Trump asks US attorney general to investigate state climate laws, carbon trading

US President Donald Trump is directing Attorney General Pam Bondi to identify state laws seeking to address climate change and to "expeditiously" take action to halt the enforcement of such laws, including California's carbon trading program.

In an executive order issued late afternoon on April 8, the president cited California, New York and Vermont as states that target fossil fuels and "threaten American energy dominance and our economic and national security." Another White House order the same day sought to boost production and reliance on coal, an industry that has long been in decline.

The order titled "Protecting American energy from state overreach" singled out California's 12-year-old cap-and-trade market as a program that "punishes" businesses by forcing them to pay "large sums" to trade carbon credits. Trump in 2019, during his first term, sued the state over a decision to link its carbon market with a similar program in Quebec, but a federal judge dismissed the case the following year.

California carbon allowance prices dropped sharply in response to the executive order. Platts, part of S&P Global Commodity Insights, assessed current-month CCAs at $26.28 per allowance on April 9, a 9% drop on the day. This is the lowest Platts CCA current-month allowance price assessment since September 2022.

"California will stand our ground and defend our efforts to reduce harmful pollution to the fullest extent possible," said CARB Chair Liane Randolph in an April 9 statement.

The executive order called a December 2024 New York law seeking payment from fossil fuel companies for damages caused by climate change and "extortion law," and claimed that some states delay review of permit applications.

"These state laws and policies are fundamentally irreconcilable with my administration's objective to unleash American energy," the order said. "They should not stand."

The US Climate Alliance, an organization of 24 states with targets to halve greenhouse gas emissions by 2030, addressed the executive order immediately.

"The federal government cannot unilaterally strip states' independent constitutional authority," New York Governor Kathy Hochul and New Mexico Governor Michelle Lujan Grisham, Democratic co-chairs of the alliance, said in a statement. "We are a nation of states — and laws — and we will not be deterred."

Senator Sheldon Whitehouse, Democrat-Rhode Island and ranking member of the Senate Environment and Public Works Committee, also issued a statement saying Trump's order violates state sovereignty.

The American Petroleum Institute, the oil industry's trade group, praised Trump's efforts to end climate superfund statutes and "restore the rule of law." The API, along with Republican-led states and other industry groups, has asked federal courts to strike down such laws in New York and Vermont.

The Department of Justice could seek to assert its legal viewpoint pin the context of that litigation.

"We welcome President Trump's action to hold states like New York and California accountable for pursuing unconstitutional efforts that illegally penalize US oil and natural gas producers for delivering the energy American consumers rely on every day," said API's senior vice president and general counsel, Ryan Meyers.

Under Trump's order, Bondi must submit a report within 60 days to the White House on steps her office has taken to challenge state laws found to violate the administration's agenda. It also says the order must be implemented "consistent with applicable law and subject to the availability of appropriations."

Gas project orders

The order comes as developers of natural gas infrastructure have faced obstacles in certain states with climate laws that include greenhouse gas emissions targets.

The executive order mentions that some states have delayed review of permit applications to produce energy, creating barriers to market entry. Trump's order instructed Bondi to prioritize efforts to stop enforcement of state laws "purporting to address 'climate change' or involving 'environmental, social, and governance' initiatives, 'environmental justice,' carbon or 'greenhouse gas' emissions, and funds to collect carbon penalties or carbon taxes."

Climate laws in states such as New York and New Jersey have triggered reviews of whether proposed gas projects such as compressor stations and gas pipelines were still needed if they would interfere with targets for lowering GHG emissions by set dates.

New York took nearly three years to review air permits for Iroquois Gas Transmission's 125 MMcf/d Enhancement-by-Compression Project, after the Federal Energy Regulatory Commission authorized the interstate project in March 2022. The review included a look at whether the project was justified under the state's Climate Leadership and Community Protection Act, despite the project's downstream emissions. While New York granted the air permit for two compressor stations in the state on Feb. 7, a third permit is still pending in Connecticut.

Environmental groups are now suing New York over whether it is stalling on implementation of its climate law.

Christie Hicks, Earthjustice managing attorney for clean energy, said targets of the new order could be broad in theory because many states have regulations on the books that mention terms such as climate and environmental justice. But she said the administration may be attempting relitigate what has already been upheld in the court. For instance, the first Trump administration tried to challenge application of California's cap and trade law, she noted.