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Paramount Settles Suit & EPA Repeals Climate Controls · Bloomberg Law

• 0:02
  Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
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  Speaker 2: This settlement is not a vote of support for this merger.
• 0:14
  Speaker 2: It is not a blessing of the broader merger. Broadly speaking,
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  Speaker 2: we believe further consolidation in markets that are essential to
• 0:23
  Speaker 2: American economic life doesn't serve the American economy, consumers, or
• 0:29
  Speaker 2: competition well.
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  Speaker 3: The settlement of the antitrust lawsuit brought by 12 states
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  Speaker 3: may not be a vote of support for Paramount's historic
• 0:39
  Speaker 3: $ 110 billion acquisition of Warner Brothers, but it was a
• 0:44
  Speaker 3: vote to remove the final obstacle to the deal. Attorneys
• 0:48
  Speaker 3: General from 12 states and the Writers Guild had sued
• 0:52
  Speaker 3: to block the deal, arguing that it would give Paramount
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  Speaker 3: an undue share of the movie and cable TV industries.
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  Speaker 3: The settlement announced by California Attorney General Rob Bonta doesn't
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  Speaker 3: do anything to change that dominance. It just calls for
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  Speaker 3: some new commitments from the company without any divestitures. The bloc,
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  Speaker 3: the Merger Coalition, which represents more than 40 organizations that
• 1:18
  Speaker 3: oppose the tie-up, slammed the settlement, calling it a sweetheart deal. Quote,
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  Speaker 3: we are disappointed and angry. that the interests of average
• 1:28
  Speaker 3: Americans have been trampled to benefit oligarch billionaires. The blockbuster
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  Speaker 3: deal will vastly reshape Hollywood, with Paramount now controlling two
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  Speaker 3: of its biggest studios, two major subscription streaming services, and
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  Speaker 3: dozens of TV channels ranging from CBS to HBO. Joining
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  Speaker 3: me is Bloomberg Intelligence Senior Litigation Analyst Jennifer Reed. Jen,
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  Speaker 3: what is Paramount giving up to get this settlement?
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  Speaker 2: Very little.
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  Speaker 4: Really, at the end of the day, I think this
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  Speaker 4: is a win for Paramount and a surprising settlement because
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  Speaker 4: we all expected something structural, a structural aspect. And that's
• 2:08
  Speaker 4: where I see it as a win for Paramount because
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  Speaker 4: there's nothing structural in it. By that, I mean, June,
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  Speaker 4: that they have to sell something rather than just making
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  Speaker 4: a bunch of promises about how they're going to behave
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  Speaker 4: once they're merged. Now, there are some divestiture commitments in here,
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  Speaker 4: but only if The merged company is in breach of
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  Speaker 4: certain terms of which I doubt they'd be in breach
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  Speaker 4: of because it's actually a pretty easy agreement with which
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  Speaker 4: they can abide.
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  Speaker 3: And I understand that a lot of these terms Paramount
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  Speaker 3: had been offering for months, including releasing 30 films a
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  Speaker 3: year in theaters.
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  Speaker 4: Yes, you know, they had. And I think in some ways.
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  Speaker 4: I believe some of these commitments really aren't a big
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  Speaker 4: change from the way they've just always done business. You know,
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  Speaker 4: for instance, people are talking about this commitment to release
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  Speaker 4: 30 movies to theaters every year. Now, that's release, not make.
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  Speaker 4: So it doesn't necessarily have to be a movie that
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  Speaker 4: they produce, but they only have to either produce or
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  Speaker 4: co-produce 50%. So that's the first thing. And it's really
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  Speaker 4: not that different from what they're already each individually doing.
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  Speaker 4: So this isn't asking for much from Paramount.
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  Speaker 3: And it seemed like California and the states were holding
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  Speaker 3: all the cards. Paramount was set to face late fees
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  Speaker 3: of $ 7 million a day if it didn't close the
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  Speaker 3: deal by the end of the month and $ 7 billion
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  Speaker 3: if the deal fell apart. The states beat Paramount in court,
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  Speaker 3: winning a court-ordered pause on the merger. And the company
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  Speaker 3: agreed to pause the merger until as late as next June.
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  Speaker 3: It seemed like they had an edge in the negotiations
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  Speaker 3: at this point.
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  Speaker 4: Absolutely. It was a very odd situation because I think
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  Speaker 4: the states very much had leverage, not because their case
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  Speaker 4: against the merger was so strong, because honestly, it wasn't
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  Speaker 4: that strong, but because time. Time and the financial aspects
• 3:57
  Speaker 4: were on their side. And I really think that they
• 3:59
  Speaker 4: could have waited this out. It would have put more
• 4:01
  Speaker 4: pressure on Paramount. maybe they might have gotten better terms.
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  Speaker 4: But then Paramount, knowing, I believe, that it didn't have
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  Speaker 4: the leverage it needed for a settlement negotiation to come
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  Speaker 4: out favorably, threatened to leave California. And I think that's
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  Speaker 4: what did it, because that would have been devastating on
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  Speaker 4: the state and had an impact on the state's economy,
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  Speaker 4: as well as so many employees and people who live there.
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  Speaker 4: And I think it was that threat that the Attorney
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  Speaker 4: General of California called blackmail. I think of it as
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  Speaker 4: just trying to do what they can to get leverage
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  Speaker 4: that did give them the leverage to to get to
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  Speaker 4: this settlement and to get to it when they did,
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  Speaker 4: which was mid-September. And I kind of thought late September
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  Speaker 4: would be more likely.
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  Speaker 1: Apparently.
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  Speaker 3: Pressure was on the Attorney General Bonta from the governor, L.A.
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  Speaker 3: 's mayor. I mean, would Paramount really have left California
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  Speaker 3: in the end?
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  Speaker 4: It really would have been a major disruption to their
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  Speaker 4: business and actually quite an endeavor and very expensive for them.
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  Speaker 4: And that was the big question. You know, it was funny.
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  Speaker 4: I had so many clients saying, you know, are they
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  Speaker 4: going to do this or not? Is this a real
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  Speaker 4: threat or not? And I'd say, look, I'm not in
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  Speaker 4: their head. So California had its reasons for this.
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  Speaker 1: Yes.
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  Speaker 3: But the other states, and there were several states that
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  Speaker 3: were holding out, including New York, Connecticut, Massachusetts, and Minnesota.
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  Speaker 3: According to Bloomberg sources, they decided that the expense of
• 5:32
  Speaker 3: litigating without California would be too much. So litigation would
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  Speaker 3: be too much for those states?
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  Speaker 4: You know, I have to say that if you look
• 5:41
  Speaker 4: at the cases where states have been the plaintiffs and
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  Speaker 4: alone without the federal government or without private parties, it
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  Speaker 4: tends to be pretty big groups of states. You have
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  Speaker 4: 12 You have 14. I think it was something like
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  Speaker 4: 14 when the state sued to block T-Mobile and Sprint.
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  Speaker 4: You had a pretty big group of states going after
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  Speaker 4: Nexstar and Tegna and also a big group of states
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  Speaker 4: going after Live Nation. They have very small group. They
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  Speaker 4: have one or two antitrust attorneys. They don't have the money.
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  Speaker 4: They don't have the physical resources. And then they're going
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  Speaker 4: up against major heavy hitter lawyers on the other side
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  Speaker 4: and unlimited resources, essentially. They really do need– and California
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  Speaker 4: was leading. So you have to remember that. This litigation
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  Speaker 4: now has been going for quite some time. California has
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  Speaker 4: been in the lead. It is a little bit difficult
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  Speaker 4: for another state to take over that role and jump in.
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  Speaker 4: So I do think that once California and other states,
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  Speaker 4: aside from New York, had decided that they were going
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  Speaker 4: to settle, the other states really had to, as did
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  Speaker 4: the Writers Guild of America, which was also a plaintiff.
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  Speaker 3: Yeah, the Writers Guild apparently was blindsided.
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  Speaker 2: Right.
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  Speaker 4: I haven't seen as much news, but the settlement they
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  Speaker 4: reached And I think they must have been blindsided because
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  Speaker 4: their concerns about harm were to writers markets, writers of movies,
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  Speaker 4: writers of television shows, writers that are signed on contract
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  Speaker 4: with studios. And instead, what they agreed to was some
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  Speaker 4: guarantee of employment for CBS News Bureau, which is different from...
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  Speaker 4: the areas which they said would be harmed.
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  Speaker 3: So now let's talk about that. You have now Paramount
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  Speaker 3: is going to control both CBS News, and we've seen
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  Speaker 3: what's happened at CBS News. So they'll control CBS and CNN.
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  Speaker 3: And apparently the Connecticut Attorney General was really pushing for
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  Speaker 3: divestiture of those networks, but Ellison would not agree to that.
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  Speaker 3: So now there's going to be an independent editorial oversight board.
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  Speaker 3: What does that mean?
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  Speaker 4: Well, you know, let's just say that It's really something
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  Speaker 4: that's quite unenforceable. So it's a board made up of
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  Speaker 4: five people. They have to be journalists, retired or currently
• 7:41
  Speaker 4: acting journalists. And there are a bunch of qualifications written
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  Speaker 4: into the settlement as to what that means to be
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  Speaker 4: an experienced journalist. And no more than two can be
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  Speaker 4: from the same political party. But here's the kicker. They
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  Speaker 4: will be appointed by Paramount. So Paramount will be picking
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  Speaker 4: these five people. even though no more than two can
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  Speaker 4: be from one political party. So they're picking the editorial
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  Speaker 4: board that's supposed to oversee their own business, which that
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  Speaker 4: seems to me a little bit ridiculous if you really
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  Speaker 4: wanted this neutral editorial board. But the board is intended
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  Speaker 4: to establish guiding editorial principles. And those principles are supposed
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  Speaker 4: to be based on CBS News' and CNN's standards and
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  Speaker 4: practices now before they close. So whatever their practicing policies
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  Speaker 4: are now, they're supposed to stick to those. And this
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  Speaker 4: board is supposed to make sure that they stick to those.
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  Speaker 4: And then they're going to resolve disputes if they arise
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  Speaker 4: between CBS News or CNN and the management of the
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  Speaker 4: combined company.
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  Speaker 3: So, I mean, under that, could Paramount put Barry Weiss
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  Speaker 3: in charge of CNN?
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  Speaker 4: Oh, I do think so.
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  Speaker 1: Yes.
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  Speaker 4: I don't see why not. There's nothing in this that
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  Speaker 4: would prevent that as far as I've seen.
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  Speaker 3: And so let's say you see that there's pressure on
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  Speaker 3: CNN to take a conservative turn to, let's say, have
• 8:57
  Speaker 3: more stories in favor of the administration. What can be done? Anything?
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  Speaker 4: Well, the first thing that would happen is if there
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  Speaker 4: was a dispute, if the journalists object to this, then
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  Speaker 4: this dispute between those journalists and the Paramount management would
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  Speaker 4: be resolved by this editorial independence board. Now, there's another
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  Speaker 4: layer that oversees this entire agreement. There's a monitor. There
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  Speaker 4: will be an internal monitor and then also an outside
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  Speaker 4: monitor chosen by the states and Paramount together. And then
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  Speaker 4: that monitor could step in. But the thing is, June,
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  Speaker 4: if there's some problem, if whatever's happening is considered a breach,
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  Speaker 4: really the only way to fix it, the only way
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  Speaker 4: to make the company act differently would be then to
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  Speaker 4: go back to court. You'd need the states. You'd need
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  Speaker 4: the attorney generals to agree. They'd have to bring this
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  Speaker 4: up back in court in front of the judge that
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  Speaker 4: was overseeing this litigation to start. And, you know, that's
• 9:47
  Speaker 4: a lot. And I'm not so sure I see something
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  Speaker 4: like that happening.
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  Speaker 3: You said before the States case wasn't necessarily great. But
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  Speaker 3: you have this one company controlling two of Hollywood's biggest studios,
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  Speaker 3: two major subscription streaming services. and dozens of TV channels.
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  Speaker 5: Right.
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  Speaker 3: Ranging from CBS to HBO.
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  Speaker 5: Right.
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  Speaker 3: Why isn't that a good case for antitrust?
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  Speaker 4: Because at the end of the day, antitrust cases in court,
• 10:12
  Speaker 4: to have a strong case in court, it's going to
• 10:13
  Speaker 4: come down to the way markets are defined and market shares.
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  Speaker 4: It's really mathematical at the end of the day. you
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  Speaker 4: look at the market, you look at the market shares
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  Speaker 4: in that market, and there's a computation you can do
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  Speaker 4: to determine how concentrated that market is. And the guidelines
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  Speaker 4: that are used by the Department of Justice, Federal Trade Commission,
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  Speaker 4: and generally used by the judges, even though they're not binding,
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  Speaker 4: give you a number. And they say, well, if it's
• 10:35
  Speaker 4: over that number, you have a presumption of harm. If
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  Speaker 4: it's under that number, you really don't, you're probably not
• 10:40
  Speaker 4: going to win. To get over that number, the states
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  Speaker 4: define the markets in a very specific way that could
• 10:46
  Speaker 4: be rebutted. And they used market share numbers from a
• 10:49
  Speaker 4: very specific time period. And if you change that time period,
• 10:53
  Speaker 4: those market shares change quite a bit. And in using
• 10:56
  Speaker 4: what they used, which Paramount would call gerrymandered, I would
• 10:59
  Speaker 4: call just good advocacy. By using those numbers, they actually
• 11:04
  Speaker 4: barely hit those thresholds of harm, right? So this was
• 11:08
  Speaker 4: their problem. And if Paramount could have come into court
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  Speaker 4: and sort of poked holes in the way they defined
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  Speaker 4: the market, or poked holes in that time period they
• 11:15
  Speaker 4: used for shares, it would have been problematic. And one
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  Speaker 4: other really big thing is that in merger cases, where
• 11:21
  Speaker 4: you have the threat of new entry, the threat of
• 11:23
  Speaker 4: new entry can be a really good defense. Okay, these
• 11:25
  Speaker 4: may be our shares today, but we have all these
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  Speaker 4: other new entrants nipping at our heels, and we can't
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  Speaker 4: really do anything to let them take our share. And
• 11:33
  Speaker 4: you do have new studios. There's one, an independent called A24.
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  Speaker 4: You have Apple making movies. You have the combined Amazon
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  Speaker 4: MGM making some new movies. So they had a decent
• 11:43
  Speaker 4: argument that we have some new entry. So court, you
• 11:45
  Speaker 4: really shouldn't even pay much attention to these static market
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  Speaker 4: shares because they're not going to be the picture in
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  Speaker 4: a year from now or two years from now as
• 11:52
  Speaker 4: these other studios continue to make movies. And so I
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  Speaker 4: think that what the states had was a good enough
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  Speaker 4: case for that complaint and a good enough case to
• 12:00
  Speaker 4: get their temporary restraining order. But I view it as fragile.
• 12:03
  Speaker 4: That's how I like to think about it. Kind of
• 12:05
  Speaker 4: easy to poke holes in. once Paramount got into court.
• 12:08
  Speaker 3: There was a lot of pressure to let this deal
• 12:10
  Speaker 3: go through on the federal level. I mean, Ellison, father
• 12:15
  Speaker 3: and son, very close to Trump. There was lobbying there.
• 12:19
  Speaker 3: And we saw what happened with the Live Nation antitrust case,
• 12:23
  Speaker 3: where it fell apart when trial had already started because
• 12:27
  Speaker 3: of a deal made in D.C. So in a different administration,
• 12:32
  Speaker 3: do you think that the feds would have challenged this?
• 12:34
  Speaker 1: Yes.
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  Speaker 4: Yes, I heard rumors. I don't know if they're true
• 12:37
  Speaker 4: or not, or reports that there were DOJ staffers. And,
• 12:39
  Speaker 4: you know, the staffers tend to be there a long time.
• 12:41
  Speaker 4: They're not necessarily politically affiliate, you know, they're neutral politically,
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  Speaker 4: that the staffers were opposed to this. And it was
• 12:48
  Speaker 4: the decision was made over their head to settle. I
• 12:50
  Speaker 4: do think in a different, particularly if it had been
• 12:53
  Speaker 4: the previous Biden administration, that there probably would have been either,
• 12:57
  Speaker 4: you know, a challenge that was settled with a stronger
• 12:59
  Speaker 4: settlement than this. I think they would have demanded some divestiture,
• 13:03
  Speaker 4: particularly of some cable channels. Or they would have actually
• 13:06
  Speaker 4: gone to court to try to block it.
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  Speaker 3: They're paying so much. There's investments from outside groups. Is
• 13:13
  Speaker 3: this deal going to be profitable for them?
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  Speaker 4: Well, that's the big question now. And I think you'll
• 13:18
  Speaker 4: have to talk to my colleague, Geetha Rankin-Nathan, about that,
• 13:20
  Speaker 4: who's an expert in these companies and these industries. I
• 13:23
  Speaker 4: will say this, that those assets, the Time Warner assets,
• 13:27
  Speaker 4: have a checkered history in terms of their acquisitions. and success.
• 13:30
  Speaker 4: Those assets, the Warner Brothers assets, have been bought and
• 13:33
  Speaker 4: sold numerous times, and the buyers have not had success.
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  Speaker 4: And the craziest thing is that this is such a
• 13:39
  Speaker 4: full circle case, June, because the last time those assets
• 13:42
  Speaker 4: were sold was when AT & T acquired Time Warner,
• 13:45
  Speaker 4: and the Department of Justice went to court to try
• 13:48
  Speaker 4: to challenge that. And the Assistant Attorney General in charge
• 13:51
  Speaker 4: of antitrust that challenged the deal was Makan Delrahim, who
• 13:54
  Speaker 4: is now the General Counsel at Paramount that guided this through.
• 13:57
  Speaker 4: And at the time, he went to court- against AT &
• 13:59
  Speaker 4: T and Tom Warner because he insisted that they divest CNN.
• 14:04
  Speaker 4: And they said, no, we won't do that. And AT &
• 14:06
  Speaker 4: T won in court. Now, sadly for them, they did
• 14:09
  Speaker 4: not make a success of it with these assets, as
• 14:11
  Speaker 4: has been the history. I'll sort of think of them
• 14:14
  Speaker 4: as cursed. But it's interesting to me that he's come
• 14:16
  Speaker 4: back around to be involved again in the control of CNN.
• 14:21
  Speaker 3: So tell me this. We've talked about this before, but
• 14:24
  Speaker 3: how is the Trump administration– in the antitrust area, are
• 14:28
  Speaker 3: they being any more aggressive than last time? It doesn't
• 14:32
  Speaker 3: seem like it.
• 14:33
  Speaker 1: No.
• 14:34
  Speaker 4: The answer would be no. And I can give you
• 14:36
  Speaker 4: some data that backs that up. So far in 2026,
• 14:39
  Speaker 4: as we come into the fourth quarter, there has been
• 14:41
  Speaker 4: not one single challenge without a simultaneous settlement to a
• 14:44
  Speaker 4: deal by the Department of Justice. I don't even know
• 14:47
  Speaker 4: if there's been one by the FTC. Trump's FTC has
• 14:49
  Speaker 4: challenged a few small health care deals and one deal
• 14:53
  Speaker 4: related to do-it-yourself adhesive for constructions. Gorilla Glue. Oh, really?
• 14:58
  Speaker 2: Right.
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  Speaker 3: Okay. Now I get it.
• 15:00
  Speaker 1: Yes. I have it at home. Right.
• 15:02
  Speaker 4: So there have been very few challenges across the board
• 15:06
  Speaker 4: since the Trump administration enforcers took over by both the
• 15:10
  Speaker 4: FTC and DOJ. But really what's glaring is this year,
• 15:12
  Speaker 4: nothing at all by the Department of Justice. So when
• 15:15
  Speaker 4: you look at it that way, it's a very business
• 15:17
  Speaker 4: friendly enforcement era that we're in on the M &
• 15:20
  Speaker 4: A side right now. And, you know, they're beginning also
• 15:23
  Speaker 4: to settle some of the monopolization suits as well. that
• 15:26
  Speaker 4: were existing that they inherited when they took over. And
• 15:28
  Speaker 4: I think we'll probably see a settlement of a suit
• 15:31
  Speaker 4: that's been running for a few years now against Apple.
• 15:34
  Speaker 4: We may see a settlement of an FTC suit against Amazon.
• 15:37
  Speaker 4: I'm just guessing. I'm not talking in the near term,
• 15:40
  Speaker 4: but in the longer term, the ones that are left
• 15:42
  Speaker 4: over that were started by the Biden administration.
• 15:46
  Speaker 3: So the effort goes into settlements instead of bringing new cases.
• 15:50
  Speaker 3: Thanks so much, Jen. It's great to have you on again.
• 15:53
  Speaker 3: That's Bloomberg Intelligence Senior Litigation Analyst Jennifer Rhee. Turning to
• 15:58
  Speaker 3: environmental law news, the Trump administration has announced rule changes
• 16:03
  Speaker 3: that will effectively erase efforts undertaken by Presidents Barack Obama
• 16:08
  Speaker 3: and Joe Biden to address climate change. EPA Administrator Lee
• 16:13
  Speaker 3: Zeldin announced the agency is repealing rules that limit planet-warming
• 16:18
  Speaker 3: greenhouse gas emissions from coal and gas-fired power plants. one
• 16:23
  Speaker 3: of its most aggressive moves so far to unwind U.S.
• 16:26
  Speaker 3: environmental regulations.
• 16:29
  Speaker 5: It means providing companies that choose to invest in America
• 16:32
  Speaker 5: with the certainty that their work will pay off and
• 16:36
  Speaker 5: their money won't get tied up in unnecessary, burdensome regulatory battles.
• 16:40
  Speaker 3: The EPA says removing the rule will save power plants
• 16:44
  Speaker 3: more than $ 300 billion in costs. It also estimates it
• 16:48
  Speaker 3: will result in an additional 533 million metric tons of
• 16:54
  Speaker 3: carbon dioxide emissions by 2040. This follows the agency's axing
• 16:59
  Speaker 3: in February similar EPA climate standards for cars and trucks,
• 17:05
  Speaker 3: another major source of emissions, and the reversal of the
• 17:08
  Speaker 3: legal underpinning for those rules, known as the endangerment finding.
• 17:13
  Speaker 3: Joining me is environmental law expert Pat Parenteau, a professor
• 17:17
  Speaker 3: at the Vermont Law and Graduate School. Pat, where do
• 17:20
  Speaker 3: we stand with the EPA repealing these rules?
• 17:25
  Speaker 1: So this is the second shoe to drop following EPA's
• 17:30
  Speaker 1: repeal of the endangerment finding, which, of course, as we've talked,
• 17:35
  Speaker 1: undergirds all of the regulation of greenhouse gas emissions from
• 17:39
  Speaker 1: every source, you know, mobile sources, cars and trucks, but
• 17:43
  Speaker 1: also stationary sources, power plants, etc. So they've already repealed
• 17:49
  Speaker 1: the tailpipe emission standards for cars and trucks. And now
• 17:53
  Speaker 1: they've repealed the greenhouse gas controls for power plants. And
• 17:59
  Speaker 1: in addition to repealing the Biden administration rules for power plants,
• 18:05
  Speaker 1: they've also initiated another rulemaking to completely eradicate greenhouse gas
• 18:13
  Speaker 1: emissions from the Clean Air Act. So this is a
• 18:15
  Speaker 1: two-step kind of process that they're engaged in, but all
• 18:19
  Speaker 1: of it is premised on their argument that, in fact,
• 18:23
  Speaker 1: EPA lacks authority to regulate greenhouse gas emissions under the
• 18:28
  Speaker 1: Clean Air Act. So You know, that's what they're going for.
• 18:32
  Speaker 1: What they want is a case to get back to
• 18:35
  Speaker 1: the U.S. Supreme Court and have the court review its
• 18:40
  Speaker 1: ruling in the landmark Massachusetts v. EPA case and either
• 18:45
  Speaker 1: overturn it completely or at least revise it to the
• 18:50
  Speaker 1: point where it agrees with EPA now that EPA doesn't
• 18:55
  Speaker 1: have the authority to regulate these emissions. So that's kind
• 18:58
  Speaker 1: of where we are.
• 18:59
  Speaker 3: So if EPA doesn't have the authority to regulate greenhouse
• 19:02
  Speaker 3: gas emissions, then which agency has the authority?
• 19:06
  Speaker 1: Well, no federal agency would. The question would be, does
• 19:10
  Speaker 1: that open the door to state regulation? And the answer
• 19:14
  Speaker 1: would be, yes, it would. I mean, to the extent
• 19:17
  Speaker 1: that some states, like California, of course, and others, might
• 19:21
  Speaker 1: be willing to step in and try to fill the gap.
• 19:24
  Speaker 1: But that's not the kind of program... that would be successful.
• 19:28
  Speaker 1: You don't want to leave it up to individual states
• 19:31
  Speaker 1: to decide whether they're going to regulate, and if so,
• 19:34
  Speaker 1: to what extent they're going to regulate. That will defeat
• 19:38
  Speaker 1: a coordinated, comprehensive, intelligent way of transitioning away from fossil
• 19:45
  Speaker 1: fuels to cleaner sources of energy, which is what we need.
• 19:49
  Speaker 3: So the point of this rule revocation is to save
• 19:53
  Speaker 3: coal and natural gas plants?
• 19:55
  Speaker 1: Yeah, it's primarily coal. Gas plants don't have as much
• 19:59
  Speaker 1: trouble meeting emission standards, frankly. The state-of-the-art gas plants, they
• 20:05
  Speaker 1: could definitely benefit from some carbon capture and sequestration, but
• 20:11
  Speaker 1: it's really the coal plants that the Trump administration is
• 20:15
  Speaker 1: trying to salvage. And of course, they ordered through the
• 20:18
  Speaker 1: Department of Energy, the Trump administration ordered old power plants
• 20:23
  Speaker 1: in Michigan to keep operating, even though the utilities wanted
• 20:27
  Speaker 1: to shut them down because they're not cost effective, right?
• 20:30
  Speaker 1: So the first part of what EPA has done is
• 20:35
  Speaker 1: to say, we don't believe that CCS, carbon- capture and
• 20:39
  Speaker 1: storage is a viable technology. Now, that's, of course, contradicted
• 20:46
  Speaker 1: by the industry itself, which has been using CCS for decades.
• 20:52
  Speaker 1: They use it to capture the carbon so that they
• 20:55
  Speaker 1: can inject it into oil and gas formations to recover
• 21:01
  Speaker 1: what they call secondary recovery of oil and gas. So
• 21:05
  Speaker 1: we know that CCS works There is a question about
• 21:10
  Speaker 1: whether it's, quote, ready for prime time. The Biden administration,
• 21:15
  Speaker 1: you know, required 90 percent capture of carbon emissions from
• 21:21
  Speaker 1: coal plants. But they gave the Biden administration gave the
• 21:24
  Speaker 1: utilities until 2032 to figure out how to do that. So,
• 21:29
  Speaker 1: I mean, there is a legitimate question under the terms
• 21:34
  Speaker 1: of the Clean Air Act, which requires adequate demonstration of
• 21:38
  Speaker 1: of control technologies, there is a question about whether 90%
• 21:43
  Speaker 1: capture and storage is commercially feasible. But, you know, if
• 21:49
  Speaker 1: it isn't 90%, is it 50%? Because even that would
• 21:53
  Speaker 1: be useful, right? So the legal question on the immediate
• 21:57
  Speaker 1: repeal of the greenhouse gas regulations of power plants is
• 22:02
  Speaker 1: going to turn on a technical determination by the courts.
• 22:06
  Speaker 1: Is CCS really a viable, achievable technology right now.
• 22:12
  Speaker 3: Is the EPA actually arguing that greenhouse gases from power
• 22:16
  Speaker 3: plants don't endanger human health or the environment?
• 22:21
  Speaker 1: Yeah, they've already said that with regard to emissions from
• 22:25
  Speaker 1: cars and trucks. So there's another technical question about whether
• 22:29
  Speaker 1: that finding is applies also to stationary sources like power plants.
• 22:34
  Speaker 1: But the bottom line is the Trump administration and Zeldin
• 22:38
  Speaker 1: have already determined that the endangerment finding was wrong and
• 22:44
  Speaker 1: that the Supreme Court was wrong in Massachusetts v. EPA
• 22:49
  Speaker 1: to say that greenhouse gases are air pollutants subject to
• 22:52
  Speaker 1: control under the Clean Air Act. So this is just
• 22:55
  Speaker 1: a follow-through on that earlier determination that Zeldin has made.
• 22:59
  Speaker 1: But it's much more specific now. And it's also going
• 23:02
  Speaker 1: to affect, you know, the oral argument in front of
• 23:06
  Speaker 1: the Supreme Court in the Suncor case.
• 23:09
  Speaker 3: Coming up next, what happens when this gets to the
• 23:11
  Speaker 3: Supreme Court? I'm June Grosso, and you're listening to Bloomberg.
• 23:18
  Speaker 3: The Trump administration is rescinding climate controls on coal and
• 23:22
  Speaker 3: gas-fired power plants. It's one of its most aggressive moves
• 23:26
  Speaker 3: so far to unwind U.S. environmental regulations. The EPA is
• 23:32
  Speaker 3: ending a Biden-era mandate requiring existing and future fossil fuel-fired
• 23:37
  Speaker 3: power plants to dramatically curb their emissions in the coming
• 23:41
  Speaker 3: decades through the use of specific technologies, including carbon capture
• 23:47
  Speaker 3: and storage. I've been talking to environmental law professor Pat
• 23:51
  Speaker 3: Parenteau of the Vermont Law and Graduate School. Pat, we
• 23:55
  Speaker 3: were talking about how the EPA is now arguing that
• 23:58
  Speaker 3: greenhouse gases from power plants don't endanger human health or
• 24:03
  Speaker 3: the environment. Do they have any scientific backing for that?
• 24:08
  Speaker 3: Isn't all the evidence against that position?
• 24:11
  Speaker 1: Oh, it certainly is against it. And in fact, to
• 24:13
  Speaker 1: the point where Zeldin's original instinct or proposal was that
• 24:20
  Speaker 1: the endangerment finding was wrong on the science. Well, that
• 24:23
  Speaker 1: fell apart. And the National Academy of Sciences issued a
• 24:28
  Speaker 1: very comprehensive, detailed, and pointed analysis of why that kind
• 24:34
  Speaker 1: of thinking was completely nuts. Not their words. So, no,
• 24:38
  Speaker 1: there's no possible scientific argument to say that greenhouse gases
• 24:43
  Speaker 1: don't endanger public health and welfare. They clearly do, and
• 24:47
  Speaker 1: the science is overwhelming on that. So, you know... Zeldin
• 24:52
  Speaker 1: and Trump are now trying to argue, you know, maybe
• 24:56
  Speaker 1: these things are a danger, but we don't have the
• 24:59
  Speaker 1: authority to do anything about it. That's what they're arguing now.
• 25:02
  Speaker 3: Blue states and environmental groups are going to sue over this.
• 25:06
  Speaker 3: I mean, what would the basis of their suits be?
• 25:09
  Speaker 1: They're going to argue that, again, you know, the narrow
• 25:13
  Speaker 1: focus right now is on carbon capture and storage, okay?
• 25:17
  Speaker 1: So they're going to argue that that technology is proven
• 25:21
  Speaker 1: to is available, is being used throughout the world, by
• 25:25
  Speaker 1: the way, not just in the United States. There have
• 25:28
  Speaker 1: been several major power plants, one in Texas, that were
• 25:32
  Speaker 1: demonstrating that you could, in fact, capture and store carbon emissions. Again,
• 25:38
  Speaker 1: the legal question is going to be, yeah, but at
• 25:40
  Speaker 1: what level of carbon capture is commercially available, is adequately
• 25:46
  Speaker 1: demonstrated right now? That's That's the question for the D.C. Circuit.
• 25:51
  Speaker 1: The D.C. Circuit is not going to overturn Massachusetts versus EPA.
• 25:55
  Speaker 1: It's not going to agree with EPA now that it
• 25:59
  Speaker 1: lacks authority to regulate. The Supreme Court has said it does,
• 26:03
  Speaker 1: and the D.C. Circuit can't second-guess that. So the only
• 26:07
  Speaker 1: hope that the Trump administration has for these moves they're
• 26:12
  Speaker 1: making is to get the case to the U.S. Supreme
• 26:15
  Speaker 1: Court and get a different decision from the court. And
• 26:18
  Speaker 1: they're fighting the clock. Because, you know, getting a case
• 26:22
  Speaker 1: all the way to the Supreme Court takes a long time.
• 26:26
  Speaker 1: And they may run out of time. That's kind of
• 26:29
  Speaker 1: what the challengers to these moves that EPA is making
• 26:33
  Speaker 1: are counting on. That they can slow walk the litigation,
• 26:37
  Speaker 1: drag it out, stretch it out, and get to a
• 26:40
  Speaker 1: point where a new administration, fingers crossed, comes in and
• 26:44
  Speaker 1: undoes what Zeldin has done.
• 26:46
  Speaker 3: Let's just say that this rule went through and there
• 26:49
  Speaker 3: are theories here, then that would hamper future administrations from regulating.
• 26:55
  Speaker 1: Yes, that's their goal. Yes. Tie the hands of future
• 26:58
  Speaker 1: administrations by having the Supreme Court say, yeah, we agree
• 27:02
  Speaker 1: now that you don't have authority.
• 27:03
  Speaker 3: I've been reading all these scary numbers about how the
• 27:07
  Speaker 3: Trump administration's rollbacks of federal greenhouse gas rules have altered
• 27:14
  Speaker 3: this country's emissions curve. The EPA itself estimated that the
• 27:19
  Speaker 3: power plant repeal will result in an additional 553 million
• 27:24
  Speaker 3: metric tons of carbon dioxide emissions by 2040.
• 27:29
  Speaker 1: Yeah, I mean, if you just look at power plant emissions,
• 27:35
  Speaker 1: they would rank number five in the world, just behind China. So...
• 27:42
  Speaker 1: You know, that is one of the arguments I should
• 27:45
  Speaker 1: have mentioned, that Zeldin is also making that, well, you know,
• 27:49
  Speaker 1: controlling these emissions wouldn't make any meaningful impact on climate
• 27:53
  Speaker 1: change because of the global emissions. But that's just not true.
• 27:57
  Speaker 1: I mean, isn't the largest source of greenhouse gas emissions
• 28:00
  Speaker 1: in the United States... reason enough to regulate them. I mean,
• 28:04
  Speaker 1: you know, their logic is unless you can regulate emissions
• 28:08
  Speaker 1: to the point where you eliminate them, they're not meaningful.
• 28:11
  Speaker 1: But that's that's not the law. That's never been the law.
• 28:14
  Speaker 3: And the U.S. reversal on carbon cutting policy comes as
• 28:19
  Speaker 3: China starts to move in the opposite direction. And this
• 28:23
  Speaker 3: whole campaign where Trump and Zeldin want to keep the
• 28:28
  Speaker 3: coal plants going is Isn't that a losing battle? Because
• 28:32
  Speaker 3: there are cheaper and cleaner sources of power.
• 28:36
  Speaker 1: Yes, the market is trying to kill coal and Trump
• 28:40
  Speaker 1: is trying to prop it up and keep it alive.
• 28:42
  Speaker 1: It's a zombie technology, right? It's the dirtiest way of
• 28:46
  Speaker 1: producing energy imaginable, right? Maybe we were stuck with it
• 28:50
  Speaker 1: for a very long period of time, but we're not
• 28:52
  Speaker 1: stuck with it anymore. The cheapest source of generating electricity
• 28:56
  Speaker 1: in the world is solar. by leaps and bounds, and
• 28:59
  Speaker 1: storage technology, which is improved by leaps and bounds, right?
• 29:03
  Speaker 1: So there's no economic case for maintaining these old... Some
• 29:09
  Speaker 1: of these plants, these coal plants, are 50 years old,
• 29:12
  Speaker 1: for crying out loud. So there's no economic case for
• 29:15
  Speaker 1: keeping them going. The smartest thing utilities can do is
• 29:18
  Speaker 1: get rid of them, close them as fast as possible,
• 29:22
  Speaker 1: and shift to these cleaner sources. In some cases, that
• 29:25
  Speaker 1: definitely is gas.
• 29:26
  Speaker 2: Right.
• 29:27
  Speaker 1: But no, there's no there's no future for coal.
• 29:31
  Speaker 3: And going back to the Supreme Court, Pat, is it
• 29:33
  Speaker 3: possible that they might rule for the Trump administration and
• 29:37
  Speaker 3: reverse themselves, change?
• 29:39
  Speaker 1: Oh, there's always. that risk, isn't there? Yeah. I mean,
• 29:42
  Speaker 1: I can't say that's a zero possibility. So, you know,
• 29:46
  Speaker 1: it's certainly on questions like, is a technology suitable for
• 29:53
  Speaker 1: imposing the cost? Because, you know, these technologies do cost
• 29:57
  Speaker 1: a lot of money. They're not the best way. to
• 29:59
  Speaker 1: achieve the goal of reducing emissions and eliminating emissions. But
• 30:04
  Speaker 1: here's another point that EPA is going to run into
• 30:07
  Speaker 1: in the litigation, and that is they've changed the rules
• 30:12
  Speaker 1: for doing cost-benefit analysis for these rules. They will no longer,
• 30:17
  Speaker 1: this is amazing, they will no longer consider the public
• 30:21
  Speaker 1: health benefits of regulating these emissions, which is just insane, frankly.
• 30:28
  Speaker 1: And no court is going to accept that. You can't
• 30:31
  Speaker 1: just look at the cost to industry of compliance without
• 30:35
  Speaker 1: looking to the benefits of the public of reducing these emissions.
• 30:38
  Speaker 1: And yet that's what Zeldin is doing. And the reason
• 30:43
  Speaker 1: for that is because the public health benefits are overwhelming
• 30:47
  Speaker 1: in favor of regulating. When you regulate the carbon emissions,
• 30:52
  Speaker 1: you're also regulating a lot of other emissions that are
• 30:56
  Speaker 1: coming out of the plant. things like mercury, things like
• 31:00
  Speaker 1: carbon dioxide, sulfur dioxide. So there's going to be litigation
• 31:06
  Speaker 1: over whether EPA has done a proper cost-benefit analysis under
• 31:12
  Speaker 1: the law.
• 31:12
  Speaker 3: Has the Trump administration, has the EPA succeeded in basically
• 31:18
  Speaker 3: erasing the most consequential climate policies of Biden and Obama?
• 31:25
  Speaker 1: Well, I guess you'd have to say, based on what
• 31:28
  Speaker 1: they've done so far, yes. I mean, the challenge to
• 31:33
  Speaker 1: the repeal of the endangerment finding and the repeal of
• 31:36
  Speaker 1: the tailpipe emission standards, which, by the way, are the
• 31:39
  Speaker 1: largest emissions, right, from all the vehicles, they're even larger
• 31:43
  Speaker 1: than the coal plant emissions. So the point is that
• 31:47
  Speaker 1: the groups did not move to stay the impact of
• 31:52
  Speaker 1: that rescission of the endangerment finding and the repeal of
• 31:55
  Speaker 1: the tailpipe standards. So as of right now, we have
• 31:59
  Speaker 1: no standards for greenhouse gas emissions at all, right? So
• 32:03
  Speaker 1: in that sense, for the moment, the Trump administration has
• 32:06
  Speaker 1: succeeded in eliminating regulation.
• 32:09
  Speaker 3: And tell us about the case coming up at the
• 32:11
  Speaker 3: Supreme Court, the first case of the new term.
• 32:15
  Speaker 1: This also relates to the argument in what's called the
• 32:19
  Speaker 1: Suncor case, versus Boulder County Commissioners case that the Supreme
• 32:25
  Speaker 1: Court will hear on October 5th, the first case on
• 32:28
  Speaker 1: their docket. And that case, you know, the issue is
• 32:32
  Speaker 1: whether federal law preempts Boulder and other states and cities
• 32:39
  Speaker 1: from suing the oil companies for the damage that climate
• 32:45
  Speaker 1: change is causing and the costs of adapting to it.
• 32:49
  Speaker 1: And their argument is, The oil companies have deceived the
• 32:53
  Speaker 1: public about the dangers of climate change and their products.
• 32:58
  Speaker 1: And so they're arguing, you should be held accountable for
• 33:04
  Speaker 1: misleading us and making the problem worse, not giving us
• 33:08
  Speaker 1: time to adapt, plan for adaptation, etc., And the oil
• 33:13
  Speaker 1: companies have got the Supreme Court to agree to review
• 33:16
  Speaker 1: whether all of those claims are preempted by federal law.
• 33:20
  Speaker 1: But here's the catch, and here's how it relates to
• 33:24
  Speaker 1: what Zellin has just done with power plant emissions. Now
• 33:28
  Speaker 1: that EPA has said we have no authority to regulate
• 33:32
  Speaker 1: emissions under the Clean Air Act, how can you then
• 33:35
  Speaker 1: say that the Clean Air Act preempts the states from
• 33:39
  Speaker 1: pursuing these remedies in state court? Well, you can't. It's
• 33:43
  Speaker 1: logically inconsistent to say, on the one hand, the Clean
• 33:47
  Speaker 1: Air Act preempts these cases, but on the other hand,
• 33:50
  Speaker 1: the Clean Air Act doesn't even regulate these emissions, right?
• 33:54
  Speaker 1: So that's going to be, I think, a focal point
• 33:57
  Speaker 1: of the argument, at least one of many, probably, focal
• 34:00
  Speaker 1: points in the argument on October 5th.
• 34:03
  Speaker 3: I'm actually looking forward to the start of the new term.
• 34:07
  Speaker 3: Thanks so much, Pat. That's Professor Pat Parenteau of the
• 34:10
  Speaker 3: Vermont Law and Graduate School. And that's it for this
• 34:13
  Speaker 3: edition of the Bloomberg Law Show. Remember, you can always
• 34:16
  Speaker 3: get the latest legal news on our Bloomberg Law podcast.
• 34:19
  Speaker 3: You can find them on Apple Podcasts, Spotify, and at
• 34:23
  Speaker 3: www.bloomberg.com slash podcast slash law. And remember to tune into
• 34:28
  Speaker 3: the Bloomberg Law Show every weeknight at 10 p.m. Wall
• 34:32
  Speaker 3: Street time. I'm June Grosso, and you're listening to Bloomberg.