President Trump has issued another Executive Order (EO) seeking to protect American energy production from overreach by state governments. Specifically, the order references states that target or discriminate against out-of-state energy producers by imposing significant barriers to interstate and international trade.

For example, the EO notes that New York “enacted a ‘climate change’ extortion law that seeks to retroactively impose billions in fines (erroneously labelled “compensatory payments”) on traditional energy producers for their purported past contributions to greenhouse gas emissions not only in New York but also anywhere in the United States and the world.”

Similarly, Vermont “extorts energy producers for alleged past contributions to greenhouse gas emissions anywhere in the United States or the globe.” Also, California “punishes carbon use by adopting impossible caps on the amount of carbon businesses may use, all but forcing businesses to pay large sums to ‘trade’ carbon credits to meet California’s radical requirements.” 

Moreover, the EO asserts some states “delay review of permit applications to produce energy, creating de facto barriers to entry in the energy market.” Additionally, it claims states have also sued energy companies for supposed “climate change” harm under nuisance or other tort regimes that could result in crippling damages.

The Executive Order challenges these laws and policies as undermining Federalism by projecting the regulatory preferences of a few states into all states. The EO provides, “Americans must be permitted to heat their homes, fuel their cars, and have peace of mind – free from policies that make energy more expensive and inevitably degrade quality of life.”

The EO directs the Attorney General to identify all state laws that burden domestic energy development and production, including state laws purporting to address “climate change” or involving “environmental, social, and governance” initiatives, “environmental justice,” carbon or “greenhouse gas” emissions, and funds to collect carbon penalties or carbon taxes.

The Attorney General is also directed to take all appropriate action to stop the enforcement of all such state laws that the Attorney General determines to be illegal.

This approach might be limited by the Supreme Court’s recent decision in National Pork Producers Council v. Ross, where the Court upheld a California law that restricted in-state sale of whole pork meat that comes from breeding pigs (or their immediate offspring) that are “confined in a cruel manner.” The law was challenged by pork producers in other states that argued the law impermissibly burdened interstate commerce.

But the Court denied that this extraterritoriality argument supported a constitutional claim, holding that the law was applied uniformly to all pork products sold within the state, regardless of the state or origin, and was therefore constitutional.

The state lawsuits seeking fines or reparations from oil and natural gas producers for their prior greenhouse gas emissions seem unlikely to succeed, however, even without additional opposition from the Trump Administration.

NEFI regulatory counsel Rick Schweitzer is evaluating the potential implications of this order on state laws and regulations affecting NEFI members. For more information contact Rick at rpschweitzer@rpslegal.com.