Paul Hodgson: A redrawn US political map will affect Trump’s ability to roll back ESG

The implications of the recent US mid-term elections

See RI’s early assessment of the election results here.

The redrawing of the US political map that resulted from the mid-term elections is likely to have long-lasting and significant effects on the Trump administration’s ability to roll back ESG regulations.

And even though the Republicans increased their majority in the Senate, any legislation still needs 60 votes to pass.

This means that bills like H.R. 4015, the corporate governance and transparency bill, is only slightly more likely to pass because the party continues to fall shy of that figure. More importantly, with the appointment of new committee chairs in the House of Representatives, such as on the finance committee, now that the Democrats are in the majority there, it means that partisan bills like this are unlikely to go anywhere.

This kind of development is likely to be repeated across the spectrum of ESG legislation. An emboldened Democratic House might also be likely to push more climate change legislation, and many of the bills currently listed as “3% prognosis” on, such as the Clean and Efficient Cars Act of 2018 introduced by Representative Doris Matsui of California, are likely to receive a much higher change of success.

On the other hand, the election of Senator Kevin Cramer in North Dakota, a former Trump adviser on energy, does not improve the fortunes of any legislation in the Senate.

And 20 out of 45 Republican members of the bipartisan Climate Solutions Caucus either lost their seats or retired, including the chairman Carlos Curbelo of Florida.

However, getting a new nominee for the Environmental Protection Agency past the relevant senate committee – which has Bernie Sanders and Corey Booker as members – is likely to be tough.

But the Democratic majority in the House will increase the party’s leverage with the Senate and the administration.

It will prevent the fast-tracking of legislation – such as was the case with the recent tax bill – which will now have to receive proper debate rather than just be rubber-stamped.

And it is not just environmental issues that will be affected; efforts to deregulate banking and financial services are likely to be blocked by Representative Maxine Waters, who will probably take control of the House’s financial services committee.

Other deregulation efforts likely to be stalled include sectors like energy, industrials and small business. For example, Frank Pallone, who is set to take over as chairman of the Energy and Commerce Committee, has said he will question nuclear and coal subsidies and provide oversight of Trump’s attempts to intervene in the energy markets.Law firm K&L Gates, speaking at the recent Ceres webinar on the effects of the mid-terms, noted that lawsuits to stop the roll back of Obama-era climate regulations and legislation, such as the Clean Power Plan, fuel efficiency objectives and methane emissions, are likely to be the most effective.

And, as if on cue, progress on the Keystone XL pipeline was halted by a Federal judge just two days after the elections due to the Trump administration’s not following due process.

“The House science committee will question the EPA’s decisions using actual science, now,” said K&L Gates.

The best guess for House speaker, Nancy Pelosi, has said she will re-establish the select committee on global warming and pursue infrastructure legislation that will mitigate the effects of climate change.

Of equal importance, seven gubernatorial seats were flipped from Republican to Democrat, including my home state, Maine, which experienced something of a blue [Democrat] tsunami rather than a wave.

This means that state-wide initiatives, such as those already seen in California and New York, are likely to become more common. Some states, even Republican ones, were already resisting ‘rollbacks’ – Vermont, North Carolina, New Jersey – and they are now more Democratic and greener.

New Democratic governors in Maine, Nevada, Colorado, New Mexico, Illinois, Michigan, Wisconsin, Minnesota, Oregon and California all have clean energy goals to which they are committed.

Even one Republican governor, said Ceres’ Alli Gold Roberts, had identified “mitigating the hazards of climate change… as a priority agenda item.”

Nevada voters supported a higher clean energy goal, Florida voters supported a ban on offshore drilling and Californians rejected an attempt to roll back initiatives aimed at reducing pollution from cars.

Not everything went the way of environmental protection; voters rejected measures that would have restricted drilling in Colorado and put a tax on carbon emissions in Washington, where millions of dollars of industry lobbying put a stop to those efforts.

And Arizona rejected an attempt to raise clean energy targets, while in Michigan a ballot initiative to raise a renewable energy goal was dropped when local utilities voluntarily agreed to it.
Finally, shares of gun makers saw a brief rally during the election only to fall again once it was clear that the Democrats had won the House. There were also several gun regulation ballot measures; for example Washington state voted to introduce enhanced background checks, waiting periods and increase the minimum age to buy a semi-automatic rifle to 21.