(Bloomberg) — U.S. Supreme Court justices signaled they
are divided over Obama administration rules that would cut
emissions from 460 coal-fired power plants in an effort to curb
birth defects, heart disease and premature deaths.
During arguments Wednesday, justices questioned
Environmental Protection Agency controls on mercury and acid
gases from the plants owned by Southern Co., American Electric
Power Co. and other utilities. Lawyers for power companies and
some states said the agency didn’t adequately consider costs
before imposing rules estimated to cost $9.6 billion a year.
“It’s classic arbitrary and capricious agency action,”
Justice Antonin Scalia said, referring to a legal standard the
court can use to block an agency rule.
The Obama administration says it considered costs in how it
set the rules but wasn’t required to do so at the initial stage
of deciding whether to issue regulations at all.
That argument was questioned by Scalia and other
Republican-appointed justices, who said it could lead to onerous
costs for power companies. Justices appointed by Democrats
defended the EPA’s decision.
“Costs become relevant later in the process,” Justice
Elena Kagan said. Justice Sonia Sotomayor added, “All we have
to find is a plausible reading to uphold the EPA’s
The case concerns a 2011 EPA regulation that curtails
mercury emissions. The rule, which takes effect next month for
most plants, has forced companies to close aging facilities or
install expensive scrubbing equipment.
Mercury accumulates in fish and can cause neurological and
kidney disorders when people consume those fish.
Air-pollution controls rank high on President Barack Obama’s list of accomplishments. That’s in large part because
courts have given the EPA broad power to interpret the Clean Air
Act and impose tighter curbs on emissions from power plants and
The outcome may hint at how the Supreme Court will handle
an even bigger fight down the road, a clash over the
administration’s plan to tackle climate change.
In this case, the Clean Air Act says the EPA may regulate
mercury and other hazardous power-plant pollutants if the agency
concludes action is “appropriate and necessary.”
The question for the court is whether the agency must
consider the cost before deciding whether to regulate. The
administration contends the Clean Air Act requires that costs be
taken into account only at a later stage — when the EPA is
deciding the extent of the regulation.
A federal appeals court in Washington agreed in a 2-1
decision, saying the law gives the EPA broad discretion.
The administration is relying on a 1984 Supreme Court
decision that requires judges to defer to an agency’s
interpretation of an ambiguous statute as long as its reading is
a reasonable one.
Industry trade groups and almost two dozen states say that
the administration’s interpretation is unreasonable and that it
isn’t entitled to that type of deference.
The EPA estimates the rule will cost $9.6 billion annually
once fully implemented next year. The agency says the new
standards will prevent 11,000 premature deaths a year and
produce as much as $90 billion in annual benefits.
Many are so-called “co-benefits” that accrue not from
curbing mercury or acid gases, but from reducing other
pollutants also captured by the scrubbing equipment. The
agency’s use of those benefits to justify its regulation drew
skepticism from Chief Justice John Roberts.
“It’s an end run,” Roberts said. “The issue that raises
a red flag is that there’s such a tiny benefit from regulating”
the stated pollutants, he said.
Roberts and Justice Anthony Kennedy, who sided with the EPA
in two clean-air cases last year, also pressed U.S. Solicitor
General Donald Verrilli to agree that the agency could have
chosen to consider costs in its initial decision.
Justice Ruth Bader Ginsburg said the word “appropriate”
is “commonly used to indicate that the expert agency will do
what it finds fit based on its expertise.”
Opponents of the rule include Peabody Energy Corp., the
largest U.S. coal producer, as well as the National Mining
Association, which represents the industry.
Not all power companies are fighting the EPA rules. Exelon
Corp., the nation’s largest owner of nuclear plants, joined with
other businesses to file a brief supporting the EPA’s actions,
saying they will produce overwhelming public health benefits.
Nuclear facilities don’t emit large quantities of mercury and
other pollutants and aren’t covered by the EPA rule.
A Supreme Court decision against the EPA wouldn’t
necessarily kill the rule. The agency might be able to reissue
the regulation after doing the cost-benefit analysis the
industry says is necessary. Even if the rule doesn’t survive,
many utilities have already complied.
The total U.S. capacity for coal-generated electricity will
drop an unprecedented 17 percent to 250 gigawatts by 2020 as
plants shut or switch to natural gas as a fuel, according to
Bloomberg New Energy Finance.
A decision is expected by the end of June. The cases are
Michigan v. EPA, 14-46; Utility Air Regulatory Group v. EPA,
14-47; and National Mining Association v. EPA, 14-49.
To contact the reporters on this story:
Greg Stohr in Washington at
Mark Drajem in Washington at
To contact the editors responsible for this story:
Jon Morgan at
Patrick Oster at
Mark McQuillan, Laurie Asseo