US Supreme Court curbs ‘Chevron deference’

By Sharon Kimathi, Energy and ESG Editor, Reuters Digital

Hello!

This week’s newsletter opens with the United States Supreme Court ruling that overturned a legal precedent that had given deference to government agencies in interpreting laws, whilst in Europe, business leaders say that a political tilt to the right on the continent and a potential Trump presidency in the United States will not derail climate efforts.

The Supreme Court justices ruled 6-3 to set aside lower court decisions against fishing companies that challenged a government-run program partly funded by industry that monitored overfishing of herring off New England’s coast.

It marked the latest decision in recent years powered by the Supreme Court’s conservative majority that hemmed in the authority of federal agencies.

Also on my radar today:

Climate activists participate in a demonstration outside of the U.S. Supreme Court in Washington, D.C., U.S. REUTERS/Sarah Silbiger

The overturned precedent, deemed to be among the most important principles in administrative law, arose from a 1984 Supreme Court ruling involving oil company Chevron. Conservatives and business interests had opposed it while groups favoring robust corporate regulation championed it.

The ruling will make it easier for judges to second-guess actions by regulators, empowering challengers to regulations across federal agencies. 

This is significant for federal environmental agencies as it may restrict their powers to enforce climate change-curbing regulations.

Business, conservative and libertarian groups cheered the decision, saying it eliminates a rule that requires courts to favor the government in all manner of challenges to regulation.

The challenge by the fishing companies was supported by various conservative and corporate interest groups including billionaire Charles Koch’s network.

The litigation was part of what has been termed the “war on the administrative state,” an effort to weaken the federal agency bureaucracy that interprets laws, crafts federal rules and implements executive action.

Democrats and groups favoring regulation, including environmental groups, said the ruling will undermine agencies, whose officials use scientific and other expertise to ensure safe food and drugs, clean air and water, stable financial markets and fair working conditions.

In one example that is currently in the courts, the Chamber of Commerce sued the U.S. Federal Trade Commission to challenge a new rule barring “noncompete” clauses in employment contracts. Such rules “often raise major legal and policy questions on which Congress would be expected to have a view, without specific congressional authorization,” the Chamber of Commerce said.

The Democrat-led FTC banned the agreements in April, calling the action necessary to rein in the increasingly common practice of requiring workers to sign “noncompete” agreements, even in lower-paying service industries such as fast food and retail. In one well-known example, sandwich chain Jimmy John’s agreed to stop enforcing such agreements in 2016.

Last week, the U.S. Supreme Court blocked an Environmental Protection Agency regulation aimed at reducing ozone emissions that may worsen air pollution in neighboring states, handing a victory to three Republican-led states and the steel and fossil-fuel industries that had challenged the rule.

Environmental groups denounced the ruling. Sam Sankar, senior vice president of programs at environmental law group Earthjustice, called the ruling part of a growing pattern of anti-environmental decisions by the Supreme Court.

It was one of the latest rulings by the conservative-majority court restricting the powers of the EPA.

Meanwhile, the big election year globally has seen right-wing and populist parties return to power or gain ground in the European Union Parliament, India, Indonesia, Argentina, and  France, which heads to a second round of voting on July 7 after Marine Le Pen’s far-right National Rally party won Sunday’s first round.

However, for the 45,000 delegates at London’s Climate Action week, the capital’s biggest annual climate event, the message was clear: even in the absence of U.S. government support, the real economy would continue to move towards decarbonization.

“The bottom line remains that CEOs all around the planet understand that avoiding climate responsibility is not a good business plan… their products, the cost of their supply chains, everything will be impacted,” former U.S. climate special envoy John Kerry told Reuters.

A backlash against environmental, social and governance investing in the United States and elsewhere as inflation and a cost-of-living crisis has refocused attention on shorter-term profits has led some companies to shift their strategy away from renewable energy.

Waves crash into a pier after Hurricane Beryl made landfall, in Port of Spain, Trinidad and Tobago. REUTERS/Andrea De Silva

Chad Spitler, CEO of ESG consulting firm Third Economy, shares his thoughts on the US presidential debate and what it means for climate policies:

“In the first presidential debate, both candidates were asked to offer their vision for addressing climate change. Former President Trump never answered the question, while President Biden doubled down on his Inflation Reduction Act – but neither candidate came to the table with new ideas on climate policy, nor did they provide confidence that we can count on our government alone to adequately address climate change.

“The situation is equally as bleak when considering the current state of the capital markets. The well-intended Securities Exchange Commission rule on climate reporting has had the unintended consequence of chilling leadership and innovation in climate action, as companies are afraid to stick their neck out in an uncertain regulatory environment.  

“Investors are pulling back on sustainable finance as they continue to be attacked by conservative-led organizations, backed by the fossil fuel industry, to stem the flow of capital into innovations that put their industry at risk. 

“If we want to get serious about addressing the climate crisis, we need reliable and stable government policy, companies that integrate sustainability innovation into their business strategies, and investors that reward corporate innovation in how they allocate capital and vote at annual shareholder meetings.  

“This is not just the right thing to do, it’s how we ensure alignment between financial value, healthy communities, and a livable planet.”

Leaf, 28, poses in an empty former youth centre, now occupied by squatters rights activist group Reclaim Croydon, in Croydon, south London, Britain. REUTERS/Hannah McKay

Today’s spotlight is on social (‘S’ in ESG) initiatives in Europe, as a community-based squatters group creates a home for unhoused people on the outskirts of Britain’s capital city, London, whilst Latvia welcomes its first registered same-sex civil union couple.

The Reclaim Croydon collective, a squatters’ group, has taken over disused commercial premises to provide beds for the homeless, saying it is providing a community-based solution to a broken housing market.

“The government is failing homeless people,” said one of the youth center’s new occupants, who goes by the name Leaf.

Leaf, who comes from the city of Reading and is non-binary, said they had been living on the streets and in squats because rising rents had outstripped government welfare and housing benefits. Leaf argues that many of the country’s disused and empty properties could be turned into homes.

Click here for the full Reuters special report.

The first couple who have registered a same-sex partnership in Latvia, Maksims (Di) Ringo and Janis Locs, pose for a photo in Riga, Latvia. REUTERS/Janis Laizans

Elsewhere, Maksims Ringo and Janis Locs became the first Latvian same-sex couple to register their partnership on Monday, shortly after midnight when a new law came into force.

After the event at a legal office in Riga’s historic centre, the couple exchanged silver rings at a party in the city’s main library and hope to get gold rings if and when Latvia legalises same-sex marriage, Ringo said.

“We have been together for five and a half years … so for us, it’s mostly practical”, said Ringo, noting improved hospital visiting rights for example under the new law.

Homosexuality remains a divisive topic in Latvia, whose legislators in 2005 changed the constitution to define marriage as only allowed between a man and a woman.

The Latvian parliament voted last November to formally legislate same-sex civil unions, after 46 same-sex couples successfully challenged courts to get recognised as a family unit in the eyes of the law.

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