3 Mar

How Might the US Supreme Court’s Vacancy Enable Obama’s Clean Power Plan?

WRITTEN BY Sheldon Krieger

Why is it important?

The death of US Supreme Court Justice Antonin Scalia on February 13, 2016, created an unexpected twist in the tale of President Obama’s CPP (Clean Power Plan) implementation. Justice Antonin Scalia voted in favour of CPP stay in the 5–4 ruling by the Court. In the absence of a ninth member, it leaves the decision a 4–4 split between justices supporting and opposing the stay.

How Might the US Supreme Court’s Vacancy Enable Obama’s Clean Power Plan?

Probable outcome from lower court

The next hearing on the Clean Power Plan case is scheduled for June 2, 2016, in the US Court of Appeals for the District of Columbia. Regardless of the lower court ruling, the loser will file a petition in the Supreme Court for review. However, in the absence of a ninth member, the lower court may hold the case until the appointment of a ninth member.

On the same token, if the lower court comes up with a ruling, and if 4–4 voting persists after a complete briefing of the case in the Supreme Court, the lower court’s decision will prevail. But considering the importance of the case, the lower court is very likely to hold the case until the Supreme Court has a full bench of nine members.

The tussle over the next nomination

According to the United States Constitution, nominations Supreme Court justices are to be made by the President of the United States, but the final appointment of the nominee has to be confirmed by the US Senate. So, assuming the 4–4 vote by the existing eight justices remains, Obama’s nomination of the ninth member would be the key to determining the fate of the CPP.

As a result, Senate Republicans could try to block any nomination, as they are largely against the implementation of the CPP, which Obama developed in accordance with the latest world climate talks in Paris in December. If the Senate refuses to approve—or even consider—Obama’s nomination, then the outcome of the case could linger until a new US president takes office in January 2017.

Thus, the outcome of the 2016 presidential election in November is likely to decide the fate of the CPP as well as the future of coal-mining (KOL) companies like Peabody Energy (BTU), Arch Coal (ACIIQ), Alpha Natural Resources (ANRZQ), and Cloud Peak Energy (CLD).

Keep checking in with Market Realist’s Energy and Power page for ongoing updates and analysis.

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