Energy and Commodities Outlook 2021

Read time: 5 minutes (931 words) 

The Biden administration is using regulatory bodies, such as the EPA and Departments of Labor and Transportation, to promote environmental, social and governance (ESG) policy objectives in addition to their normal job of promulgating safety-focused requirements. While this regulatory bent bypasses the constraints of the legislative process, it is still susceptible to push-back from other forces, notably states and state and federal courts, up to the U.S. Supreme Court.

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ESG policy initiatives

Climate change. Biden has issued several executive orders directing federal agencies to implement ESG-related practices, including a key order on Jan. 27, called “Tackling the Climate Crisis at Home and Abroad.“ The order:

  • Requires agencies to consider the effects of federal permitting decisions on greenhouse gas emissions and climate change;
  • Initiates an agency-wide push to incorporate programs, policies and activities to promote environmental justice; and among other things,
  • Encourages the development of renewable energy production on land and in water.

Key recent and ongoing EPA rulemakings affecting climate change include rules to:

  • Reduce methane emissions from abandoned oil and gas wells;
  • Cut emissions from existing oil and natural gas operations;
  • Tighten emissions standards for transportation and other mobile sources; and
  • Phase out hydrofluorocarbons, a potent greenhouse gas.

The administration’s use of regulatory agencies to further ESG policy objectives is apparent in OSHA’s recent involvement in climate change as a workplace safety issue, with the agency moving to implement standards to address heat and wildfire hazards.

PFAS. On Oct. 18, the Biden administration announced a joint effort with eight agencies to address the growing public health concern over certain per- and polyfluoroalkyl substances (PFAS), spearheaded by a four-year strategic roadmap from the EPA outlining next steps and efforts to regulate PFAS under major environmental laws and regulations. PFAS concerns implicate many industries, including industrial operations like metal and electronics manufacturing, as well as the packaging and transportation industries, to name a few.

OSHA COVID-19 vaccine mandate. The recently released Emergency Temporary Standard (ETS) is an example of President Biden’s use of regulatory bodies to promote ESG policy objectives. Historically, OSHA used its regulatory authority to identify a hazard and implement a discrete requirement to address the identified hazard. Indeed, OSHA’s initial COVID-19 related ETS was focused on the health care industry and was not published until June 21 – what was then thought to be after the peak of the pandemic.

However, on Sept. 9, President Biden issued his “Path Out of the Pandemic,” in which he tasked OSHA with developing a significantly broader ETS to encourage vaccinations among the workforce. The temporary standard, effective Nov. 5, requires employers with over 100 employees to either:

  • Ensure all employees are fully vaccinated; or
  • Require unvaccinated employees to: (i) produce a negative test result at least once every seven days before coming to work; and (ii) wear a mask.

Under the standard, employers must provide paid time off for the time employees use to get vaccinated and/or recover from post-vaccination illness.

The rule is comprehensive, as state plans will be required to implement equally protective rules within 30 days of the effective date, or Dec. 5.

State-based opposition

Climate change. Arkansas, Mississippi, Nebraska, North Dakota and Wyoming have said that they would challenge any new federal policies that require the power sector to cut carbon emissions. Pennsylvania, which is expected to join the Regional Greenhouse Gas Initiative through a rulemaking set to take effect in 2022, is facing staunch opposition from Republican legislators arguing that such a decision must come from the legislative body and not the executive branch. At the federal level, in March 2021, 12 state attorneys general sued President Biden over his executive order directing agencies to consider the social cost of greenhouse gas pollution in future federal rulemakings, arguing the directive violated the separation of powers, although the lawsuit was later dismissed.

Key takeaways
  • Administration uses executive orders and rulemaking to promote ESG policies.
  • States and the judicial system, including the Supreme Court, may curb or thwart certain requirements.
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