Supreme Court rules against EPA power plant regulation

Plant Branch Units 3 and 4, near Milledgeville, April 15

Plant McManus Units 1 and 2, near Brunswick, April 15

Plant Yates Units 1-5, near Newnan, April 15

Plant Kraft Units 1-4, near Savannah, April 16, 2016 (planned)

Plant Mitchell Unit 3, near Albany, closing to be requested in 2016

The U.S. Supreme Court on Monday ruled against the Obama administration on environmental regulations that have already helped force Georgia Power to close more than a dozen power plants.

The ruling was a win for the Atlanta-based Southern Co., Georgia Power’s parent, which is part of a trade association that joined the suit against the Environmental Protection Agency for not taking into account the costs for businesses when deciding whether to limit mercury and other toxic emissions from coal plants.

By a 5-4 majority the court agreed, sending the case back to a lower court — while not throwing out the regulation yet.

Environmental groups said the narrow ruling would not have much impact, but industry groups and their allies in Congress said it could hem in the agency’s push to limit existing power plants’ carbon emissions — a legacy item for President Barack Obama in his quest to fight climate change.

In recent years Georgia Power has closed or is in the process of closing 17 coal- or oil-fired units across the state because of recent state and federal regulations, as well as the price of natural gas and other economic conditions.

Cost of compliance at heart of case

The EPA’s mercury rule “was definitely a major one and is still one that we’re looking at as part of (evaluating) our overall generation mix,” Georgia Power spokesman Jacob Hawkins said.

The Supreme Court did not outright kill the mercury rule, but it said the EPA had to consider its impact on companies such as Georgia Power when justifying it.

“The Agency must consider cost — including, most importantly, cost of compliance — before deciding whether regulation is appropriate and necessary,” Justice Antonin Scalia wrote in the majority opinion.

He added: “It will be up to the Agency to decide (as always, within the limits of reasonable interpretation) how to account for cost.”

Scalia was joined by the court’s conservative wing and its swing justice, Anthony Kennedy.

Mercury rule was unveiled in 2012

The EPA said its attorneys were still reviewing the ruling. The District of Columbia Circuit Court could put the regulation on hold or keep it standing while deciding whether to completely strike it down.

“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 making emissions reductions,” agency spokeswoman Enesta Jones wrote in an email.

The Southern Co. cheered the decision.

“Southern Company has long believed that important energy policy decisions should be made by Congress and that, in this case, Congress clearly intended that EPA take into account the costs that the rule would impose — ultimately — on customers of electric utilities,” spokesman Jack Bonnikson said in a statement.

The EPA rolled out its Mercury and Air Toxics Rule in 2012, and power plants had to comply by April. Jennette Gayer, the director of Environment Georgia, said the state’s requirement that most power plants install emissions-reducing scrubbers limited the federal rule’s impact, though the EPA’s move was valuable in mandating actual emissions reductions.

“It’s unfortunate the federal rule is no longer there as a backstop because … the EPA rule would have guaranteed emissions reductions,” Gayer said.

According to EPA data, Georgia power plants emitted 1,286 pounds of mercury in 2011, the 16th-highest total in the country.

The state of Michigan, coal mining companies and a group of utilities including the Southern Co. sued on the basis that the EPA should have taken costs into account up front when deciding whether to regulate. The agency found that the rule would cost businesses $9.6 billion per year.

Dollar figures for health benefits debated

The EPA later calculated the “ancillary” public health benefits as between $37 billion and $90 billion per year, but it said the cost-benefit calculation did not factor into its decision to regulate.

In her dissenting opinion, Justice Elena Kagan seized upon the $37 billion-to-$90 billion number.

“The central flaw of the majority opinion is that it ignores everything but one thing EPA did,” Kagan wrote. “It forgets that EPA’s ‘appropriate and necessary’ finding was only a first step which got the rest of the regulatory process rolling. It narrows its field of vision to that finding in isolation, with barely a glance at all the ways in which EPA later took costs into account.”

Industry groups have long disputed the EPA’s public health calculations.

“If the EPA had to … base (its regulation) on the co-benefits, that means the co-benefits would be totally subject to notice and comment and judicial review,” said Scott Segal, a lobbyist for power companies at Bracewell & Giuliani.

“And that,” Segal said, “is something the EPA’s cooked math has not been subject to in the past.”

Extent of ruling is cloudy

Segal said the ruling in the short term helps about 100 power plants across the country that won delays from the EPA in implementing the mercury rule. But it also could have an impact on the pending rule to cut carbon emissions from existing power plants that has been met with stiff opposition from industry.

“If EPA is planning to do no better than the cost assessments they’ve done to date on the Clean Power Plan, it’s possible the rule will fail under this test,” Segal said.

John Walke, a senior attorney and the clean air director for the Natural Resources Defense Council, said the EPA should work quickly to compile a cost analysis for the mercury rule to pass Supreme Court muster. He added that he did not see any effect on the pending carbon rule.

“The mercury majority reiterated a line of court cases that give deference to reasonable agency interpretations, and that was the law before today and it remains the law after today,” Walke said. “So there will be challenges to the Clean Power Plan, to be sure, but I don’t think they were bolstered by today’s ruling.”