Federal petition from CEI seeking federal intervention against state climate disclosure laws, alleging these laws negatively impact interstate commerce and surpass constitutional boundaries.
The state of California has taken a significant step in the fight against climate change with the introduction of the Accountability Act, which requires companies operating within the state to disclose their greenhouse gas (GHG) emissions. This includes direct emissions, indirect emissions purchased from energy companies, and value-chain emissions.
However, the Act has sparked controversy, with some federal agencies and other states expressing concerns. The Environmental Protection Agency (EPA) is considering revoking funding to states like California under its fund for pollution control, such as the Climate Pollution Reduction Grants (CPRG) and Pollution Prevention (P2) Grants.
The Department of Justice (DOJ) is encouraged to collaborate with the EPA in opposition to California's climate disclosure laws. Federal agencies may even consider filing suit against California over these regulations, while the DOJ and FTC can investigate how these proposed regulations advance the Regional Greenhouse Gas Initiative (RGGI) and the Western Climate Initiative (WCI).
The WCI, a 501c3 compact formed between California, Washington, and Canadian provinces of Nova Scotia and Quebec, aims to reduce GHG emissions in the US using a multi-sector, market-based approach: a regional cap-and-trade system. Washington is among the several states pursuing similar climate disclosure laws in the legislature.
New York and New Jersey are members of the RGGI, dedicated to reducing GHG emissions from power plants in the region. Both states are pursuing similar GHG reporting policies in their legislatures. Six other states have also been inspired by California's Accountability Act to craft similar mandates, each furthering the goals of their regional compacts.
California's Accountability Act requires roughly 5,300 companies in the state to disclose their carbon footprint by next summer. The Accountability Act also includes the Accounting Act, which requires companies to gather and report data on GHG emissions outside of California to aid the firm's compliance.
The Act, however, has been criticised for violating the Dormant Commerce Clause by imposing administrative reporting burdens on firms in other states. The Climate Corporate Data Accountability Act, one of the laws in question, is said to impose undue burdens on interstate commerce.
California's Voluntary Carbon Market Disclosure requires firms to disclose the scope and extent of their carbon credit trading. Despite potential violations of constitutional law, especially the Dormant Commerce Clause, there is no direct information explaining why no federal funds for emissions reporting under the Greenhouse Gas Protocol were withheld by states.
The California Air Resources Board (CARB) has failed to meet its July 2025 deadline for crafting regulations that properly guide the climate law's implementation. This has added to the controversy surrounding the Act, with critics arguing that it lacks clear guidelines and could potentially harm interstate commerce.
The DOJ and EPA are encouraged to intervene to prevent harm from state compacts that could lead to a coast-to-coast assault on access to affordable energy and severely burden interstate commerce.
Minnesota is the only other state to have some form of climate reporting law, aimed at large banks and credit unions and not compelling GHG reporting. As the debate continues, it remains to be seen how the federal government and other states will respond to California's climate disclosure laws and the multi-state initiatives they spearhead.
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