Data Centers Face Growing Environmental and Litigation Risks
The environmental regulatory and litigation landscape for data centers has shifted. In the past several weeks, states with significant existing or planned data center development have announced new requirements affecting environmental permitting, water use, backup generation, electricity demand, and local approvals. At the same time, environmental groups are increasing their litigation toolkits — primarily, through Clean Air Act citizen suits — to challenge data centers and the power generation supporting them.
Federal Court Strikes Down New York’s Climate Change Superfund Act
On August 31, 2026, the U.S. District Court for the Northern District of New York struck down New York’s Climate Change Superfund Act (the Act). As we reported when the Act was signed into law in 2024, the Act established a Climate Change Adaptation Cost Recovery Program authorizing New York to recover $75 billion over 25 years from fossil fuel companies for their alleged contributions to greenhouse gas (GHG) emissions. As we also reported when challengers filed suit in February 2025, a coalition of twenty-two states and multiple industry associations had argued that the Act was preempted by the Clean Air Act (CAA) and violated the Supremacy Clause, among other issues. Chief U.S. District Court Judge Brenda K. Sannes agreed, granting summary judgment in favor of the challengers and holding that the Act is preempted by federal law and cannot be enforced.
Court Order Blocks Enforcement of California’s SB 343 Recycling Law and Could Impact State’s Extended Producer Responsibility Program
Companies that manufacture products bearing recyclability labels have received temporary relief from impending compliance obligations. On July 14, 2026, the U.S. District Court for the Southern District of California issued a preliminary injunction preventing California, “the State,” from enforcing SB 343, the “Truth in Recycling” law, as litigation continues. The law was set to take effect on October 4, 2026, and the preliminary injunction could impact the implementation of SB 54, California’s Plastic Pollution Prevention and Packaging Producer Responsibility Act, which establishes the State’s Extended Producer Responsibility (EPR) program.
EPA Drops Suit Against eBay
On April 24, 2025, the United States, on behalf of the U.S. Environmental Protection Agency, voluntarily dismissed the government’s appeal of a district court order rejecting claims that eBay violated the Clean Air Act (CAA), the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), and the Toxic Substances Control Act (TSCA). This means the district court’s dismissal of the case against eBay will stand.
SEC Ends Defense of Climate-Related Disclosure Rules
On March 27, 2025, the U.S. Securities and Exchange Commission (SEC) announced that it had voted to end its defense of the final rules on the enhancement and standardization of climate-related disclosures for investors (the climate rules). This decision follows significant opposition to the climate rules from congressional leaders, trade associations, state attorneys general, and other business entities. (more…)
States Challenge New York’s Climate Superfund Act
The Climate Superfund Act (Act), signed into law by New York Governor Kathy Hochul on December 26, 2024, faces a substantial lawsuit filed by a coalition of states and industry participants. As described in our previous post here, the Act authorizes the state government to unilaterally levy billions of dollars in fines on fossil fuel companies over the next two decades for alleged contribution to greenhouse gas (GHG) emissions.
States, Advanced Reactor Developer Challenge NRC’s Authority to License Advanced Reactors
The outcome of a lawsuit filed at the end of 2024 challenging the U.S. Nuclear Regulatory Commission’s (“NRC’s or the Agency’s”) authority under a 1956 rule to license certain nuclear facilities could have important implications for advanced reactor licensing processes and the supply of electricity in the U.S. in the years ahead.
California Kicks Off Special Legislative Session in Response to Presidential Election
On December 2, California lawmakers began a special legislative session, convened by Democratic Governor Newsom, aimed at bolstering state support for opposing the incoming U.S. presidential administration.
Jarkesy’s Potential Implications for EPA Administrative Proceedings
On June 27, 2024, the U.S. Supreme Court decided SEC v. Jarkesy,[1] holding that when the Securities and Exchange Commission (SEC) alleges a defendant has violated securities antifraud provisions and seeks civil penalties, the defendant is entitled to a jury trial in federal court under the Seventh Amendment. The ruling restricts the SEC’s use of its own in-house administrative tribunal with its own administrative law judges (ALJs), which the SEC has historically used to pursue antifraud claims. While the Court’s ruling focuses on the SEC, the principles underlying the decision may be applied more broadly to restrict the ability of other federal agencies, including the Environmental Protection Agency (EPA), to pursue civil penalties via their own administrative proceedings.
