By - Michael Drost

Supreme Court blocks EPA MATS regulations on coal, oil-fired power plants

Energize Weekly, July 1, 2015

A narrowly divided U.S. Supreme Court blocked a landmark air quality rule this week, ruling that the U.S. Environmental Protection Agency (EPA) did not properly considering the costs of the regulation before proposing it.

In a 5-4 decision, the justices ruled that the EPA improperly crafted its ambitious Mercury and Air Toxic Standards (MATS) rule, which seeks to limit emissions of mercury and other toxic pollutants from coal and oil-fired power plants, because it did not consider the costs of implementing the standards before deciding the regulation was “appropriate and necessary”. The EPA argued that it was not required to consider costs when it determined whether to create the rule, but did so later when setting emission standards.

The EPA estimated that the rule would cost $9.6 billion and yield between $37 billion and $90 billion in benefits, and prevent up to 11,000 premature deaths and 130,000 asthma cases annually. Industry groups said that the EPA erred when it concluded that its regulatory impact analysis should have “no bearing” on determination of whether regulations are appropriate according to the Clean Air Act.

“It is not rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits. Statutory context supports this reading,” said Justice Antonin Scalia, writing for the majority.

Justice Elena Kagan, writing for the minority, said that the EPA did consider the costs of compliance at a later stage of the rulemaking process, a practice that had been allowed by the courts in the past.

“The majority’s decision that EPA cannot take the same approach here — its micromanagement of EPA’s rulemaking, based on little more than the word ‘appropriate’ — runs counter to Congress’s allocation of authority between the Agency and the courts,” she said.

The decision was limited to whether the EPA “reasonably” interpreted the Clean Air Act when it decided it did not have to take costs into account when determining whether to create the MATS rule, so it is possible for the EPA to save the regulations by tweaking the rule to comply with the court’s decision.

“The EPA will have to do more homework on costs,” said Sean Donahue, who represents environmental and public health groups that signed on to the agency’s case, to the New York Times. “But I’m very confident that the final rule will be up and running and finally approved without a great deal of trouble. This is a disappointment. It’s a bump in the road, but I don’t think by any means it’s the end of this program.”

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