Environmental Regulation

State of play.

• California AG Bonta has escalated the PFAS fraudulent-transfer theory to include a newly created spinoff. The Second Amended Complaint in the DuPont PFAS litigation adds Qnity Electronics, targets insurance-coverage transfers, and invokes both the Uniform Fraudulent Transfer Act and the Uniform Voidable Transactions Act—seeking to consolidate liability across the entire DuPont corporate family in the D.C. District of South Carolina (→ California expands PFAS fraud case against DuPont spinoffs over asset transfers).
• New York has enacted the first statewide data center moratorium in the country. Governor Hochul signed an executive order halting state environmental permits for facilities exceeding 20 megawatts; the Department of Environmental Conservation must complete an environmental impact report within 18 months, and the moratorium remains in effect until new standards are finalized .
• A 17-state coalition has filed the first major interstate constitutional challenge to a state EPR packaging law. The Nebraska-led suit against California's SB 54 alleges Commerce Clause, Import-Export Clause, and First Amendment violations—but compliance obligations remain live pending a court order (→ 17 States and Wholesaler Group Sue to Block California's SB 54 EPR Law).
• The SEC's 2024 climate disclosure rules are now in active rescission proceedings, with 22 state AGs formally opposing the agency's 2026 rescission proposal and California simultaneously advancing its own CARB-administered disclosure regime for 2027 filings (→ Bonta Leads 21-AG Push to Preserve SEC Climate Disclosure Rules).
• For counsel advising companies with California operations, multi-state packaging exposure, or public-company climate disclosure obligations, the practical baseline is a bifurcated federal-state compliance landscape: federal rollbacks are contested by state coalitions in real time, and California's independent regime is advancing on its own timeline regardless of SEC outcome.

Where things stand.

• PFAS fraudulent-transfer litigation is testing whether corporate restructuring can insulate successor entities from environmental liability. California's Second Amended Complaint targets Chemours, New DuPont, Corteva, and Qnity Electronics, alleging that a series of spinoffs and amended MOUs shifted both liabilities and insurance coverage away from solvent entities; the South Carolina federal court's treatment will influence parallel PFAS litigation nationally (→ California expands PFAS fraud case against DuPont spinoffs over asset transfers).
• California's climate disclosure regime is advancing independently of the SEC. CARB's fifth public workshop addressed 2027 Scope 1, 2, and 3 reporting mechanics under SB 253 and SB 261; the 2026 reporting deadline has shifted to November 10; formal rulemaking is expected later in 2026, with sector-specific exemptions—including for insurers—still unsettled .
• The SEC's 2024 climate disclosure rules face formal rescission. The agency proposed rescission in 2026, arguing the rules exceed statutory authority; 22 state AGs have filed formal opposition; the SEC voted in 2025 to end its legal defense of the rules in pending litigation, signaling the direction of travel (→ Bonta Leads 21-AG Push to Preserve SEC Climate Disclosure Rules).
• New York's data center moratorium is the most concrete state-level AI infrastructure regulation in the country. The Responsible Data Center Development Act covers facilities exceeding 20 megawatts, exempts projects with existing permits, requires phased 90% renewable energy by 2040, and mandates prevailing wages and domestic steel sourcing; the DEC's 18-month environmental impact report will define the post-moratorium permitting regime .
• California's SB 54 EPR packaging law faces a constitutional challenge while compliance deadlines run. The 17-state suit alleges improper delegation to a private entity (the Circular Action Alliance) and interstate commerce discrimination; a parallel environmental-group suit argues the regulations are too lenient; an Oregon court has already issued a preliminary injunction narrowly covering NAW members in a similar challenge (→ 17 States and Wholesaler Group Sue to Block California's SB 54 EPR Law).
• State AG coalitions are contesting the DOE's blanket regulatory sunset mechanism. Fourteen AGs argue the DOE Sunset Rule—which would automatically terminate over 500 regulations under EO 14270—violates the APA for lack of individualized justification; the challenge targets rules governing nuclear device access, research funding, and nuclear waste disposal .
• California's Clean Air Act waiver authority is in active litigation. A multi-state coalition has sued the EPA over its proposal to eliminate New Source Review permits and its invocation of the Congressional Review Act to subject California's vehicle emissions standards to congressional revocation; the outcome determines whether states can maintain independent air quality regimes .
• AI infrastructure is generating novel environmental review obligations globally. Google's $15 billion Visakhapatnam data center faces petitions in the Andhra Pradesh High Court and India's environmental tribunal over water supply and wildlife sanctuary impacts; SpaceX has filed an FCC petition for up to one million orbital AI data center satellites, drawing objections over atmospheric pollution and astronomical interference .
• Packaging EPR is an enforcement-stage obligation in seven states. California's SB 54 took effect May 1, 2026, with $50,000-per-day penalties and sales bans beginning January 1, 2027 for noncompliance; the constitutional challenge does not suspend compliance obligations absent a court order (→ 17 States and Wholesaler Group Sue to Block California's SB 54 EPR Law).

Latest developments.

• California AG files Second Amended Complaint in PFAS litigation, adding Qnity Electronics and targeting insurance-coverage transfers under fraudulent transfer statutes (→ California expands PFAS fraud case against DuPont spinoffs over asset transfers).
• 22 state AGs file formal comment letter opposing SEC's 2026 proposal to rescind its 2024 climate disclosure rules (→ Bonta Leads 21-AG Push to Preserve SEC Climate Disclosure Rules).
• 17-state coalition and National Association of Wholesaler-Distributors sue to block California's SB 54 EPR law on Commerce Clause, Import-Export Clause, and First Amendment grounds; compliance obligations remain live (→ 17 States and Wholesaler Group Sue to Block California's SB 54 EPR Law).
• Governor Hochul signs executive order enacting New York's one-year data center moratorium for facilities exceeding 20 megawatts, the first such statewide action in the country .
• CARB holds fifth public workshop on SB 253/SB 261 implementation, shifts 2026 reporting deadline to November 10, and signals formal rulemaking later in 2026 .
• 14-state AG coalition files formal comments opposing DOE's Sunset Rule, arguing APA violation for lack of individualized regulatory justification .
• California-led coalition sues EPA over elimination of New Source Review permits and Congressional Review Act invocation targeting California's vehicle emissions standards .
• Google's $15 billion Visakhapatnam data center faces court petitions in the Andhra Pradesh High Court and India's environmental tribunal over water and wildlife impacts .
• SpaceX files FCC petition for up to one million orbital AI data center satellites; astronomers warn of atmospheric pollution and obstruction of major telescope facilities .

Active questions and open splits.

• Can ongoing corporate restructuring defeat PFAS environmental liability? California's fraudulent-transfer theory—that spinoffs and amended MOUs were designed to concentrate liability in a thinly capitalized Chemours while shielding New DuPont, Corteva, and Qnity Electronics—has no settled resolution; if the South Carolina court sustains the theory, it will reshape how acquirers and restructuring counsel evaluate environmental liability in any spinoff involving legacy contamination (→ California expands PFAS fraud case against DuPont spinoffs over asset transfers).
• Does the Commerce Clause bar state EPR packaging regimes that regulate out-of-state manufacturers? The 17-state SB 54 challenge is the first major interstate constitutional test of an EPR law; the private-delegation theory—that California improperly delegated regulatory authority to the Circular Action Alliance—adds a nondelegation dimension that could invalidate the PRO framework regardless of the dormant Commerce Clause outcome (→ 17 States and Wholesaler Group Sue to Block California's SB 54 EPR Law).
• Will the SEC finalize the rescission of its 2024 climate disclosure rules? The agency has proposed rescission and ended its litigation defense, but 22 state AGs are formally opposing; if rescission is finalized, California's CARB regime becomes the de facto national standard for large companies doing business in the state—a compliance obligation that does not depend on the SEC's outcome (→ Bonta Leads 21-AG Push to Preserve SEC Climate Disclosure Rules).
• Does the New York data center moratorium survive legal challenge and become a national model? The moratorium is in effect but the post-moratorium permitting regime is undefined pending the DEC's 18-month environmental impact report; whether other states follow—and whether industry challenges the moratorium itself on constitutional or preemption grounds—is unresolved .
• Can the executive branch impose blanket regulatory sunsets without individualized APA justification? The DOE Sunset Rule challenge will test whether EO 14270's conditional sunset mechanism survives procedural APA review; a ruling against the administration would constrain the deregulatory toolkit across energy, nuclear, and environmental sectors .
• Does California's Clean Air Act waiver authority survive Congressional Review Act invocation? The EPA's referral of California's vehicle and equipment standards to Congress for potential revocation is a novel use of the CRA; the pending litigation will test whether the waiver—largely unchallenged since the 1970s—can be circumvented through congressional action rather than rulemaking .
• What environmental review framework applies to AI infrastructure at scale? New York's moratorium, India's High Court proceedings over Google's data center, and SpaceX's FCC petition for orbital data centers all present the same structural question—whether existing environmental review regimes (NEPA, state EIA, FCC spectrum licensing) are adequate for AI-driven infrastructure—with no settled answer across any jurisdiction .

What to watch.

• The South Carolina federal court's ruling on California's fraudulent-transfer theory in the DuPont PFAS litigation—particularly whether it sustains the claim that insurance-coverage transfers constitute voidable transactions, which would set a template for PFAS recovery against restructured corporate families nationally (→ California expands PFAS fraud case against DuPont spinoffs over asset transfers).
• Whether the Eastern District of California issues a preliminary injunction suspending SB 54 compliance obligations in the 17-state EPR challenge—the first judicial test of whether state EPR regimes can constitutionally bind out-of-state manufacturers (→ 17 States and Wholesaler Group Sue to Block California's SB 54 EPR Law).
• CARB's formal rulemaking on SB 253/SB 261 Scope 3 and assurance requirements, expected later in 2026—the final rule will define the compliance mechanics and litigation exposure profile for the 2027 reporting cycle .
• The SEC's final decision on whether to rescind its 2024 climate disclosure rules—if rescission is finalized, expect immediate litigation from the state AG coalition and a practical shift to California's CARB regime as the operative standard for large public companies (→ Bonta Leads 21-AG Push to Preserve SEC Climate Disclosure Rules).
• Court rulings on the California Clean Air Act waiver litigation and any congressional action on the EPA's CRA referral—together these will determine whether California's vehicle and equipment emissions standards survive or are effectively preempted by federal action .
• Whether additional states enact data center moratoriums or permitting restrictions modeled on New York's Responsible Data Center Development Act, and whether industry mounts a constitutional challenge to the New York moratorium itself .