USA – CALIFORNIA Law and Practice Contributed by: Nora Sheriff, Gwenneth O’Hara, Samir Hafez, Antonio Carrejo and Timothy Lee, Buchalter LLP
regulatory constraints, signalling a renewed focus on energy independence and traditional energy sources. In addition, the Act repeals, restricts, or accelerates the phaseout of many clean energy incentives intro- duced under the Inflation Reduction Act, including tax credits for wind, solar, electric vehicles, and energy efficiency programmes, while imposing stricter eligi- bility rules and foreign-entity restrictions on remaining credits. Overall, the bill reorients federal energy policy away from subsidies for renewable energy and toward sup- port for oil, gas, coal, and certain technologies like carbon capture, with broader implications for energy markets, investment, and decarbonisation efforts in the United States. US Environmental Protection Agency Emergency Waiver On 25 March 2026, the US Environmental Protection Agency (EPA) issued a temporary emergency fuel waiver under the Clean Air Act to address anticipated fuel supply disruptions and high gasoline prices. The waiver permits nationwide summer sales of E15 gaso- line (15% ethanol), which are normally restricted due to volatility and air-quality rules. In addition, the EPA temporarily waived certain federal fuel standards, including low‑volatility requirements and federal enforcement of state “boutique” fuel rules, effectively enabling a single national gasoline standard with 9–15% ethanol content. The agency stated that the action was taken in the public interest to increase fuel supply, stabilise mar- kets, and reduce costs for consumers ahead of the summer driving season, particularly in light of global supply disruptions. CARB Cap-and-Invest Program Amendments In 2026, CARB initiated rule-making to implement amendments to the Cap-and-Invest regulation (for- merly Cap-and-Trade). CARB’s proposals include changes to allowance allo- cation methodologies, industrial assistance mecha- nisms, and product-based benchmarks, with a focus
on addressing emissions leakage risk for emis- sions‑intensive, trade‑exposed (EITE) industries. The proposed changes are also framed in part as address- ing affordability and competitiveness considerations within the carbon market framework. Implementation of Climate-Related Disclosures On 26 February 2026, CARB officially adopted the initial regulations for the California Corporate Green- house Gas Reporting Program, authorised by SB 253 (2023). This programme requires companies with total annual revenues in excess of USD1 billion that do business in California to submit annual reports disclosing their emissions. Scope 1 and 2 Emissions reporting begins in 2026, with the first report due by 10 August 2026. Scope 3 Emissions reporting require- ments have been staggered to begin in 2027. Governor Gavin Newsom’s EO N-79-20 EO N-79-20 (23 September 2020) mandates that 100% of new passenger vehicles sold in California be zero-emission by 2035, and that 100% of medi- um- and heavy-duty vehicles be zero-emission by 2045. In response, CARB adopted regulations aimed at increasing the number of zero-emission vehicles in California and tightening vehicle emissions stand- ards. While many expect this aggressive push toward EVs will dramatically increase electricity demand, the exact timing and scale of this growth are highly uncer- tain due to an ongoing, legal battle with the federal government. In June 2025, President Trump signed congressional resolutions revoking the federal EPA waivers allowing California to enforce these strict mandates. California and a coalition of states immediately sued to reverse the repeal. The conflict escalated further on 12 March 2026, when the US Department of Justice and Depart- ment of Transportation sued California to completely block the State’s zero-emission rules, arguing they illegally infringe on federal authority over fuel economy standards. With both sides locked in federal litigation, the enforcement of California’s 2026 interim goals is entirely up in the air.
414 CHAMBERS.COM
Powered by FlippingBook