Supreme Court overturns landmark EPA air pollution rule

The Supreme Court dealt a blow to the Obama administration’s landmark air quality rule on Monday, ruling the Environmental Protection Agency did not properly consider the costs of the regulation.

In a 5-4 ruling, the justices ruled that the EPA should have taken into account the costs to utilities and others in the power sector before even deciding whether to set limits for the toxic air pollutants it regulated in 2011.

{mosads}The case, Michigan v. EPA, centers on the EPA’s first limits on mercury, arsenic and acid gases emitted by coal-fired power plants, known as mercury and air toxics (MATS). Opponents, including the National Federation of Independent Business, say it’s among the costliest regulations ever issued.

The EPA estimated its rule, which took effect for some plants in April, would cost $9.6 billion, produce between $37 billion and $90 billion in benefits and prevent up to 11,000 premature deaths and 130,000 asthma cases annually. 

But the agency concluded that its regulatory impact analysis should have “no bearing on” the determination of whether regulations are appropriate, as set forth in the Clean Air Act.  

In the majority ruling, Justice Antonin Scalia concluded that the EPA “unreasonably” interpreted the Clean Air Act when it decided not to consider industry compliance costs and whether regulating the pollutants is “appropriate and necessary.”

While the agency is afforded a certain level of power to interpret the law, the court wrote, “EPA strayed well beyond the bounds of reasonable interpretation in concluding that cost is not a factor relevant to the appropriateness of regulating power plants.”

Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito and Anthony Kennedy joined Scalia in overturning the rule, while Justices Elena Kagan, Sonia Sotomayor, Stephen Breyer and Ruth Bader Ginsburg sided with the EPA.

Writing for the minority, Kagan said the EPA properly considered costs at a later stage in the regulation, something that it has done in other rules and that the courts have allowed.

“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 EPA said it is reviewing the decision and will decide any next steps — including re-doing the regulation — once that process is complete.

“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,” EPA spokeswoman Melissa Harrison said in a statement.

She said the agency “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.”

Opponents of the regulation immediately cheered the ruling, while environmentalists expressed disappointment.

“The mere fact that the EPA wished to ignore the costs of its rules demonstrates how little the agency is concerned about the effects it has on the American people,” House Majority Leader Kevin McCarthy (R-Calif.) said in a statement.

“The Supreme Court’s decision today vindicates the House’s legislative actions to rein in bureaucratic overreach and institute some common sense in rulemaking,” McCarthy said.

The rule will technically remain in place while the Court of Appeals for the District of Columbia Circuit decides how the EPA can proceed.

National Mining Association President Hal Quinn called the ruling a “vindication of common sense that is missing in much of the administration’s regulatory actions.”

“The decision effectively puts EPA on notice: reckless rulemaking that ignores the cost to consumers is unreasonable and won’t be tolerated,” he said.

Vickie Patton, general counsel for the Environmental Defense Fund, called the ruling “unfortunate” and said it puts communities and families at risk.

“While today’s decision is a setback, EPA has ample information to swiftly address the Court’s concerns,” she said.

“The court’s decision to let polluters off the hook is a huge setback for our kids’ health,” Anna Aurilio, director of Environment America’s Washington office, said in a statement.

Since the ruling only concerns the cost-benefit analysis, the EPA can try writing the rule again if it considers costs.

While Monday’s ruling struck down a major environmental priority for President Obama, it is not a complete loss.

Most power plant operators have already either complied by shutting plants down or retrofitting them, or have made firm plans to comply.

On a Friday appearance on HBO’s “Real Time with Bill Maher,” EPA head Gina McCarthy said she was confident the Supreme Court would rule in the EPA’s favor.

But she was not too concerned about what would happen if the ruling went against the EPA.

“This is a rule that actually regulates toxic pollution emissions from primarily coal facilities, and we think we’re going to win because we did a great job on it,” she said.

“But even if we don’t, it was three years ago. Most of them are already in compliance, investments have been made, and we’ll catch up. And we’re still going to get at the toxic pollution from these facilities,” she continued.

Furthermore, the EPA’s carbon limits for power plants are expected to shut down more than half of the nation’s coal-fired power plants, which would also reduce the other air pollutants.

“It is possible that, if the court strikes down the rule, some utilities might not be willing to pay the cost of running the control equipment as much as they would have to under the rule,” Jody Freeman, an environmental law professor at Harvard Law School, said before the ruling

“But generally the bottom line is that that utilities are already headed in the direction of putting more controls on this pollution, whether because of this rule, or to comply with the cross-state pollution rule the Supreme Court already upheld in the Homer case last term, or in anticipation of the carbon rule for power plants,” she said, referring to a case decided last year that upheld the EPA’s regulation on air pollution that crosses state lines.

The ruling also could help the EPA defend its carbon limits in court.

Opponents of the rule, including energy companies, utilities and some states, say the Clean Air Act prohibits the EPA from regulating power plants’ carbon output if other pollution from the plants is also regulated under another section of the law.

While the EPA and its allies disagree, striking down the MATS rule largely neutralizes the problem.

— This report was last updated at 2:04 p.m.