Accountability of investors on climate change risk and opportunity
EPA will implement United States' commitment to reduce GHG emissions
DOI issuing offshore wind lease sales while reforming oil and gas leasing programme
Federal agencies provide incentives for zero-emission vehicles and supporting infrastructure
Stringent regulation and action on climate change to influence government decision-making


With 2022 underway, the Biden-Harris administration is continuing to implement its "whole-of-government" response to climate change. In 2021, the administration focused on:

In early 2022, the administration announced new actions and funding to address methane emissions – including $1.15 billion for states to cap abandoned oil and gas wells – while the Department of Interior (DOI) will hold its first offshore wind auction later this month. Going forward, the Environmental Protection Agency (EPA) hopes to initiate new rule-makings to reduce greenhouse gas (GHG) emissions from fossil fuel-based energy production and consumption. In addition, the National Highway Traffic Safety Administration (NHTSA) will finalise new corporate fuel economy standards. 2022 could also see "strong and systemic" moves by financial regulators, such as the Securities and Exchange Commission's (SEC's) long-awaited proposed rule on climate-related disclosures.

All told, it is expected that there will be a flurry of regulatory and non-regulatory actions from the administration in 2022 aimed at achieving the United States' nationally determined contribution (NDC) under the Paris Agreement – a 50 to 52% reduction in economy-wide GHG emissions by 2030 leading to net-zero by 2050 – especially as the Democrats' window narrows for passing climate legislation before the congressional midterm elections.

This article is part of a series that highlights key climate and sustainability developments to watch in 2022 as the Biden-Harris administration rolls out its "year two" environmental agenda.

Accountability of investors on climate change risk and opportunity

US public companies remain on the lookout for the SEC's proposed rule to enhance disclosure requirements for climate change risks and opportunities. Readers will recall SEC Chair Gensler's assertion that:

investors increasingly want to understand public companies' climate risks and are looking for consistent, comparable and decision-useful disclosures to help them invest in companies that fit their needs.(2)

Initially, the SEC signalled that the proposed rule would be out in late 2021, but it seems that drafting the rule is presenting more challenges than anticipated. Now, interested stakeholders expect the SEC to act by mid-2022.

In the meantime, as Form 10-K and proxy season approaches, US public companies should be mindful of existing disclosure obligations in relation to climate change risks and opportunities faced by their companies. They should also ensure that such disclosure obligations are consistent with all other disclosures to investors (eg, disclosures made in sustainability and earnings reports). Information regarding climate change-related risks and opportunities may be required in various disclosure items in a company's SEC filings (eg, the description of business, legal proceedings, risk factors, and management's discussion and analysis (MD&A) of financial condition and results of operations) (for further information, see "Corp Fin's Climate Disclosure Review is Here – What to Expect and How to Prepare").

Companies that do not believe climate change poses any material risks to their operations or financial position should be prepared to support their position with quantitative and qualitative analyses, data and other supporting materials.

EPA will implement United States' commitment to reduce GHG emissions

After rejoining the Paris Agreement and announcing an aggressive new NDC in 2021, President Biden committed the country to significant reductions in GHG emissions from the production and use of fossil fuel-based energy. The United States also joined a global pact at last year's United Nations Climate Change Conference, calling upon parties to "accelerat[e] efforts toward the phasedown of unabated coal power". The conference also issued an action plan to implement the United States-led Global Methane Pledge to reduce global methane emissions by 30% below 2020 levels by 2030.(3) Accordingly, it is anticipated that the administration in 2022 will continue to focus on coal, oil and natural gas and their ultimate disposition in the fuels used to power the economy.

The EPA reportedly plans to adopt a "coordinated" series of rules to decrease emissions from coal generation. The first could include a replacement of the Obama administration's Clean Power Plan (CPP).(4) Although the Supreme Court is evaluating the EPA's authority to regulate GHG emissions from existing power plants under section 111 of the Clean Air Act(5) – the likely statutory basis of a replacement CPP – the EPA has already reached into its regulatory toolkit to facilitate emissions reductions from coal plants. For example, the EPA recently issued denials (and, in one case, an approval conditioned on a costly groundwater monitoring programme) to coal facilities that requested extensions to comply with deadlines under the Coal Combustion Residuals Rule to close unlined coal ash impoundments. Several dozen additional determinations remain outstanding, and the EPA is not expected to rule affirmatively on many.

Other EPA regulations, such as effluent limitation guidelines on coal plants' wastewater discharges, reportedly have contributed to the closure of some plants. The EPA likely will look to its broad authorities under the Clean Air Act, the Clean Water Act, and the Resource Conservation and Recovery Act to pursue future rule-making and stricter enforcement of existing regulations and permit conditions for power plants such as:

  • renewed or more stringent standards to limit emissions of mercury, acids, gases and other hazardous air pollutants;
  • increased efforts to require plant operators to respond to groundwater quality concerns; and
  • improved monitoring in the oft-disadvantaged communities surrounding plants.

Recently, for example, the EPA proposed to restore the legal foundation for the agency to impose emission limits on certain hazardous air pollutants from power plants (including the EPA's long-contested Mercury and Air Toxics Standards). Almost certainly by design, these efforts will make it more expensive and difficult to produce coal-fired power. By the end of 2022, it is expected that there will be momentum toward a number of new agency actions and rules that finalise the proposals discussed above or seek further restrictions on coal-fired power. Altogether, the EPA's "coordinated" suite of regulatory actions very well may force operators to consider plant shutdowns or technology conversions in 2022 and thereafter.

Beyond efforts targeting coal, the EPA likely will finalise proposed performance standards and methane and volatile organic compound emission guidelines for the oil and natural gas sectors. The EPA proposed new standards in November 2021 for both new and existing sources of air pollution in all key segments of the oil and gas industry. Those standards target a range of sources at oil and gas sites, including fugitive emissions at wells, compressor stations, storage vessels and numerous others. New requirements range from bolstered leak detection and monitoring programmes to implementing zero-emission technology directly at the emission source.

Additionally, the EPA has looked downstream to fuel itself as a vehicle to achieve climate goals. In December 2021, after years of delays, the EPA proposed Renewable Fuel Standard (RFS) volumes for the 2020, 2021 and 2022 compliance years. Taking a somewhat pragmatic approach, the EPA proposed to reduce the requirement for blending renewable fuel into traditional (non-renewable) fuels for the 2021 compliance year, but proposed to raise the renewable fuel volume obligations for 2022. Additionally, the EPA proposed late in 2021 to deny all undecided and pending small refinery exemptions from RFS compliance.(6)

DOI issuing offshore wind lease sales while reforming oil and gas leasing programme

The Biden-Harris administration made historic commitments to offshore wind in its first year. That momentum continues into 2022, with the DOI recently carrying out a wind auction for nearly half a million acres off the New Jersey and New York coasts. As the administration seeks to shift the country's energy mix from fossil fuels to renewable sources, at least two more offshore wind lease sales in 2022 are expected for areas off the California and North Carolina and South Carolina coasts.(7)

The DOI is also pursuing climate-inspired actions aimed at fossil fuel-based energy. Although courts stymied the DOI's moratorium on the issuance of new oil and gas leases on public lands and waters, the DOI took several steps in 2021 that will carry over into 2022 and beyond. This includes a November 2021 report culminating from the DOI's review of the federal oil and gas leasing programme, which contains numerous recommendations to correct alleged "well-documented and long reported deficiencies" in leasing practices. The report signals upcoming changes (as early as 2022) to leases' fiscal terms and remediation requirements, including minimum health, safety and environmental criteria and an increase in royalty rates – the latter of which was recently inadvertently revealed by the administration. It is also expected that the DOI will rethink its land use planning decisions, which may mean reducing or changing the criteria used to evaluate the public lands and water available for oil and gas leasing. This would impose more cumbersome lease stipulations and permit conditions, and require consultation with affected communities.

One trend unlikely to materialise, however, is a complete cessation in the issuance of leases and permits. Although the DOI may, in 2022, issue fewer leases and permits than in the past, there are no indications that it significantly will limit, restrict or stop these activities. Such a drastic policy change is unlikely to survive legal scrutiny, even if environmental groups have had success as of late in challenging lease sales – including a suit that recently convinced the US District Court for the District of Columbia to vacate and remand the record of decision underlying one of the DOI's largest ever offshore lease sales.(8)

Federal agencies provide incentives for zero-emission vehicles and supporting infrastructure

During his campaign, President Biden pledged to reduce GHG emissions from transport and develop "rigorous new fuel economy standards aimed at ensuring 100% of new sales for light- and medium-duty vehicles will be electrified" by 2050. This includes deploying a coordinated approach centred on more stringent regulations and efforts to promote the production and adoption of electric vehicles (EVs) and the build-out of EV infrastructure.

The EPA and the NHTSA, the agencies charged with regulating tailpipe emissions and fuel economy, respectively, bear much responsibility in meeting this lofty pledge. In December 2021, the EPA issued a final rule that provided aggressive new standards for tailpipe GHG emissions for model year (MY) 2023 through 2026. The NHTSA, meanwhile, repealed a Trump administration rule (SAFE I) that "codified regulatory text and made additional pronouncements" regarding the federal Energy Policy and Conservation Act's pre-emption of state and local laws related to fuel economy standards. This led to the EPA recently restoring the waiver for California's zero emission vehicles mandate and GHG emission standards within the state's Advanced Clean Cars programme, allowing California (and states that mirror California's tailpipe emission standards) to adopt standards more stringent than those in place under federal law. The NHTSA also will finalise new corporate average fuel economy standards for MY 2024-2026 vehicles in the near future to replace the Trump-era standards.

The EPA has also committed to standards for subsequent MY vehicles beginning with MY 2027. These standards are expected to contain the most stringent tailpipe emission restrictions to date – ostensibly an effort from this administration to spur the widespread adoption of hybrid and zero-emission vehicles. The EPA may even look beyond the traditional tailpipe emission standards (which typically apply to new vehicles) to meet its climate goals, such as targeting regulations and enhanced incentives directly at EVs or older, higher emitting vehicles. As an ancillary strategy to ensure emission reductions, the EPA is expected to continue its aggressive enforcement of aftermarket automobile parts manufacturers, consistent with one of the agency's ongoing National Compliance Initiatives.

Of course, the success of these strategies is dependent on the country's ability to build infrastructure to support widespread EV charging. The NHTSA's parent agency, the Department of Transportation (DOT), plans to use $7.5 billion in funding in partnership with the Department of Energy (DOE) to make that happen. Together, the DOT and the DOE will start in 2022 to "build out a national EV charging network that can build public confidence, with a focus on filling gaps in rural, disadvantaged, and hard-to-reach locations".

Stringent regulation and action on climate change to influence government decision-making

In Spring 2022, it is anticipated that the Interagency Working Group on the Social Cost of Greenhouse Gases (the working group) will propose an updated schedule of social costs from carbon dioxide, methane and nitrous oxide pollution (the social costs of GHGs).(9) Federal agencies use these social costs to inform cost-benefit analyses and justify rule-makings and other executive action, such as decisions over leasing public lands for fossil fuel development and production. The forthcoming social costs of GHGs – which likely will increase the current interim values – will be subject to public comment and scientific peer-review, with the working group aiming to publish final values for agency use in Summer 2022.(10)

Notably, the administration may expand the influence of the social costs of GHGs in 2022 to government procurement. The Federal Acquisition Regulatory Council (FAR)(11) is considering potential amendments to federal acquisition rules that would impose new requirements to incorporate the social costs of GHGs into procurement decisions and "giv[e] preference to bids and proposals from suppliers with a lower" GHG footprint. This would mark a departure from historical uses of the social costs of GHGs, which largely has been limited to cost-benefit analyses in rule-makings.

For further information on this topic please contact Kenneth Markowitz, Stacey H Mitchell, Cynthia Mabry or Christopher A Treanor at Akin Gump Strauss Hauer & Feld LLP by telephone (+1 202 887 4000) or email ([email protected], [email protected], [email protected] or The Akin Gump Strauss Hauer & Feld LLP website can be accessed at

Shawn Whites, energy regulatory specialist, J Porter Wiseman, senior counsel, Bryan C Williamson, associate, Alexa Rummel, associate, John R Gilliland, consultant, Gabriel R Harrison, public policy specialist, and Charles Smith, contractor, assisted with the preparation of this article.


(1) These are but a few of the Biden-Harris administration's noteworthy climate-related actions in 2021. For a comprehensive listing, see here.

(2) For further details, see "Chair Gensler Makes Renewed Case for Mandatory Climate Risk Rules".

(3) As noted earlier, the administration announced a series of new actions in January 2022 to follow-through on the Global Methane Pledge.

(4) In the CPP, which faced challenges in the courts and ultimately rescission during the Trump administration, the EPA classified power plants as an air pollution source to justify emission guidelines spanning from heat-rate improvements to the substitution of natural gas-combined cycle units and the use of renewable energy.

(5) 42 US Code section 7411.

(6) Changes to internal EPA procedures may make it easier and faster for the agency to approve applications for biofuels intended to replace petroleum-based fuels and additives, but some industry groups advocated during the EPA's recent public hearing for scaled back 2022 required volumes for conventional biofuels.

(7) For estimated timeframes on these potential leases and others through 2025, see the Bureau of Ocean Energy Management's offshore wind proposed leasing schedule.

(8) Friends of the Earth v Haaland, No. 21-2317 (RC), slip op (DDC 27 January 2022).

(9) While President Biden's Executive Order 13990 directed the working group to issue the final social costs of GHGs "no later than January 2022", the administration recently clarified that the working group "intends to publish its proposed final estimates within the next two months". Defendants' Supp Brief at 23, Louisiana v Biden, No. 2:21-cv-01074-JDC-KK (WD La 21 January 2022) (ECF No. 90).

(10) Defendants' Supp Brief at 23, Louisiana v Biden, No. 2:21-cv-01074-JDC-KK (WD La 21 January 2022) (ECF No. 90).

(11) The FAR Council includes representatives from the Office of Federal Procurement Policy, the Department of Defense, the National Aeronautics and Space Administration and the General Services Administration.