Was it a smackdown or just a tweak?
Within hours of the U.S. Supreme Court decision that dealt a defeat to the Environmental Protection Agency and the Obama administration, energy industry supporters as well as environmental groups pondered the long-term impact.
To review, in a 5-4 decision the Supreme Court ruled EPA’s regulation to limit emissions of mercury and other toxic pollutants from coal-fired power plants went too far by not taking the costs of the regulation into effect when the agency made its initial determination.
The case hinged on the meaning of what is “appropriate and necessary” for EPA to order a ruling under the Clean Air Act for the Mercury and Air Toxics Standards rule, nicknamed MATS.
Writing for the majority, Justice Antonin Scalia said EPA made a mistake by not first conducting a cost-benefit analysis.
“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,” Scalia wrote. “Statutory context supports this reading.”
Even by EPA’s reckoning, it would cost power plants about $10 billion a year to comply, even if the agency insisted it would translate into billions more in health benefits.
“EPA refused to consider whether the costs of its decision outweighed the benefits,” Scalia wrote. “The Agency gave cost no thought at all, because it considered cost irrelevant to its initial decision to regulate.”
The case was brought by 20 states as well as industry groups, who were delighted by Monday’s ruling.
“Thanks to today’s ruling, the EPA will finally have to listen to the nation’s concerns with this poorly constructed, costly rule,” Mike Duncan, president and CEO of the American Coalition for Clean Coal Electricity, said in a statement.
Environmental groups bemoaned it.
“It is clear that the benefits to public health and the environment this rule would provide dwarf the costs of implementing it, no matter when in the determination those costs are considered,” Joseph O. Minott, executive director and chief counsel of the Clean Air Council, said in a statement.
But the ramifications of the ruling are a bit cloudy.
The agency’s supporters expressed optimism that the high court’s ruling is limited. saying it doesn’t eliminate EPA’s ability to restrict mercury and pollutants from power plants. In a narrow sense, they say, it means EPA officials had to take into account the costs of industry earlier in the process.
“The Court’s decision focuses on EPA’s initial finding that it was appropriate and necessary to regulate these emissions and not on the substance of the standards themselves,” EPA Press Secretary Melissa J. Harrison said in a statement.
Related: Will the EPA’s Clean Power Plan save you money or clean your clock?
In addition, while EPA may not have properly assigned costs at the time of the regulation, it has taken so long for the case to wend its way to the high court that the rule had the force of law — as many companies retired or retrofitted their coal-fired plants.
“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,” Harrison said.
And the interpretation of what’s “appropriate and necessary” may give the agency plenty of wiggle room.
As Ann Carlson pointed out on the judicial blog LegalPlanet.org, the case will now be remanded to the D.C. Circuit Court Of Appeals that earlier ruled in the EPA’s favor in a 2-1 decision.
“It is quite possible that the panel will leave the rule in effect pending EPA’s complying with the directive to take costs into account,” Carlson wrote Monday.
But Patrick J. Michaels, director of the Center for the Study of Science at the Cato Institute, a libertarian think tank, thinks EPA got a good spanking.
“This in small part is a warning to EPA to not play fast and loose with numbers and not try and hide things under the guise of their agency authority,” Michaels told Watchdog.org.
Backers of the energy industry — coal plants in particular — think Monday’s ruling could have implications on other wide-ranging EPA regulations, such as ozone and the agency’s Clean Power Plan, which have been subject to lawsuits claiming that much tougher requirements would prove prohibitively expensive while providing relatively little environmental benefit.
Like the MATS rule, EPA said it had the authority to institute the Clean Power Plan under its interpretation of the Clean Air Act.
If the Supreme Court rejected EPA on Monday, will the agency proceed with its Clean Power Plan or consider making some changes to avoid a potential loss in court?
Andrew Grossman, litigator the Washington law firm of Baker Hostetler and an adjunct scholar at the Cato Institute, thinks the Obama administration may have shot itself in the foot.
“This is a real big deal,” Grossman told Watchdog.org. Rather than vacating the rule, the court calls for industry to still comply with the current MATS rule until a revision is crafted.
“What that means is when the next big rule comes down the pike — and that’s the Clean Power Plan — there’s a much greater likelihood after this decision that that rule gets stopped in its tracks,” Grossman said.
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