U.S. Supreme Court Ruling Against the Environmental Protection Agency's Mercury and Air Toxic Standards

On June 29, 2015, the U.S. Supreme Court in a 5-4 decision struck down the Environmental Protection Agency's (EPA) Mercury and Air Toxics Standards (MATS) Rules under the Clean Air Act which took effect in April of this year. The challenge to MATS was led by industry groups and 21 Republican-led states who claimed that the standards were too costly for businesses, consumers and coal miners.

At the center of the ruling was the question as to whether or not the regulations deemed "appropriate and necessary" ought to include significant consideration of costs early on in the process, or if the Clean Air Act demands that only health risks be taken into consideration. The EPA wrote the standards nearly three years ago that were expected to reduce toxic emissions by 90%.  The EPA factored the costs at a later stage after the standards were set. The courts ruled that was too late and that the EPA did not weigh the cost of compliance for coal-fired power plants against the benefit to public health while setting the standards.  Subsequently, the EPA estimated the cost of compliance to be $9.6 billion annually.  The benefits, however, were estimated to be much greater at between $37 billion and $90 billion annually. The savings stem from the estimated prevention of up to 11,000 deaths, 4,700 nonfatal heart attacks and 540,000 lost days of work, the EPA said. Mercury accumulates in fish and is especially dangerous to pregnant or breastfeeding women, and young children, because of the concern that too much mercury could harm a developing brain.

The ruling returns the case to the lower courts in Maryland, which can decide whether or not to leave the standards in place while the EPA establishes new ones or to eliminate them in the meantime.  While some view the ruling as a major win for the energy industry, the EPA points out that most power plants have already made the investment to reduce emissions and are well on their way to compliance with standards that are inevitably going to be put into place; it is just a question of when.  The U.S. Energy Information Administration reports that many of the 1,400 electricity generating units and 600 power plants are already in compliance. While some electric companies have begun shutting down coal-fired power plants, the mercury rules are not necessarily to blame, since coal continues to compete against cheap natural gas.

The implications for the ruling are thought to be significant by some, as the the Clean Air Act also proposes regulation of carbon dioxide emissions from fossil fuel-fired electric utilities.  The main argument of opponents of the proposed regulation is that regulating carbon dioxide emissions would be illegal because of Mercury and Air Toxic Standards that prevent further regulation. If the MATS Rules are eliminated, so is their argument.

While the state of environmental utility regulation may seem uncertain at the moment, it appears to just be delayed.  It appears that the EPA will simply revisit and reissue Mercury and Air Toxic Standards that reconsider the cost of compliance estimated at less than $10 billion, which it has already factored in at multiple stages through the process over more than a decade.  Once fully implemented, the rule is expected to deliver benefits of $37 billion to $90 billion. The rules regulating carbon dioxide emissions are expected to be released by the EPA sometime this summer.

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