerns. Initially, the SMMI will target 64 communities identified under the CAPP.
Looking Forward
Following his inauguration as the 47th President of the United States, Donald Trump again withdrew the United States from the Paris Climate Accord and signaled his intent to follow through on his campaign promises to slash the Biden administration’s climate change policies and combat California’s state-level climate change policies. Governor Newsom, meanwhile, issued a brief statement following the inauguration indicating that California again plans to pursue its ambitious climate targets regardless of the level of support or opposition from the federal government.
The potential for uncertainty, instability, and conflict between federal law and the laws of the state representing the nation’s largest economy bears watching closely for all those who may be impacted.
FOOTNOTES
[1] See articles related to the State’s fire response here and here.
[2] See our previous articles covering 2022 and 2023, respectively.
[3] See prior articles on these bills here and here.
[4] Projects designed to evaluate the “presence and characteristics of geothermal resources” prior to development of a geothermal energy project.
[5] See EPA Grants Waiver for California’s Advanced Clean Cars II Regulations | US EPA.
[6] Ohio et al. v. U.S. Environmental Protection Agency et al., case number 22-1081, in the U.S. Court of Appeals for the District of Columbia Circuit.
[7] See withdrawal letters at this link: Vehicle Emissions California Waivers and Authorizations | US EPA.
[8] See California Vehicle Waivers ‘Legally Solid’ as Trump Eyes Repeal; Trump takes aim at clean energy, climate change and the environment on day one – Los Angeles Times.
President Trump’s Executive Orders and The Impact to Environmental Rules and Regulations
President Donald Trump began his first week in office by signing a multitude of Executive Orders “Orders,” some of which impact federal environmental laws or policies. Here is a partial list of the laws affected by the Orders:
Freeze funding from the Inflation Reduction Act and Infrastructure Investment and Jobs Act
Certain funding disbursements from the two laws are pending a 90-day review of spending recommendations. Certain funds may be released after consultation with the Office of Management and Budget.
60-Day Moratorium on New Rules
All agencies and departments must refrain from proposing or issuing new rules not yet published in the Federal Register.
Agencies must also postpone for 60 days the effective date for rules that have been published but haven’t yet taken effect.
Declare a National Energy Emergency
A groundbreaking measure that could unlock new powers to suspend certain environmental rules or expedite permitting of certain mining projects.
Offshore Drilling
Attempt to reverse Biden’s ban on offshore drilling for 625 million acres of federal waters.
Repeal of Tailpipe Pollution Regulations
Begin the repeal of Biden-era regulations on tailpipe pollution from cars and light trucks, which have encouraged automakers to manufacture more electric vehicles.
Rollback Energy Efficiency Regulations
Roll back energy-efficiency regulations for dishwashers, shower heads, and gas stoves.
Open the Alaska wilderness to more oil and gas drilling.
Restart reviews of new export terminals for liquefied natural gas (“LNG”).
This was paused by the Biden Administration in early 2024 to study the environmental impacts of LNG exports.
Offshore Wind Farms
Halt the leasing of federal waters for offshore wind farms.
Eliminate Environmental Justice Programs
Across the federal government. These programs were aimed at protecting poor communities from excess pollution.
PFAS Rule No Longer Listed as Under Review
A Pending Rule meant to set discharge limits on certain PFAS is no longer listed as being under review on the government’s regulatory calendar site.
The Review of Energy-Related Regulations and Rules
All agencies must conduct an “immediate review” of actions believed to “impose an undue burden” on the development and use of certain energy sources. The order calls for identification of any regulations, policies, guidance documents, or other materials that would negatively impact the development or use of oil, gas, coal, hydropower, biofuels, nuclear energy, or critical minerals.
Paris Agreement Withdrawal
Federal agencies, including the EPA, will need to submit a plan for how to “revoke or rescind policies” related to budgeting for or implementing aspects of the Paris Agreement.
Greenhouse Gas Working Group Disbanded
The Interagency Working Group on the Social Cost of Greenhouse Gases created during the Obama administration will cease operations.
Federal Hiring Freeze
Vacant federal civilian positions won’t be filled, and no new positions will be created. The freeze includes the United States Environmental Protection Agency. This Order also ends remote work for federal employees.