March 23, 2026
Analysis of S. 3836/H.R. 6409, The Foreign Emissions and Nonattainment Clarification for Economic Stability (FENCES) Act
Key Takeaways
« America’s energy, manufacturing, and transportation industries are among the safest and cleanest industries in the world.
« However, under the Biden Administration, states found to be in violation of the Clean Air Act could be designated as having a “nonattainment area,” regardless of whether the emission emanated from outside that state.
« Nonattainment designations levy substantial regulatory burdens—and compliance costs—on states, impacting economic growth, investments, job opportunities, and infrastructure projects.
« H.R. 6409 presents a solution to these challenges by clarifying that states are not liable for emissions of foreign origin that are beyond a state's ability to reduce or eliminate.
Introduction
America is home to the world’s leading producers, innovators, and industrial powerhouses. U.S. manufacturers produce goods that are twice as clean as the global average. American companies produce goods that emit 40% less CO2 than the global average for the same products. American natural gas production emits 30% less fugitive emissions than Russian production, and fuel switching from coal to natural gas has driven world-leading reductions in CO2 emissions.
While American industries have reduced their environmental footprint at an exponential rate, our economic adversaries have not. China, for example, is responsible for a third of global emissions. China’s emissions have increased from 14% of total global emissions in 2000 to 35% in 2022. While per-capita emissions are still higher in the U.S., China alone emits more CO2 than the rest of the developed world.
Despite the stark contrast between American emissions reductions and other nations (like China) dramatically increasing theirs, federal regulations still punish American states and businesses for pollution that emanates from outside of states’ borders. Emissions that enter the United States from Mexico or Canada are common and can cause states to fail to meet appropriate air quality standards.
Nonattainment Designations
Under the Clean Air Act (CAA), states face severe consequences when designated as nonattainment areas. This designation can encompass the entire state, but is typically focused on specific regions that fail to meet CAA National Ambient Air Quality Standards (NAAQS).
If states fail to meet NAAQS, they may incur substantial penalties—highway funding freezes, mandatory emissions offset requirements, and substantial financial penalties—all of which pose a significant challenge to the state’s economic well-being. The EPA can impose these sanctions even when violations result entirely from natural sources or sources outside state control.
Regressive regulatory policy that places punitive fines and restrictions on states that exercise good-faith efforts to curb unnecessary pollution threatens long-term investments, as businesses cannot predict when transboundary pollution events might trigger new penalties or restrictions. Regulatory delays can lead to the cancellation of infrastructure projects when investors withdraw capital following a nonattainment designation.
Relief from Improper Designations: A Legislative Path Forward
In response, lawmakers have taken proactive action to protect American states’ infrastructure projects and investment opportunities. Senator Cythia Lummis (R-WY) introduced the “Foreign Emissions and Nonattainment Clarification for Economic Stability (FENCES)” Act (S. 3836), and Congressman August Pflueger (R-TX) introduced companion legislation in the House of Representatives (H.R. 6409).
The FENCES Act clarifies the Clean Air Act requirements that punish states for emissions originating outside U.S. borders. FENCES restores certainty for states by clarifying that all foreign emissions, whether man-made or natural, are not within a state’s ability to control or regulate. The act also expands the list of pollutants to include more than just ozone, allowing greater flexibility for states adversely affected by foreign pollution.
Furthermore, the law provides protection for states placed in nonattainment because of exceptional events (such as wildfires) and mobile-source emissions that states lack the authority to fully regulate.
Finally, the FENCES Act requires states to renew their demonstrations to qualify for attainment status every five years. This ensures that states do not receive a single designation. Instead, they must provide ongoing verification and adhere to clear environmental standards to maintain an attainment designation, balancing relief from unreasonable penalties with continued accountability for controllable emissions.
The Environmental Protection Agency has already rescinded the Biden-era EPA rules that promulgated these regressive rules. Now, legislative action can codify these important CAA reforms.
Conclusion
The FENCES Act returns common sense to environmental policy by protecting states from regulatory impacts related to emissions beyond their control, while still ensuring reasonable requirements to reduce harmful emissions. As AFPI research outlines, the United States is a global leader in air quality and environmental stewardship, with relatively low emissions relative to peers around the world and active contributions to global health through air quality monitoring in more than 50 cities across three dozen countries. American industries should not be penalized for poor air quality standards emanating from nations with far weaker environmental commitments. The FENCES Act provides clarity and predictability, protects the environment, and streamlines regulation to allow American businesses the freedom to operate and provide world-class products and services.