The most recent Supreme Court term saw the Court issue three significant and precedent-shaking decisions that will have an immediate impact on administrative law and policy, both now and into the foreseeable future. Although these decisions address administrative rulemaking and enforcement issues in contexts beyond the United States Environmental Protection Agency and environmental law specifically, they will be of significant interest to environmental law practitioners and advocates. We address those three cases below.
On June 27, 2024, in Securities and Exchange Commission v. Jarkesy, the U.S. Supreme Court issued an opinion written by Chief Justice Roberts in which the Court held in a 6 to 3 split that “[w]hen the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial.” The SEC can bring enforcement actions in federal court, with an Article III judge and a jury, or the SEC can adjudicate a matter itself, with only an Administrative Law Judge. The question for the Court was when the SEC can itself adjudicate a matter involving civil penalties. The majority of the Court found that the remedy—civil penalties—was “all but dispositive” because a monetary penalty that is designed to punish or deter “resembles” a common law cause of action that only could be enforced in courts of law. Therefore, if the SEC pursues civil penalties, defendants are entitled to their day in court with a jury, absent a possible public rights exception.
The Court based much of its Seventh Amendment analysis on Tull v. United States, which is a 1987 case in which the Court concluded that certain actions for civil penalties under the Clean Water Act required a jury. Other environmental statutes also contain similar civil penalty provisions, and after Jarkesy, courts may be inclined to apply a Seventh Amendment analysis to environmental statutes if a violation for which the U.S. Environmental Protection Agency (EPA) seeks penalties “resembles” a common law claim that does not implicate a public right. Importantly, some statutes give the EPA only administrative enforcement authority with no recourse in the federal courts. For those types of laws, if Jarkesy applies, EPA might be prevented from pursuing civil penalties absent new authorization from Congress. Of course, if a party prefers to resolve a matter administratively, it may be able to waive any right to a jury trial that would otherwise be required by Jarkesy or other constitutional principles.
On June 28, 2024, in Loper Bright Enterprises v. Raimondo, Secretary of Commerce, the U.S. Supreme Court issued an opinion written by Chief Justice Roberts in which the Court held that the doctrine of judicial deference to agency interpretations of ambiguous statutes, as espoused in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., was unconstitutional. The Court explained that the Administrative Procedure Act (APA) requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency’s interpretation of the law simply because a statute is ambiguous.
Decades ago, the Court introduced a two-step framework in which courts must defer to permissible agency interpretations of ambiguous statutes in Chevron. Loper reintroduced the question of whether a reviewing court was required to defer to an agency’s interpretation of an ambiguous statute, specifically as to whether the National Marine Fishery Service could impose monitoring fees on private fishing fleets.
The Court premised its holding on the notion that the Chevron doctrine defies the command of the APA that a reviewing court decide all questions of law and interpret statutory provisions. Unlike questions of policymaking or fact finding, the APA provides no deferential standard for courts to apply when answering legal questions. Pointing to U.S. v. Mead Corp. and King v. Burwell, the Court highlighted the uneven and uneasy application of Chevron resulting in limits being placed upon the doctrine. The Court itself has not deferred to an agency interpretation of an ambiguous statute under Chevron since 2016. Chief Justice Roberts noted that the doctrine of stare decisis is not absolute and can be overcome when the quality and workability of precedent support overturning a decision, as it did here. Further, the Court stated that previous cases decided under Chevron are not being called into question by Loper and remain good law.
Rounding out these significant administrative law decisions is the Court’s July 1, 2024 opinion in Corner Post, where it held that, for purposes of suits under the APA, the default six-year statute of limitations in 28 U.S.C. § 2401(a) for proceeding against the Federal Government does not begin to run until the plaintiff has been injured by final agency action.
The underlying facts of the case relate to a regulation finalized by the Board of Governors of the Federal Reserve in 2011 pursuant to the 2010 Dodd-Frank Act that set the maximum “interchange fees” payment networks issuing debit cards could require merchants to pay each time a customer makes a debit card purchase at a storefront (Regulation II). Corner Post is a truck stop and convenience store that opened in 2018 and accepted debit card payments; it was therefore covered under the Board’s 2011 Regulation II. In 2021, Corner Post joined an APA lawsuit brought by trade associations to challenge Regulation II as setting higher interchange fees than were allowed by statute. The district court rejected the challenge as untimely, and the Eighth Circuit affirmed, finding that the default six-year statute of limitations in 28 U.S.C. § 2401(a) began to run at the moment of final agency action – here, when the Board finalized Regulation II in 2011. The Supreme Court reversed.
Justice Barrett’s majority opinion in Corner Post assessed three statutory provisions to reach its ultimate holding – 5 U.S.C. § 702 and § 704, under the APA, and the default statute of limitations provision in 28 U.S.C. § 2401(a). The Court found that § 702 of the APA provides a cause of action (judicial review by parties injured by agency action), and § 704 of the APA sets the limit for the type of agency action subject to review (final agency action). However, 28 U. S. C. §2401(a) provides the default statute of limitations for such a cause of action – the suit must be brought “within six years after the right of action first accrues” (emphasis added).
The Board of Governors argued that “accrues” must be interpreted in light of when the agency action is “final” under APA § 704, meaning when the agency finalized the regulation at issue. It argued that this was consistent with prior holdings in several circuit courts. The majority rejected this argument, looking instead to what it called the “well-settled meaning” of the word “accrues” when Congress enacted the language of § 2401(a) in 1948 – “a right accrues when it comes into existence,” that is “when the plaintiff has a complete and present cause of action.”
The majority found that with the particular language it used in § 2401(a), Congress sought to establish a plaintiff-focused “statute of limitations,” which “creates a time limit for suing in a civil case, based on the date when the claim accrued,” as opposed to a defendant-protective “statute of repose,” which “‘puts an outer limit on the right to bring a civil action’ that is ‘measured not from the date on which the claim accrues but instead from the date of the last culpable act or omission of the defendant.’” Here, “[b]ecause injury, not just finality, is required to sue under the APA, Corner Post’s cause of action was not complete and present until it was injured by Regulation II.”
The impact of the Corner Post decision moving forward is that there is now potential for new APA facial challenges to long-finalized regulations brought by plaintiffs that have only been injured more recently in time.
As we move into 2025 and reflect on the continuing rollercoaster-like environment of ESG that was 2024, the purpose of this article is to provide a status update on key trends from last year (California’s Climate Reporting, Greenwashing Litigation, and Environmental Justice Regulations), while highlighting a developing trend identified for 2025 (Filling the Gaps - State and Local Governments Move Forward).
Disclosures in response to California’s Voluntary Carbon Market Disclosure Act (“VCMDA” or “AB 1305”) are due officially as of January 1, 2025. As of the publication date, and except for some clarifying statements regarding the disclosure deadline and the definition of a “voluntary carbon offset” - not including renewable energy credits (RECs), there is virtually zero official implementation guidance for AB 1305. This lack of clarity is significant since the VCMDA requires companies making net zero, carbon neutral, and/or similar carbon reduction claims to disclose “all information” to substantiate such claims.
Nevertheless, it appears that many companies submitting disclosures have taken a “less is more” approach by providing shorter written responses in the actual disclosure but still linking those responses to more robust information like annual sustainability reports, SBTi submittals and approvals, and other global reporting frameworks. While AB 1305 allows CARB to impose civil penalties of up to $2,500 per day (capped at $500,000 per reporting year) for inaccurate, incomplete, or failed reporting, it is unknown how aggressively CARB will enforce.
In a different but related context, California’s additional climate rules, the Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261) were amended by California Senate Bill 219 (SB 219) while still being litigated in California federal district court. The amendments in SB 219 give CARB more time to promulgate implementing regulations for SB 253 and SB 261 and give CARB the option (as opposed to being mandatory in the previous version) to decide whether it will retain a climate reporting organization to develop a reporting program.
On December 5, 2024, CARB issued an enforcement notice explaining that the agency planned to exercise its enforcement discretion for companies filing their first SB 253 report due in 2026. Specifically, this discretion is for companies needing “lead time to implement new data collection processes” to allow for fully complete scope 1 and scope 2 emissions reporting. Despite this “soft enforcement” approach, the California Legislature issued a letter expressing its disapproval of CARB’s leniency and is threatening increased oversight of the agency absent vigorous enforcement.
The California Legislature’s tone signals an aggressive enforcement approach that is not surprising for California’s regulatory status quo. Yet, as noted above, there is a “wait and see” period for CARB’s enforcement posture, especially for the VCMDA.
While 2024 saw a modest increase in greenwashing litigation, certain data also suggests that the “severity” of greenwashing cases has increased. In the United States, entities across sectors faced claims, including in aviation, fashion, beverage, and finance. Increased scrutiny of green and climate-related claims is expected to continue with the incoming administration’s attitude toward climate action and general bipartisan alignment on anti-greenwashing. Examples of 2024 litigation fall into categories such as (1) long-term climate commitments and carbon-neutral pledges without credible strategy for achieving the same and (2) organizations utilizing selective sustainability initiatives to divert attention from other business practices that expand instead of reduce a company’s carbon footprint.
That said, careful vetting of the data, crafted communications, and thorough claim substantiation are table stakes. For companies continuing to develop decarbonization, eco-friendly, nature positive, and similar claims or programs, consider working with outside counsel to retain third-party technical consultants under privilege to develop robust and verifiable “substantiation files.”
The Biden Administration’s leadership and focus on “advancing environmental justice for all” is still being shaped, even at this late stage. Early in December, the EPA released the Interim Framework for Advancing Consideration of Cumulative Impacts in draft form, with a public comment period open until February 19, 2025. This framework is meant to offer guidance on how analysis and consideration of cumulative impacts can be incorporated into programmatic work and research. The goal of this guidance document is to provide tools and resources that will “improve the health and quality of life in America’s communities.” This interim framework directly aligns with Executive Order 14096 and provides additional resources for the mitigation of adverse impacts on marginalized communities.
Regardless of the pace of federal legislation, many states have independently moved forward with legislation and regulatory tools involving environmental justice’s cumulative impact. Here we provide some highlights of those nationwide activities, per the National Caucus of Environmental Legislators:
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Predictably, the US Election outcome has led to a perceived change of course among some industry leaders in backing away from ESG commitments. The incoming administration will likely seek to repeal or erode climate-related rulemaking and legislation proposed by the Biden administration. Consequently, in 2025, we anticipate seeing State and local governments move to fill these gaps by proposing carbon disclosure laws and developing new regulatory tools for items like “building-performance and emissions standards.”
On June 20, 2024, the Canadian federal government amended the Competition Act (the Act), increasing the regulation of greenwashing in Canada and moving the nation a step closer to aligning with the more advanced greenwashing regime in the European Union. In circumstances where businesses operate, and products and services are sold on both sides of the U.S.-Canada border, it is important to understand how the legal requirements differ between the two nations, particularly given this recent expansion of greenwashing regulation in Canada and the growing expectations of the average consumer that environmental claims are accurate. As a result, American companies doing business in Canada should familiarize themselves with these changes as they will impact the way companies advertise and market their business, products, and services within Canada’s borders.
“Greenwashing” is when a business, intentionally or inadvertently, makes false or misleading positive claims or downplays negative qualities about the environmental or sustainability attributes of its business, products, or services. Claims can relate to materials and goods or elements of the supply chain, including extraction, production, packaging, distribution, use or disposal, as well as business practices and processes. As with other types of false or misleading claims, greenwashing has the effect of deceiving or influencing consumers into purchasing from “green” businesses or purchasing “green” products or services because of supposed environmental benefits.
The primary source of liability with respect to greenwashing in Canada at this time is the Act which prohibits the making of “false or misleading” representations to the public. The amendments to the Act expressly target greenwashing claims instead of relying on the Act’s existing (and more general) false or misleading claims provisions. Representations can take the form of statements, warranties or guarantees and can be in written, oral or other forms of media (e.g., videos, pictures, etc.). Specifically, the amendments provide that a person (including a corporate entity) engages in reviewable conduct when they make either of the below representations to the public for the purpose of promoting, whether directly or indirectly, the supply or use of a product or any business interest by any means whatsoever:
Note, however, that neither of the above representations would be considered false or misleading if the basis for the representation is an adequate and proper test or substantiation conducted in accordance with internationally recognized methodology to confirm the accuracy of the representation. In both cases, the burden of proof lies with the person making the representation. In other words, any business making any kind of “green” representation must verify its accuracy through these methods before making such a representation to the public.
The Competition Bureau has issued some general guidance on when testing is considered “adequate and proper.” In particular, testing must be conducted prior to a performance claim being used; completed in a controlled environment to eliminate external variables and eliminate subjectivity as much as possible; reflective of the real-world environment of a product or service; and supportive of the general impression created by the marketing claim. On the other hand, the expressions “adequate and proper substantiation” and “internationally recognized methodology” are not defined in the Act and have not yet been considered by Canadian courts. Moreover, other legal and regulatory regimes have requirements that also need to be considered with respect to either the product or business activity representations (such as industry requirements or industry regulation, securities laws, or the laws of other jurisdictions applicable to businesses operating cross-border).
The Competition Bureau of Canada has developed draft guidelines to define principles for compliance and clarify, among other things, which standards of testing and substantiation are acceptable (specifically, “adequate and proper”) in the Canadian context, which are open for public comment until February 28, 2025, following which they will be finalized and published. In the interim, the Competition Bureau has published the Deceptive Marketing Practices Digest – Volume 7, which provides some guidance for businesses. Of note, it includes information on the complaints most often received by the Competition Bureau as well as high-level tips to help businesses avoid engaging in greenwashing in compliance with the Act. The Competition Bureau reports that most complaints fall into the categories of claims listed below:
Understanding how greenwashing applies to a company’s products, services, and claims is particularly important today as not only regulators across different areas but also stakeholders and competitors are now paying close attention to greenwashing, thereby increasing the risk of a complaint to the Competition Bureau. As a reminder, any interested person (which may include consumers or even competitors) can file a complaint with the Competition Bureau or bring a civil action arising from a business’ alleged violation of the Act. Businesses should therefore assess their “green” business claims and claims related to products and services from a regulatory standpoint (as opposed to through only a marketing and sales lens) in order to mitigate the risks associated with greenwashing allegations or violations of the Act.
There is also currently a constitutional challenge to the greenwashing amendment in the Act and possibly more to follow. However, the amendment will remain in force through that legal proceeding pending its outcome, so compliance with the greenwashing provisions in the Act should not be ignored.
Green claims are nothing new. Environmental lawyers have for decades assisted clients in evaluating and developing technologies, methodologies, products and know-how in support of sustainability and in ensuring compliance with regulatory regimes. What is new is the importance and attention that such claims are now attracting from nearly everyone but particularly the average consumer, who is increasingly focused on the impacts of climate change.
As a general matter, air emissions standards are a nationwide standard set by the EPA under the Clean Air Act (CAA). Absent an exception, states are preempted from adopting their own pollutant emissions standards for new motor vehicles or new motor vehicle engines. CAA section 209(b) contains a special provision allowing California to apply for a preemption waiver, which must be granted by the EPA, unless: (1) California’s determination is arbitrary and capricious; (2) California does not need such standards to meet compelling and extraordinary conditions; or (3) California’s standards and accompanying enforcement procedures are not consistent with Section 202(a) of the CAA.
Administrations have varied in their stance on emissions standards. On September 23, 2020, following Gavin Newsom’s election to California Governor, Newsom issued Executive Order N-79-20, declaring: “[i]t shall be a goal of the State that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035.” In similar fashion, on December 8, 2021, following Joe Biden’s election to U.S. President, Biden issued Executive Order 14057 ordering: “[i]t is therefore the policy of my Administration for the Federal Government to lead by example in order to achieve a carbon pollution-free electricity sector by 2035 and net-zero emissions economy-wide by no later than 2050.” In stark contrast, on the 2024 campaign trail, President Donald Trump declared, “[w]hile I’m president, no state in America will be permitted to ban gas-powered cars or trucks, and I guarantee it. No way.”
Following Trump’s re-election, in November 2024, Governor Newsom traveled to D.C. for a series of meetings with the Biden administration as eight California preemption waivers remained pending before the EPA. Between December 17, 2024, and January 3, 2025, five waivers were approved. Among those approved was California’s Advanced Clean Car II Waiver Request, which requires that all new passenger cars, trucks, and SUVs sold in California be zero emissions by 2035. As of 2024, California has obtained over 100 EPA waiver approvals.
Trump’s return to office, however, puts California preemption waivers in jeopardy. Trump’s transition team is recommending sweeping changes—cutting electric vehicle support, imposing tariffs on battery materials, rolling back emissions standards, and blocking California from setting its own stricter vehicle emissions standards. U.S. Senator Shelley Moore Capito (R-W.Va.), Chairman of the Committee on Environment and Public Works, has already announced her intention to reverse the EPA’s decision. Indeed, during Trump’s first term in office, as a step to fulfill what Trump “promised the American people”— “that his Administration would address and correct the current fuel economy and greenhouse gas emissions standards”—the EPA withdrew the 2013 CAA waiver that authorized California to pursue its own tailpipe greenhouse gas emission standard (fuel economy standard) and ZEV mandate.
While the regulatory outcome may be uncertain, litigation appears certain. On November 7, 2024, California Governor Newsom issued a proclamation convening a special session of the California Legislature to provide “additional resources” to “pursue robust affirmative litigation against any unlawful actions by the incoming Trump Administration” and “defend against federal lawsuits aimed at undermining California's laws and policies.” On December 2, 2024, California Assembly Bill 2 was introduced authorizing $500,000 for litigation expenses against the incoming Trump administration. A separate Assembly Bill 1 was introduced authorizing $25,000,000 for payment of attorneys’ fees in connection with such litigation.
Many are aware that litigation may take months, years, or even decades, especially in the environmental and Indian law spaces. Indian water litigation, however, often pushes litigation time bounds to extremes. Take, for example, Arizona’s Little Colorado River Adjudication initiated in the 1970s. The official litigation is moving into its sixth decade. In 2024, though, one of the largest Indian water rights agreements, the Northeastern Arizona Indian Water Rights Settlement Agreement (NAIWRSA), brought hope that some of this litigation may soon end. The NAIWRSA is an agreement between three Tribes—Hopi Tribe, Navajo Nation, and San Juan Southern Paiute Tribe—and upwards of 30 other government and private parties. Due to the nuances of Indian water law, the NAIWRSA must be approved by Congress. Although bills in 2024 were introduced in both chambers, S.4633 and H.R.8940, Congress failed to pass the required legislation to bring the historic agreement to the finish line. Will we witness such history in 2025?
The agreement between the three Tribes and a myriad of other water users involves water rights across Northeastern Arizona. According to the Arizona Department of Water Resources, NAIWRSA “settles outstanding tribal water rights claims to the Colorado River, the Little Colorado River, and groundwater sources in Northeastern Arizona.” However, unlike traditional water rights litigation, Indian water settlements often include provisions covering much more than appropriation to water. At the very least, they provide increased certainty over who gets what.
Beyond stipulated allocations of water for all three Tribes, including mainstem Colorado River water, the NAIWRSA includes billions of dollars in funding for much-needed water infrastructure projects. The Navajo Nation Water Rights Commission stated, the NAIWRSA “offers a path forward in closing the severe water access equity gap that exists in our community and offer the promise of a healthy and vibrant future for our people.” Furthermore, the NAIWRSA would ratify a treaty providing the San Juan Southern Paiute Tribe with a reservation consisting of 5,400 acres of land. Emphasizing the importance of this agreement, the San Juan Southern Paiute Tribe wrote: “The approval of this legislation will give hope to many Tribal Members, especially elders, who have waited so long to see the Tribe recognize its exclusive homeland and to receive the basic assistance and services that all human beings deserve.” Yet another element of the settlement, the NAIWRSA allows for the Hopi Tribe and Navajo Nation to lease or exchange their water, an action that Tribes cannot pursue without congressional approval. The Kyl Center for Water Policy at Morrison Institute argues this is a “unique trait of the NAIWRSA” that “could help mitigate the impacts of [water] shortage in the most populous area of the state.” In addition, this could provide the Tribes with “a reliable and substantial source of revenue.”
Overall, the NAIWRSA provides the Hopi Tribe, Navajo Nation, and San Juan Southern Paiute Tribe with water-related benefits that even the winners of traditional water rights litigation cannot obtain. For example, the NAIWRSA would come with $5 billion in funding for water-related projects and infrastructure, including funding for a pipeline (iiná bá – paa tuwaqat’si) to deliver water from Lake Powell to all three Tribes. Not only could the NAIWRSA end decades of litigation and water insecurity for these Tribes, but some are calling it “the largest Indian Water Rights settlement in U.S. history.”
So where did the NAIWRSA end up in 2024? As mentioned above, bills were introduced in both chambers of Congress in 2024. Senator Mark Kelly (D-AZ) introduced S.4633 on July 8, 2024, with Senator Kyrsten Sinema (I-AZ) co-sponsoring. Although the bill was referred to the Senate Committee on Indian Affairs, which held hearings in September, it never moved past that stage. Similarly, Representative Juan Ciscomani (R-AZ-6) introduced H.R.8940 on July 8, 2024. The bill was co-sponsored by a bipartisan group of Arizona U.S. representatives, including three Democrats and two Republicans. Initially, H.R.8940 was referred to the House Committee on Natural Resources, and then on to the Subcommittee on Water, Wildlife, and Fisheries. Like its sister bill in the Senate, H.R.8940 never moved beyond the committee stage. Thus, the 118th Congress (2023-2024) failed to pass “the largest Indian Water Rights settlement in U.S. history.”
This raises the question—will the NAIWRSA be reintroduced to the 119th Congress (2025-2026)? At the time of this writing, a similar bill has not been introduced in either chamber; however, many indicators say yes. First, Arizona’s Governor Katie Hobbs signed the NAIWRSA in November of 2024. Governor Hobbs stated, “I’m proud to be a part of this solution that many Arizona families have fought to get for generations. It’s a testament to their strength and determination, as well as my commitment to collaborate with Arizona’s Tribal nations and protect water supplies for all Arizonans.” Second, other Colorado River basin states purportedly support the NAIWRSA. For example, Colorado’s principal negotiator, Becky Mitchell, emphasized that “Colorado supports reaching a Northeast Arizona settlement that provides sufficient flexibility and elements that work within each Tribal Nation’s unique circumstances and challenges.” Third, Arizona’s Director of the Department of Water Resources, Tom Buschatzke, reinforced they are “going to keep working on this into the new Congress” and “we’re very close to working out everything among the seven” Colorado River basin states. Fourth, from a federal government standpoint, the “United States pursues a policy of settling Indian water rights disputes whenever possible, which is preferable to protracted litigation over Indian water rights claims.”
Assuming the NAIWRSA makes it past the congressional hurdle, additional steps must occur before the historic agreement can be finalized. Any amendments that Congress makes must be approved by all parties to the settlement, especially the three Tribes involved. The United States Secretary of the Interior must then approve the settlement. Finally, the Arizona court managing Arizona’s Little Colorado River Adjudication must approve the settlement after considering any and all objections.
So, will we see the NAIWRSA end over a half century of litigation in 2025? Not only would this agreement quantify important water rights for the Hopi Tribe, Navajo Nation, and San Juan Southern Paiute Tribe, but it would vastly change the water landscape of Northeastern Arizona and the surrounding areas. Most importantly, it would bring much-needed water to numerous households still without clean, running water. As Navajo Nation Council Speaker Crystalyne Curley expressed, “[t]his settlement agreement is not for us today, but for our grandchildren. It’s for the generations to come.”
