High court blocks power plant regulations without cost estimates

Richard Wolf | USA TODAY

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WASHINGTON – A narrowly divided Supreme Court on Monday blocked federal clean air regulations on coal- and oil-fired power plants that have been on the drawing board for a quarter century.

The 5-4 ruling stops the Environmental Protection Agency, at least for now, from imposing new rules designed to reduce the amount of mercury and other toxins that pollute the nation's air, at an unknown net cost to companies and consumers.

It was a defeat for the Obama administration, which had been on a roll at the high court on environmental matters lately. It was a victory for a coalition of 20 states, along with major electric utilities and coal producers, which argued that the agency should have considered costs before issuing the regulations.

The decision was written by Justice Antonin Scalia, with the other four conservative justices agreeing. Justice Elena Kagan wrote a dissent for the four more liberal justices.

For the time being, the regulations remain on the books while the U.S. Court of Appeals for the D.C. Circuit reviews the Supreme Court's ruling. The EPA can try to save the regulations by taking costs into consideration. That led some experts to predict the decision represents only a temporary delay.

At issue was whether the agency should have considered costs after Congress directed it to take any "appropriate and necessary" action to regulate power plants. The challengers argued that "appropriate" must take cost estimates into account, but the agency did not do so.

While the estimated annual cost of $9.6 billion is not widely disputed, the cost-benefit ratio is. Opponents said the benefits are as low as $4 million a year. Proponents said when all secondary pollutants are considered, they're as high as $90 billion.

"One would not say that it is even rational, never mind 'appropriate,' to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits," Scalia said from the bench. "No regulation is 'appropriate' if it does significantly more harm than good."

Kagan said the decision "deprives the agency of the latitude Congress gave it to design an emissions-setting process sensibly accounting for costs and benefits alike."

The government said the regulations would prevent premature deaths and illnesses from asthma, cancer and heart disease, and protect pregnant women and unborn children whose fetal brain development can be harmed by overexposure to mercury. Environmental groups said 4,200 to 11,000 lives could be saved each year.

"This rule was issued more than three years ago, investments have been made, and most plants are already well on their way to compliance," said EPA press secretary Melissa Harrison.

"While today's decision is a setback, EPA has ample information to swiftly address the court's concerns," said Vickie Patton, general counsel at the Environmental Defense Fund. "With a few adjustments to its analyses, EPA can ensure that America's children are protected from the toxic mercury pollution discharged by coal-fired power plants."

But Richard Faulk, an appellate lawyer who represents companies against environmental damage claims, said forcing the EPA to consider costs represents a "clear victory for industry and the rule of law. There's no substitute for doing the job correctly, especially when so much is at stake for all involved."

Among the industries most threatened were coal plants, many of them clustered in the Midwest and Mid-Atlantic states, that have not upgraded their technology to reduce toxic emissions. Some were forced to close, which would reduce generating capacity and raise the cost of electricity.

"The mercury rule at issue today has already shut down dozens of power plants that provided affordable and reliable electricity," U.S. Chamber of Commerce President Thomas Donohue said in a statement. "Our nation simply cannot afford to lose even more electricity generation at the hands of an out-of-control EPA."

Other industries that have invested billions of dollars installing emission controls were aligned with the government, along with 16 states and several major cities, including New York and Chicago.

The appeals court upheld the mercury regulations in a 2-1 ruling in December 2013. The majority said the EPA acted reasonably when it declared the emissions hazardous and capable of being controlled. Consideration of costs, it said, could be delayed until specific standards for cutting pollution were set.

The case portends future legal battles over greenhouses gases and climate change. While Obama has fared well in recent cases involving cross-state air pollution and greenhouse gas emissions, a bigger showdown over ozone regulations may be yet to come.

The Supreme Court ruled last April that the government could compel 28 states to slash ozone and fine particle emissions from power plants because the pollution crosses state lines. In that case, the justices said the EPA had the discretion to take costs into account because the Clean Air Act was silent on that score.

Two months later, the court blocked the administration from requiring permits for greenhouse gas emissions from new or modified industrial facilities. But the justices said the EPA could regulate such emissions from industries already required to get permits for other air pollutants, handing the administration a partial victory.