Energy & Sustainability Litigation Updates – August 2024
Regulatory Updates
Governor Newsom (D-CA) recently proposed a two-year delay to California’s sweeping new mandatory climate disclosures, which apply to all large companies—public or private—doing business in California. Specifically, according to the proposed amended legislation, companies with more than $1 billion in revenue would not have to report Scope 1 and Scope 2 greenhouse gas emissions until 2028 (rather than 2026) and Scope 3 greenhouse gas emissions until 2029 (rather than 2027). Similarly, companies with more than $500 million in revenue would not need to report on climate-related risks until 2028 (rather than 2026). This proposed amendment has not yet been enacted by the California legislature.
Litigation Updates
The demise of the Chevron doctrine following the Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo has begun to impact various ESG regulations. Recently, the Fifth Circuit vacated and remanded a lower court’s decision upholding the Biden administration’s Department of Labor rule enabling ERISA plans to consider ESG factors, ordering that the district court reconsider its decision in the aftermath of Loper Bright’s overturning of the Chevron doctrine. Although the Fifth Circuit did not opine on the merits of the Department of Labor’s ESG rule, the change in federal jurisprudence renders it less likely that the rule will survive legal challenge, particularly as the federal district court’s original decision awarding summary judgment to the government relied heavily on the Chevron doctrine. This is merely one example of how the Supreme Court’s recent disavowal of the Chevron doctrine impacts a plethora of federal regulations, including the Biden administration’s regulatory actions in favor of ESG principles.
The various state and local governmental litigations against the major fossil fuel companies bringing tort claims in connection with climate change continue to expand in scope. Recently, Puerto Rico initiated a lawsuit based on these allegations against the major fossil fuel companies. Additionally, the lawsuit brought by the State of Connecticut is now proceeding to the discovery stage of litigation, increasing the pressure on the fossil fuel company defendants.
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