BUSINESS AND PARIS: CAN WE TALK?

Posted on May 16, 2017 by Charles F. Becker

Addressing environmental issues on a world scale will always be a difficult proposition.  The most recent attempt, the Paris Climate Accord, was no exception.  Every nation, leader and business had an opinion on what needed to be done.  Eventually, enough countries signed on to allow the Paris Agreement to be deemed “in force.” 

What was surprising about the discussions leading up to the Agreement was that 81 companies chose to publicly declare they would take action to reduce their emissions.  The companies included Wal-Mart, Mars, IKEA, Siemens, Amazon, GE, GM and Best Buy.  Not a bad group of supporters.  The declarations were, of course, prior to the election and President Trump is now deciding whether the United States is better served being out of the Paris Agreement.

One would think that after the election, there might be some changes in corporate support for the Accord.  But not so.  Most of the signing companies, and hundreds more, have reaffirmed their commitment to reduce their emissions.  Even coal companies have expressed support.  In making his decision on Paris, the President might want to consider the viewpoint of those businesses.  For example, in a March statement to Bloomberg, representatives of Apple, Amazon, Google and Microsoft said:

We believe that strong, clean energy and climate policies, like the Clean Power Plan, can make renewable energy supplies more robust and address the serious threat of climate change while supporting American competitiveness, innovation and job growth.

 

A common theme from all of the corporate supporters is to acknowledge that climate change is real and that they want to do something about it for the good of the planet. 

I have to say, however, if that’s really what the businesses believe, they aren’t helping their cause by saying it to a President who has very publicly advanced a contrary view.  The good news is, these businesses didn’t really mean it.  They were just setting out alternative facts.  Businesses care about “shareholder value” -- what action will be best for the bottom line.  That’s not a shocking concept and it provides a very understandable basis for supporting the Paris Agreement.  They just need to be willing to explain it better.  I believe this is the letter the companies really meant to send: 

Dear President Trump:

 

Regarding your consideration of withdrawing from the Paris Climate Agreement, please don’t do it.  We know you’ve got our best interests at heart, but you’ve done enough.  Let us explain.

 

We sell things—steaks, trucks, drain pipes, wigs, designer clothes.  You know, stuff people can’t live without.  It’s a whole different world from selling real estate.  You get by with a Phase I every once in a while, but we have regulation on everything we do.  And it’s been that way for a long time.

 

The difficulty is that we have discovered two simple truths.  First, people (and by that we mean our customers, your voters) actually want environmental regulation.  Even now, after all of your great efforts to explain why climate change was invented by the Chinese and late night talk show hosts, Pew Research says that 74% of the people (our customers, your voters) believe that the country should do whatever it takes to protect the environment.  We know, that’s made up of 52% Republicans and 90% Democrats, but we did our own research and discovered that we sell coffee and cola and cars to Republicans and Democrats.  We’re as shocked as you, but there it is.

 

Second, and this is really important: Quit changing the rules!  We were just getting used to the regulations.  We have already taken steps to address future goals, like those in the Paris Agreement.  For example, many of us have converted our facilities from coal to gas.  We’re not going back. 

 

Don’t get us wrong.  We’ll vote for you and we wish you nothing but the best.  But Here’s the Thing (sorry, couldn’t resist): we’re going to outlive your time – by a lot.  In a few years, you’ll be gone from office.  Sooner or later the Democrats are going to be back in power.  Sure, they all have really small hands, but what do you think they’re going to do with them?  You guessed it – they’re going to change your rules and go back to where we are now.  We’ve seen it over and over.  And they are going to make up for lost time with 74% of the people (our customers, your voters) saying it’s a great idea. 

 

What we’re trying to say is THIS WHIPSAW REGULATION IS KILLING US!

 

Only you can make it stop and leaving us in the Paris Agreement would be a great place to start.

 

We can’t tell you how appreciative we are of your attempts to reconsider some of the regulations for a few years.  Really, thank you.  But we need to make money and it’s a lot harder to do when we have to keep changing all our procedures and equipment that 74% of the people (you know) said they wanted in the first place.

So, if you could see your way to just switching your focus to getting that really important wall built and put these environmental changes on the back burner, that would be huge . . . believe me.

                                                            Most Sincerely,

 

                                                Your Friends Making Incredibly Great Stuff

Judicial Review When a New Administration Changes Course: The Surprising Supreme Court Decision that Saved Countless Lives

Posted on January 27, 2016 by Robert Percival

In an excellent December 21st blog post (“Are Obama’s Climate Pledges Really that ‘Legally Durable’?”) Richard Stoll questions two of the premises behind my assessment of the legal durability of U.S pledges at the recent Paris climate conference. In particular he challenges my conclusions that EPA’s Clean Power Plan is likely to survive judicial review and that its repeal by a new president would require a lengthy rulemaking process that could be rejected on judicial review.

First, he correctly notes that “EPA’s authority to regulate GHG emissions is not at issue in the challenges now pending in the D.C. Circuit.”  But my belief that the Obama administration’s Clean Power Plan ultimately will be upheld in the Supreme Court is not founded principally on the Court’s repeated affirmation of Massachusetts v. EPA.  My reasons for believing the Clean Power Plan ultimately will be upheld are discussed in detail here. I agree that it will be close, probably 5-4, with Justice Kennedy likely casting the deciding vote.

Second, Stoll argues that a new administration is free to reverse course and that there is no heightened scrutiny from reviewing courts when it seeks to do so.  I agree entirely.  In fact, that is precisely what the Supreme Court held in Motor Vehicle Manufacturers Ass’n v. State Farm, the case cited in my initial posting.  In fact, State Farm is the very case the D.C. Circuit relied on when it applied those long-settled principles in National Association of Home Builders v. EPA, the case Stoll cites.

But the State Farm case also provides a powerful lesson that a new administration must have a good reason for changing course beyond knee-jerk opposition to federal regulation.  In State Farm the new Reagan administration sought to rescind a regulation by the National Highway Transportation Safety Administration (NHTSA) that required passive restraints in new automobiles.  Like the Clean Power Plan, the regulation had been the subject of considerable political controversy and it was bitterly opposed by the auto industry.  Chrysler CEO Lee Iacocca had famously endorsed the notion that air bags were more suited to serve as a method of capital punishment than as safety devices.  The Supreme Court later observed that “the automobile industry waged the regulatory equivalent of war against the airbag and lost.” 

Less than one month after taking office, the Reagan administration reopened the passive restraint rulemaking.  Two months later it postponed the effective date of the passive restraint regulation and proposed its rescission.  The White House Press Office announced the decision, describing it as part of a package of “economic recovery” measures.  After a six-month rulemaking, NHTSA rescinded the passive restrain regulation, despite the agency’s previous estimate that it would save 12,000 lives per year and prevent more than 100,000 serious injuries annually.    

When NHTSA’s decision was challenged in the D.C. Circuit, the prevailing assumption was that “arbitrary and capricious” review was so toothless that it rarely could be used to overturn an agency’s decision.  Instead, the D.C. Circuit panel struck down the rescission decision by announcing a new standard of judicial review – that sudden reversals of course by an agency required heightened judicial scrutiny.  [State Farm Mutual Automobile Insurance Co. v. Department of Transportation, 680 F.2d 206 (D.C. Cir. 1982), affirmed on other grounds 463 U.S. 29 (1983)].

The Supreme Court then granted review.  The Justices unanimously rejected the D.C. Circuit’s conclusion that a new administration’s sudden change of course required heightened judiciary scrutiny. But the Court surprised most observers by declaring NHTSA’s rescission of the rule to be arbitrary and capricious. In an opinion by Justice White, the Court held that NHTSA had “failed to present an adequate basis and explanation for rescinding the passive restraint requirement . . .” 

What State Farm powerfully illustrates is that a new administration cannot simply impose its ideological preference for less regulation to quickly rescind a rule as the Reagan administration tried to do to eliminate passive restraint requirements.  The auto industry then was as vehement in its opposition to air bags as states opposing EPA’s Clean Power Plan are now.  But because the record supported the extraordinary life-saving potential of airbags, the Court held that the regulation could not be repealed without the agency coming up with a new record or a better explanation for doing so.  Due to this surprising Supreme Court decision hundreds of thousands of lives have been saved and millions of serious injuries prevented.

To be sure, the Supreme Court did not order that air bags be required.  Rather it required the agency to offer more than ideological opposition to regulation as a justification for repealing the rule.  Archival research I conducted in the papers of the late Justice Thurgood Marshall revealed a memorandum from Justice White stating that for at least one aspect of its decision he doubted that NHTSA on remand “would find it too difficult to cover its tracks based on the present record.”  I agree with Stoll that a new administration could repeal the Clean Power Plan.  But State Farm cautions that it should not act too hastily if it wishes such a decision to withstand judicial review.

In the wake of the State Farm decision both President Reagan and Lee Iacocca eventually changed their minds about the merits of air bags. The fascinating story of how Transportation Secretary Elizabeth Dole helped persuade President Reagan that air bags should be required is told in Michael R. Lemov, Car Safety Wars: One Hundred Years of Technology, Politics and Death (2015). Perhaps today’s fierce opponents of EPA’s Clean Power Plan ultimately will have a similar epiphany concerning the merits of the Clean Power Plan and the transition to a greener energy infrastructure.