Clean Power Plan and the Courts: Markets Hold More Power Over Business

Power plants in Hong Kong at sunset

by | May 1, 2017

Power plants in Hong Kong at sunset

Now that the US Court of Appeals for the District of Columbia has decided to delay its ruling on the Clean Power Plan, what does it all mean for corporate America?

To be clear, the justices made no decision on the merits of the law that would reduce carbon emissions by 32% by 2030. What it did was to hold in “abeyance” its ruling so that the Trump administration could determine its approach. To that end, the White House could withdraw its support altogether, it could significantly weaken the Obama rule or it could slightly modify the one the Obama administration put forth.

“This is obviously important but not terribly surprising. I don’t think the DC Circuit has ever gone ahead and decided on the legality of a rule when a new administration says it plans to rescind or revise it,” says Jeff Holmstead, a partner in the Bracewell law firm in Washington. “If the Court had upheld the rule, it wouldn’t have prevented the new (Trump) Administration from revoking it, but it might have made this effort harder.” 

Some background: In 2007, the Supreme Court ruled that carbon dioxide is a pollutant that could be regulated under the Clean Air Act—something that EPA made official in 2009, saying it was a danger to public health and welfare. And in 2014, the high court upheld that so-called endangerment finding. That ruling is the foundation behind President Obama’s Clean Power Plan and the one that the Trump administration is honor-bound to enforce.

But in February 2016, the Supreme Court issued a “stay” to address some concerns of several states before sending the case back to the DC Court of Appeals, where a decision to either uphold the law or remand it back to Trump’s EPA will come in due time. No matter how it rules, it will head back to the high court, which is now has a ninth Justice in Neil Gorsuch who could be the deciding vote.

When it comes to the legal merits of the Clean Power Plan, those who say it is unconstitutional and it should be tossed aside argue that it usurps the rights of states and forces the retirement of at least 49,000 megawatts of coal-fired capacity. But other legal experts say that EPA’s rule gives states several alternative options to comply, such as replacing their coal-fired generation with plants that run on cleaner natural gas, or with green energies. States with a lot of coal, for instance, have less stringent requirements.

The appeals court’s “decision doesn’t change the fact that any attempted replacement of the last regulation must articulate how the EPA is meeting its obligations to protect public health under the Clean Air Act, including a public process of notice and comment,” says Jonathan Levy, formerly the Deputy Chief of Staff to Energy Secretary Ernest Moniz under Obama.

So what is big business to do? Nearly half of the Fortune 500, for example, is taking steps to track and reduce their carbon emissions. Those companies are also trying to improve energy efficiencies and to increase their consumption of renewable energy, according to the just-released Power Forward 3.0 report. And as the cost of the technologies and the fuels drop, companies are striving to do more and more.

So, it would stand to reason that the businesses listed in that report support efforts to bring states into compliance. Practically speaking, their customers are demanding a greener presence and they are meeting that market demand. Some of the companies included are: Bank of America, Microsoft, Facebook, Google, IBM, Procter & Gamble, General Mills, Kellogg Company and WalMart.

“Companies are not waiting for policymakers to catch up with the realities of climate change,” said Anne Kelly, director of public policy at Ceres, a nonprofit sustainability advocacy group. “States with unstable climate and energy policy environments will discourage corporate investments and miss out on jobs and economic growth.”

Along with Ceres, the World Wildlife Fund, Calvert Investments and David Gardiner and Associates contributed to the report.

It is not accurate to equate the court’s allowance for a delay with its ultimate decision. Some insiders think it implies the case will get sent back to Trump’s EPA so that it can water it down. If that were the case, the appeals court would have given EPA Administrator Scott Pruitt the unlimited time he had requested to review the ruling; the justices gave his agency just 60 days.

“At the very least, (the) ruling means that it will not take as long for the (Trump) Administration to undo the Clean Power Plan,” insists Bracewell’s Holmstead.

Lots of disagreement there, however: No matter how the courts ultimately decide the Clean Power Plan, a lot of experts think that market pressures will continue to force both utilities and industry to step up and to provide cleaner solutions.

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