US ELECTIONS: Biden-era energy and climate regulations reach a crossroads

The 2024 US presidential election marks a pivotal moment for the ambitious suite of climate and energy regulations advanced by the Biden administration.

Executive branch agencies are defending broad controls on greenhouse gas emissions from the US electricity, transportation, and oil and gas sectors following a tie-breaking vote in 2022 by Vice President Kamala Harris for the Inflation Reduction Act, a historic law with $370 billion in energy and climate funding.

If Harris, now the Democratic presidential nominee, prevails in the Nov. 5 election, policy analysts expect her administration to focus on defending Biden-era rules from legal attacks and securing Inflation Reduction Act funding. A Harris administration is also expected to complete unfinished greenhouse gas rules, such as emissions limits for existing gas-fired power generators.

Republican nominee and former President Donald Trump, by contrast, is promising a spree of deregulatory actions centered on "energy dominance," with plans to dismantle the Biden team's sweeping climate agenda if he wins.

While the Biden administration sought to protect new emissions-cutting rules from quick reversal by finalizing many ahead of a murky Congressional Review Act deadline, the final rules remain vulnerable to rulings by conservative judges even if Harris denies Trump a second term.

"It often takes the first term for an administration to create regulations and the second term to defend them in court," said Tim Fox, a managing director at ClearView Energy Partners.

"A lot of what the Biden administration hoped to accomplish, they didn't get out the door as quickly as they had hoped so that it will get through the judicial process," added Christi Tezak, senior director at ClearView.

Most major Biden climate regulations are facing appeals from industry groups or red states that have yet to reach their legal conclusion.

In April, the Environmental Protection Agency finalized a rule requiring 90% carbon capture at existing coal plants by 2032, and in June the US Transportation Department published final fuel economy standards requiring new cars and light-duty trucks to achieve a fleetwide 50.4 mpg by 2031. Those rules are still in early litigation.

On a scale of one to 10, Anna Mosby, a senior research analyst with S&P Global Commodity Insights, said she would put the regulatory risk and uncertainty for energy companies overhanging the election at a 12.

"With different presidents, we've seen a complete seesaw effect in terms of regulations," Mosby said. She said this "induces a ton of regulatory uncertainty" for companies that don't know which rules will stick.

Fresh wave of regulatory rollbacks

If voters return Trump to office, policy experts expect the new administration to seek voluntary remands for Biden-era regulations facing court challenges. That would kick off a process of overhauling or, in some cases, repealing the rules, as agencies have done during both the first Trump administration and Biden's presidency.

Joseph Brazauskas, senior counsel at the law firm Bracewell, said he would expect Trump to sign multiple executive orders on his first day in office, including an order directing the US government to focus on energy dominance and supporting traditional fuels such as gas, coal and liquid motor fuels.

Plans to re-exit the Paris Agreement on climate change, repeal and replace EPA regulations, and boost oil and gas leasing plans could all be announced in the Trump administration's early days, as could directives to swiftly nix the US Energy Department's pause and study of LNG export determinations and to open areas in Alaska to drilling.

A second Trump administration would likely seek to speed such plans by installing political appointees who are ready to implement pre-drafted policies, Brazauskas said.

"They may have Day One executive orders that are already written; they may have regulatory packages that are more ripe for implementation than previously in 2017, where things were a little bit more chaotic," Brazauskas said.

Former Trump administration officials have signaled the former president would begin taking action immediately.

"On Day One, President Trump will rescind every one of Joe Biden's industry-killing, job-killing, pro-China and anti-American electricity regulations," David Bernhardt, Trump's former Interior secretary, told reporters on an Aug. 29 campaign call.

That pledge generally aligns with recommendations in Project 2025, a 900-page deregulatory policy blueprint released by the conservative Heritage Foundation in anticipation of a future Republican presidential administration. Trump has tried to disassociate himself from the plan.

Energy Innovation, a nonpartisan energy and climate policy firm, estimated that full implementation of Project 2025's recommendations would put the US on track to fall 27 percentage points short of its Paris goal to reduce greenhouse gas emissions by 52% below 2005 levels by 2030.

"On greenhouse gas emissions, the biggest difference is coming from the power sector," said Robbie Orvis, Energy Innovation's senior director of modeling and analysis.

The latest update to S&P Global Commodity Insights' North American Power Market Outlook Planning Case anticipates a 52% reduction in US power-sector carbon emissions from 2005 levels by 2030 driven by clean energy tax credits in the Inflation Reduction Act. The planning case does not account for the EPA's recently finalized greenhouse gas regulations, which are seen as particularly vulnerable to litigation.

Some Biden agency rules may be at risk for early Congressional Review Act disapproval if Republicans sweep the White House and both houses of Congress. The Congressional Research Service unofficially estimates that rules finalized on or after Aug. 1 could be subject to congressional disapproval resolutions under the statute.

Rules at risk of disapproval include a yet-to-be-finalized methane fee regulation for the oil and gas sector, along with final Treasury Department tax credit guidance for clean hydrogen production.

Looming legal uncertainty

One of the biggest unknowns for a future Harris or Trump administration is how federal courts will decide legal challenges to agency rules following the US Supreme Court's decision in June to overturn the 40-year-old Chevron doctrine.

In that decision, Loper Bright Enterprises v. Raimondo, the high court's 6-3 conservative majority held that federal judges should independently interpret ambiguous statutes rather than deferring to an agency's reasonable interpretation.

"Courts and the judicial system's influence over energy and environmental policy, that's really the wild card, as a result of the fall of the Chevron doctrine and some of the court decisions around that," said Lesley Jantarasami, managing director of the energy program at the Bipartisan Policy Center.

Rushed procedural actions by new political appointees could exacerbate legal risks, and either new administration may face heightened scrutiny over compliance with the Administrative Procedure Act in the absence of Chevron, legal experts said.

The Supreme Court in June 2022 also established the major questions doctrine, a conservative line of legal thinking, as the law of the land. The doctrine holds agencies must point to clear congressional authorization when regulating on matters of "vast political or economic significance."

Jason Schwartz, legal director for the Institute of Policy Integrity at the New York University School of Law, said some lower court decisions dealing with agency rules could hinge on who appointed the presiding judges.

"There are statutes that Congress wrote that are pretty stringent, just from the plain language," Schwartz said. "If you're not going to give agencies any flexibility, that could result in some pretty aggressive outcomes."

Schwartz noted that Trump-appointed judges could be particularly receptive to using the major questions doctrine to attack agency rules. "Overall, I am worried about the potential to continue to use the judiciary to attack and further erode the authorities of administrative agencies," he said.

Environmental groups are promising to defend Biden-era energy and climate regulations if Trump retakes the White House.

"Should another administration come in and have a posture of rolling that progress back, whether it's at the behest of industry polluters or anyone else, we will engage in defense of that progress through every means under the law that we have at our disposal," said Chris Espinosa, legislative director for climate and energy at advocacy group Earthjustice.

Biden-Harris energy and climate rules' legal vulnerabilities CROSS-COMMODITIES OIL AND GAS TRANSPORTATION As of Aug. 29, 2024 Source: S&P Global Commodity Insights

Electric power	Status	Vulnerability	Market impact
EPA greenhouse gas regulations for existing coal-fired power plants and new gas generators	Finalized May 9	Pending legal challenge at the US Court of Appeals for the District of Columbia Circuit; electric utilities seeking emergency stay at the US Supreme Court	Requires 90% carbon capture for existing coal plants and new gas plants by 2032.
EPA legacy impoundment rule for coal plants	Finalized May 8	Pending legal challenge at the DC Circuit Court of Appeals	Requires safe management of coal ash at previously unregulated inactive coal plants.
EPA supplemental effluent limitation guidelines for coal plants	Finalized May 9	Pending legal challenge at the US Court of Appeals for the 8th Circuit	Sets a "zero-discharge limitation" for three streams of wastewater, with exceptions for coal plants that cease burning coal by 2034.
FERC long-range electric transmission planning and cost allocation rule	Finalized June 11	Pending legal challenge at the US Court of Appeals for the 4th Circuit	Requires US grid regions to use a minimum 20-year planning horizon and account for seven key economic/reliability benefits.
EPA Good Neighbor Plan for smog-forming emissions	Finalized June 5, 2023	Stayed by the US Supreme Court; pending legal challenge at the DC Circuit Court of Appeals	Final rule was projected to drive an incremental 14 GW of coal plant retirements nationwide by 2030. Natural gas pipeline engines would also be required to install new pollution controls.
EPA rule tightening air quality standards for fine particulate matter	Finalized March 6	Pending legal challenge at the DC Circuit Court of Appeals	EPA expects 99% compliance with the final rule; lower emissions threshold has caused delays for some gas projects.
SEC climate disclosure rule	Finalized March 28; implementation paused April 4	Pending legal challenge at the 8th Circuit Court of Appeals	Large companies must determine whether Scope 1 and 2 emissions are "material" to investors and report on costs and losses associated with severe weather events.
White House Phase II implementation rule for National Environmental Policy Act reviews	Finalized May 1	Pending legal challenge in US District Court for the District of North Dakota	Adds consideration of climate and environmental justice in permitting reviews. Could benefit renewables projects, add friction for oil and gas.
EPA rule imposing fees on methane emissions from oil and gas operations	Proposed Jan. 12	Final rule vulnerable to legal challenges; potentially vulnerable to Congressional Review Act. Eliminating the fee would require an act of Congress	Meant to spur industry compliance with new methane controls. Proposed rule faced objections over exemptions, impact on small producers and associated gas suppliers.
EPA regulations for methane/volatile organic compound emissions from oil and gas facilities	Finalized March 8	Pending legal challenge at the DC Circuit Court of Appeals; Republican-led states seeking Supreme Court stay of part of rule applying to existing sources	Aimed at slashing emissions by almost 80%; final rule has raised industry hackles over workability.
EPA Subpart W rule tightening greenhouse gas emissions reporting requirements for oil, gas sector	Finalized May 14	Pending legal challenge in DC Circuit Court of Appeals	Rule which updates emissions monitoring and calculation requirements will be used to impose methane fee.
DOE LNG application review pause	Announced Jan. 26	Pending DOE appeal before the US Court of Appeals for the 5th Circuit following Louisiana district court stay	Adds uncertainty for pending projects while DOE reconsiders its approach to public interest determinations for LNG exports to non-FTA countries.
Interior's record of decision approving the 2024-2029 National Outer Continental Shelf Oil and Gas Leasing Program	Finalized Dec. 14, 2023	Pending legal challenge at the DC Circuit Court of Appeals	Approved the fewest offshore oil and gas lease sales in the program's history, with three Gulf of Mexico sales and no auctions off the coast of Alaska.
EPA rule on Clean Water Act Section 401 water quality certifications	Finalized Sept. 14, 2023	Pending legal challenge in US District Court for the Western District of Louisiana	Bolsters role of states, tribes in water quality reviews for energy infrastructure; allows broader scope of reviews and bolsters state role in setting timelines.
EPA reinstatement of California's Clean Air Act waiver authority for state-level vehicle emissions standards	Finalized March 14, 2022	Waiver reinstatement upheld by the DC Circuit Court of Appeals in April; 17 Republican-led states now seeking Supreme Court review under the Commerce Clause	States representing over 40% of new US passenger vehicle sales follow California's standards.
EPA greenhouse gas standards for light- and medium-duty vehicle model years 2027-2032 and later	Finalized April 18	Pending legal challenge at the DC Circuit Court of Appeals	Projected to reduce gasoline consumption by a cumulative 760 billion gallons by 2055.
EPA greenhouse gas standards for heavy-duty vehicle model years 2027-2032 and later	Finalized April 22	Pending legal challenges at the DC Circuit Court of Appeals	Projected to avoid 1 billion metric tons of greenhouse gas emissions from 2027-2055.
DOT Corporate Average Fuel Economy standards for light- and medium-duty vehicles for model years 2027-2032 and later and heavy-duty pickup trucks and vans for model years 2030-2035 and later	Finalized June 24	Pending legal challenge at the US Court of Appeals for the 6th Circuit	Passenger cars and light-duty trucks required to achieve combined fleet fuel economy of 52.5 mpg by 2032. Heavy-duty pickups and vans required to improve fuel economy by roughly 50% by 2035.