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 The court ruled in a 5-4 decision, with its five conservative
justices in the majority, against the U.S. Environmental Protection
Agency (EPA). The rule stays in effect for the time being, with the
case returning to an appeals court, which will decide whether or not
it should be thrown out.
"EPA is disappointed that the court did not uphold the rule, but
this rule was issued more than three years ago, investments have
been made and most plants are already well on their way to
compliance," the agency said in a statement.
The EPA "remains committed to ensuring that appropriate standards
are in place to protect the public from the significant amount of
toxic emissions from coal and oil-fired electric utilities and
continue reducing the toxic pollution from these facilities," the
agency added.
Justice Antonin Scalia, writing on behalf of the court, said that a
provision of the Clean Air Act that said the EPA can regulate power
plants for mercury and other toxic pollutants if it deems it
"appropriate and necessary" must be interpreted as including a
consideration of costs. The EPA had decided it did not have to
consider costs at that stage of the process.
"The agency must consider cost - including, most importantly, cost
of compliance - before deciding whether regulation is appropriate
and necessary," Scalia wrote.
The EPA says the rule, which went into effect in April, applies to
about 1,400 electricity-generating units at 600 power plants. Many
are already in compliance, the U.S. Energy Information
Administration said.
The legal rationale adopted by the court is unlikely to have broader
implications for other environmental regulations, including the
Obama administration's Clean Power Plan that would cut carbon
emissions from existing power plants, according to lawyers following
the case.
William Yeatman, a fellow at the conservative-leaning Competitive
Enterprise Institute, said the impact is "circumscribed" due to the
"narrowness and uniqueness" of the legal provision the court was
examining.
Richard Revesz, director of the Institute of Policy Integrity at New
York University School of Law, said that "nothing in this decision
would in any way call into question the legal legitimacy of the
Clean Power Plan."
BIGGER BILLS
Industry groups and 21 states appealed after an appeals court upheld
the regulation in June 2014. The challengers said the EPA's refusal
to consider the estimated $9.6 billion-a-year costs would lead to
bigger electricity bills for Americans.
Among companies opposing the rule was Peabody Energy Corp, the
nation's largest coal producer. Exelon Corp, the biggest U.S.
nuclear power plant operator, was one of several power companies
supporting the rule.
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The ruling gave an immediate lift to shares of Peabody and other
coal mining companies, which have been dogged by concerns over the
costs of the regulation and slumping coal prices as power companies
turn increasingly to natural gas to generate electricity. Peabody
shares were up 9 percent and rival Arch Coal shot up 13 percent. The
Dow Jones Coal Index was up 1.36 percent after touching a 12-year
low just before the ruling was issued.
The 2012 mercury regulation, which covered oil-fired plants as well
as coal-burning ones, was targeted by Michigan and other states in
addition to various industry groups, including the National Mining
Association.
When the EPA issued the regulation, it outlined what it saw as the
rule's costs and benefits, including preventing up to 11,000
premature deaths annually. The agency also said the regulation could
generate billions of dollars in benefits including a reduction in
mercury poisoning, which can lead to developmental delays and
abnormalities in children. Overall, the EPA said the benefits could
be worth up to $90 billion a year.
Vickie Paton, general counsel of the Environmental Defense Fund,
which backed the Obama administration, said the EPA should be able
to address the concerns raised by the court because it has "already
analyzed the economics showing that the health benefits for our
nation far outweigh the costs."
The case was the third recent Supreme Court test of President Barack
Obama's air pollution regulations. The administration mostly came
out on top in the two previous cases.
In April 2014, the court upheld a regulation limiting air pollution
across state lines. In June 2014, the court largely upheld the
government's ability to regulate greenhouse gas emissions from major
utilities.
Industry groups and states are gearing up to challenge EPA's plans
to issue new regulations aimed at curbing carbon emissions from
existing power plants.
The three consolidated cases are Michigan v. EPA, 14-46, Utility Air
Regulatory Group v. EPA, 14-47, National Mining Association v. EPA,
14-49.
(Reporting by Lawrence Hurley; Editing by Will Dunham)
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