Political and legal fights between federal Republicans and Democratic-led states over climate just intensified on two fronts.

Why it matters: States are increasingly important policy and legal arenas as Trump 2.0 officials pare back Biden-era policies.

• Advocates of tougher steps to fight global warming see chances for important gains.
• But many industry groups, red state and Trump officials see intrusion into federal policymaking turf.

Catch up quick: The Justice Department, in a highly unusual move, is seeking district court injunctions to block Michigan and Hawaii from filing lawsuits that demand damages from fossil fuel producers.

• Hawaii nonetheless filed suit against oil majors yesterday, though DOJ has made clear it will fight the effort.
• Separately, DOJ filed cases against "climate superfund" laws recently enacted in Vermont and New York that also seek billions of dollars from the industry.
• The moves follow President Trump's exec order last month pushing the Justice Department to challenge state policies and lawsuits that it alleges would burden energy production.

State of play: Meanwhile, House Republicans, joined by 35 Democrats, passed a measure yesterday that would thwart California rules that effectively ban the sale of new gas cars by 2035.

• Weeds alert: The resolution under the Congressional Review Act would nix the EPA waiver allowing California rules that a dozen other states can follow.

What's next: A looming Senate battle over skirting a parliamentarian ruling that these special, filibuster-proof measures can't be used to rescind EPA waivers.

Friction point: Getting back to DOJ's moves, red states and industry groups are already battling the NY and Vermont state climate superfund laws in court.

• So let's focus on attempts, citing constitutional and other arguments, to block Michigan and Hawaii from bringing cases against oil companies
• "The idea the federal government can preempt states from even attempting to file lawsuits is outlandish, and the complaint does not fairly represent relevant legal authorities," Jonathan Adler, a professor at Case Western Reserve University, tells me via email.
• Side note: he's not a lefty.

It's "certainly unusual, possibly unprecedented," Michael Gerrard, who heads Columbia's Sabin Center for Climate Change Law, tells me. (His group has been involved in supporting some climate litigation.)

The other side: The DOJ, in the complaints, says it's ensuring states don't interfere with the Clean Air Act or the federal government's "exclusive authority over interstate and foreign commerce, greenhouse gas regulation, and national energy policy."

• It alleges state restrictions and "burdens" on energy producers are raising consumer costs and making the U.S. "less able to defend itself from hostile foreign actors."

What they're saying: The American Petroleum Institute applauded the DOJ efforts against the four states.

• It said the Trump team "gets it" about state laws and lawsuits that "attack" — unconstitutionally in API's view — companies providing reliable energy.
• But Michigan AG Dana Nessel noted in a statement her lawsuit against fossil fuel producers hasn't been filed, which makes DOJ's move "at best frivolous and arguably sanctionable."

What we're watching: I mean, a lot?

• But right now I'm most curious to see what district court judges in Michigan and Hawaii do with the DOJ's gambit.

The House Natural Resources Committee is proposing billions in federal lease sales and changes to the National Environmental Policy Act as part of the GOP's reconciliation bill.

Why it matters: The panel's portion of the mega-tax bill would lay the groundwork for the Trump administration's goal of expanding drilling and mining on public lands.

Driving the news: The draft proposes nearly $15 billion worth of lease sales, committee aides said.

• That includes four sales in the Arctic National Wildlife Refuge and leasing in the western Gulf of America (renamed by the U.S. from the Gulf of Mexico) and Alaska's Cook Inlet.
• And it would reverse the IRA's oil and gas royalty hike, which the committee argues would actually raise revenue by making drilling more appealing.
• The proposal also includes the Public Land Renewable Energy Development Act, a longstanding bipartisan idea to set up a revenue-sharing system for wind and solar development.

The big picture: The Natural Resources slice of reconciliation would bring $15 billion in net deficit reductions to help pay for tax cuts, aides said.

• On permitting, Natural Resources is getting creative to comply with the budget rules governing reconciliation.
• Project sponsors would pay a fee to the federal government. In return, they would get an expedited NEPA review process and a prohibition on lawsuits against their NEPA permits.

What's next: The committee will mark up the bill next week.

📉 Exxon and Chevron both reported Q1 profits well under the same period in 2024 in a reflection of lower oil prices and other pressures.

• The intrigue: Chevron is reducing share buybacks, making it the first international oil company to do so this cycle, HSBC notes. Bloomberg called it a sign that "President Donald Trump's trade war is hurting a key US industry he pledged to help."
• State of play: Exxon reported a $7.71 billion net profit, down from $8.22B in the first three months of 2024. U.S.-based peer Chevron posted total earnings of $3.5B, compared to $5.5B in Q1 2024.

↩️ Via Reuters, "The board of the U.S. Export-Import Bank unanimously voted on Thursday to reverse a years-long restriction on lending to coal projects overseas, reflecting President Donald Trump's agenda that calls for more domestic coal mining and exports of U.S. coal."

💵 LNG producer Venture Global said it secured $3 billion in new debt financing from 19 banks for its big planned CP2 project.

• What we're watching: The company has not yet made a final investment decision on the huge Louisiana facility, but the new financing signals it's moving closer.

The White House is slated to unveil its fiscal year 2026 budget request to Congress later today.

Why it matters: It will provide more details on White House plans for steep cuts at environmental, resource and science agencies.

What we're watching: The depth of proposed cuts to NOAA after draft plans surfaced last month that would end much of its climate work.

• We're also watching for more info on plans to scale back DOE low-carbon energy programs.

The bottom line: Yes, budget requests are famously dead on arrival in Congress.

• But the White House is also looking to make major reductions even without approval from lawmakers.

Go deeper: Trump will call for deep domestic cuts in FY 2026 budget

That's the year-over-year decline in venture funding for U.S.-based direct air capture startups, per Pitchbook data that Bloomberg wrote about.

Why it matters: The story notes overlapping threats from federal policy changes and big companies walking back climate pledges.

"If taken literally, it means that China ... would have to choose between commercial relations with Iran or the United States."

What we're watching: How Trump's claim that buyers couldn't do business with the U.S. "in any way, shape, or form" affects negotiations with Iran over its nuclear program.