Supreme Court to EPA: power plant regs do ‘more harm than good’

scaliaIn a stinging rebuke to the climate legacy Obama is desperately seeking to create, the Supreme Court ruled today that the Environmental Protection Agency (EPA) failed to consider the costs of certain regulations, which actually did ‘more harm than good.’ In its 5-4 vote ruling, the Court said the EPA failed to take costs into account when it imposed new regulations curbing the emissions of mercury and other hazardous air pollutants, which forced the closure of hundreds of coal fired power plants due to costly new standards.

Justice Antonin Scalia, writing for the majority, said it was not appropriate to impose billions of dollars of economic costs in return for a negligible return in health or environmental benefits. “No regulation is ‘appropriate’ if it does significantly more harm than good,” Justice Antonin Scalia wrote in the majority opinion. “The Agency must consider cost—including, most importantly, cost of compliance—before deciding whether regulation is appropriate and necessary. We need not and do not hold that the law unambiguously required the Agency, when making this preliminary estimate, to conduct a formal cost-benefit analysis in which each advantage and disadvantage is assigned a monetary value.”

National Mining Association (NMA) President and CEO Hal Quinn wrote of the Supreme Court’s decision that it was a win for common sense, something that is “missing in much of the administration’s regulatory actions.” The Supreme Court’s ruling has effectively put the “EPA on notice: reckless rulemaking that ignores the cost to consumers is unreasonable and won’t be tolerated,” Quinn wrote. “It recognizes what the administration has ignored: that every regulatory benefit comes with a cost, and the value of that benefit cannot be known unless its costs are considered.

Implementation of the EPA’s Mercury Air Toxics Standard (MATS) would cost power plants $9.6 billion a year to comply, “yet its benefits were illusory,” said William Yeatman, a senior fellow at the free-market Competitive Enterprise Institute. “In fact, the rule’s justification was to spend $10 billion annually in order to protect a putative population of pregnant subsidence fisherwomen, not one of whom EPA actually identified in the course of rendering the rule.”

NMA’s Quinn also noted that the decision would be a “welcome reprieve for valuable electricity generating capacity at risk of closing from EPA’s rule. These plants may again be used to strengthen grid reliability and lower energy costs for families and industries.” Since MATS was implemented, an estimated “13 gigawatts of coal-fired power is already slated to retire by the end of 2015.” This is in addition to coal plant owners “readying themselves to comply with upcoming ozone and greenhouse gas regulations,” according to the Daily Caller.

The EPA said in a statement that since creating the rules nearly three years ago, it has since incorporated the costs of the new regulations, but only at a later stage. EPA Press Secretary Melissa J. Harrison wrote that EPA would review the decision and take “any appropriate next steps” when the review was 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.”

Harrison also reiterated that the Supreme Court’s ruling did not pertain to the agency’s overall Clean Air Act authority, but only to cost considerations, saying the “EPA remains committed to ensuring that appropriate standards are in place. 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,” she said, adding that for every dollar spent on reducing pollution under these rules, “the American public would see up to $9 in health benefits.”

According to the Washington Post, the EPA argued that mercury emissions was “especially dangerous to pregnant or breast-feeding mothers and young children,” and “could prevent as many as 11,000 deaths” and over “half-million lost days of work.” But Pat Michaels, a climate scientist and director of scientific studies at the libertarian Cato Institute, said these arguments are misleading and that the MATS rule would only yield public benefits “of 0.00209 I.Q. points (the margin for error is ~5000x this value) in a theoretical population of 240,000 people.” 

Sen. Lisa Murkowski (R-Alaska), chairwoman of the Senate Energy and Natural Resources Committee, said in a statement she hopes the opinion leads to some “balance” in these environmental standards. “It is heartening to hear that the court has reined in the EPA, especially on the issue of the costs of regulation,” she said.

Scalia was joined by Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas and Samuel Alito. In dissent, Justice Elena Kagan, joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor. Because of the ruling, the case will now go back to the lower courts so the EPA can decide how to account for the costs.