As we forecast in a prior WilmerHale alert, “What a Biden Administration Will Mean for US Climate Change Policy,” President Biden’s first actions come in the form of executive orders with high-level directives as opposed to enforceable standards. However, where relevant legislative authority is in place such as under the Clean Air Act, federal rulemakings are expected to follow. Regulated entities should view the Order as a useful roadmap for anticipating and tracking forthcoming guidance, rulemakings, and other agency actions relevant to their industry sector(s). Companies should pay particular attention to the Order’s goal of achieving net-zero domestic emissions by 2050—which is sought to be achieved, in part, through more stringent emissions standards—and should begin assessing areas where they can reduce carbon output and opportunities to engage with the Administration to provide stakeholder input.
I. Key Provisions
This alert analyzes key provisions of the Order that are expected to most immediately impact the regulated community and that highlight the Biden Administration’s broader policy priorities.
A. Promoting Renewable Energy Development
Carbon neutrality is a central tenet of the Order: in addition to directing the United States on a path to achieve “net-zero emissions, economy-wide, by no later than 2050,” it sets out to attain “a carbon pollution-free electricity sector no later than 2035.” To achieve those goals, the Order expressly prioritizes renewable energy development and directs the newly-created National Climate Task Force to identify methods to increase renewable energy production on public lands and offshore waters—and specifically to double offshore wind generation by 2030. The Order also calls on the Secretary of the Interior to engage with Tribal authorities on the development and management of renewable (and conventional) energy resources on Indian lands. In addition to energy generation, the Order emphasizes the need for sustainable infrastructure to reduce climate pollution, and positions that goal as an opportunity to create new construction, manufacturing, engineering, and skilled-trades jobs.
To align energy and infrastructure development with the Order’s overarching carbon-neutrality goals, the Order directs government agencies to increase the resilience of their facilities and operations and identify steps that can be taken to accelerate the deployment of those projects in an environmentally responsible manner. Significantly for the regulated community, the Order requires that federal permitting decisions consider the effects of greenhouse gas emissions and climate change.
B. Disfavoring Fossil Fuels
While the Order promotes renewable sources of energy generation, it looks skeptically at traditional fossil fuel sources. The Order stops short of a complete prohibition on new leasing for oil and gas development but calls for a “pause” on such leasing, both onshore and offshore. The Department of the Interior is directed to use that pause to coordinate with other federal agencies to conduct a “review and reconsideration” of federal leasing practices, including related climate impacts and the possibility of adjusting extraction royalty rates to minimize externalities. The pause does not apply to Indian lands, however; the Order “does not restrict energy activities on lands that the United States holds in trust for Tribes.”1 Additionally, the Order calls on federal agencies to identify and eliminate federal subsidies for fossil fuels, to the extent doing so is within the purview of the Executive Branch.
Litigation related to the Order’s leasing provisions has already begun. The Western Energy Alliance—a coalition of more than 200 oil and gas companies—immediately filed suit alleging that President Biden exceeded his authority in ordering an indefinite leasing pause, and suggesting that it will bring claims under a number of federal statutes, including the Mineral Leasing Act and the Federal Land Policy Management Act (FLPMA). FLPMA, for example, calls for a “multiple use” approach to public lands management, which the statute defines as “management of the public lands and their various resource values so that they are utilized in the combination that will best meet the present and future needs of the American people.” 43 U.S.C. § 1702(c). The Alliance reads FLPMA and other statutes to mean that “Congress has directed [public lands] to be responsibly developed,” and that the President cannot override this directive by executive order.2 Similar challenges brought by other oil and gas organizations are expected to follow, in addition to proposed legislation.
C. Environmental Justice
Harmonizing with President Biden’s broader efforts to address diversity and equity—which we analyzed in a prior WilmerHale alert—the Order also addresses environmental and economic justice. It creates a number of new governmental bodies to lead those efforts, including the White House Environmental Justice Interagency Council which is tasked with developing a strategy to address “current and historic environmental injustice.” In addition, the Order directs the Secretary of Health and Human Services to work with the Office of Climate Change and Health Equity and an Interagency Working Group to analyze the risks of climate change faced by vulnerable groups. Looking forward, the Order directs that 40% of the overall benefits of federal investments, such as investments in clean transit, and affordable and sustainable housing, should be directed toward disadvantaged communities. Finally, the Order seeks to promote transparency by requiring an evaluation of federal agencies’ environmental justice efforts and directing the Office of Management and Budget to publish an annual Environmental Justice Scorecard detailing agency environmental justice performance measures.
D. Reengaging the International Community
Even before the Order, the Biden Administration had taken steps to rejoin the Paris Agreement, the international accord that sets a goal to limit global warming to less than two degrees Celsius. The move is a part of the broader signal that President Biden sent as a candidate and has affirmed in the early weeks of his administration that the United States will reengage with international institutions, rejecting the more isolationist “America First” approach taken by the previous administration. The Order furthers this priority by committing to take a leadership role in advance of the 26th United Nations Climate Change Conference, scheduled for November 2021 in Glasgow, Scotland, and by instructing the Treasury Department to work through its “voice and vote” in the World Bank and International Monetary Fund to advance the goals of the Paris Agreement.
II. Implications and Predictions
The Order’s government-wide approach demonstrates President Biden’s commitment to addressing climate change through a variety of policies and government initiatives, both domestic and international, with the aim of comprehensively protecting the environment, the economy, and national security. This Order also continues to emphasize the broader areas of focus for the Biden Administration, including social equity and international engagement, which build on other orders issued by the Administration.
With the central goal of carbon-neutrality, the Order makes a stark endorsement for expanding renewable sources of energy while curtailing development of fossil fuels. This creates opportunities for federal partnerships and potential for streamlined agency approvals for renewable energy developers, and sets up the first of what could be many legal fights between the Administration and conventional energy companies.
This Order is certainly only the beginning of the Administration’s work on climate issues, which we will continue to closely follow. While not yet action-forcing for regulated entities, the Order lays out the architecture of the Administration’s climate policy agenda. Even in advance of proposed rulemakings, regulated entities should begin assessing how these directives could impact their business operations and identifying opportunities to engage with the Administration in shaping these initiatives.