In a ruling with wide implication for utilities and regulated industries, the U.S. Supreme Court on Monday blocked Obama administration rules aimed at reducing pollution from coal-fired power plants, saying regulators failed to take cost into account.
The court, in a 5-4 opinion, said the Environmental Protection Agency was obligated under the Clean Air Act to weigh the cost at the outset of efforts to cut emissions of mercury and other pollutants.
"The agency must consider cost - including, most importantly, cost of compliance - before deciding whether regulation is appropriate and necessary," the court said in its majority opinion, written by Justice Antonin Scalia.
The court said that while the cost of the pollution controls required by the program would amount to $10 billion, the annual benefits amounted to only about $6 million.
Justice Elena Kagan, in her dissent, disputed that calculation and said the benefits over time would have been as much as $80 billion, with 11,000 fewer premature deaths annually.
Scalia was joined by Chief Justice John Roberts Jr., and Justices Samuel Alito Jr., Anthony Kennedy, and Clarence Thomas, who wrote a concurring opinion. Justices Stephen Breyer, Sonia Sotomayor, and Ruth Bader Ginsburg joined Kagan in the dissent.
The ruling emerged from a multiyear effort by the Obama administration to crack down on power plant pollution. Its effect is unlikely to be great in Pennsylvania.
Since the EPA issued its emission rules in 2011, a dozen coal-fired plants have been closed in Pennsylvania.
Utilities have been moving toward plants powered by natural gas from the Marcellus Shale region.
The Supreme Court, in its Monday decision, sent the case back to the U.S. Court of Appeals for the District of Columbia Circuit for further hearings to focus on cost. In the meantime, coal plants that remain in operation in the mid-Atlantic region have been given a renewed, if possibly temporary, lease on life, said Joseph Minott, executive director of the Clean Air Council in Philadelphia.
The decision was widely praised by business organizations, which said it made little sense for the EPA to impose regulations on industry without considering the cost.
"We were pleased to see that the court recognized that it was not appropriate for the EPA to come out with a rule that cost nearly $10 billion, but yielded public benefits of only four to six million dollars," said Kevin Sunday, government affairs manager for the Pennsylvania Chamber of Business and Industry. "When an agency decides to regulate, it has to show that it is appropriate and necessary, and the EPA in this case clearly did not."
The Business Roundtable said the decision sets a precedent for adoption of future EPA regulations.
"Requiring agencies to weigh the economic costs of proposed regulations will lead to better rule-making and fairer outcomes for businesses," said John Engler, the group's president.
Michigan and 20 other states that rely heavily on coal- fired plants or have substantial coal mining within their borders sued the EPA after the agency finalized its pollution rules in 2011. They claimed that the agency was required by law to weigh the cost of the new pollution controls against the potential benefits at the outset of its rule-making process.
"By the EPA's logic, someone could decide whether it was 'appropriate' to buy a Ferrari without thinking about the cost, because he plans to think about the cost later when deciding whether to upgrade the sound system," Scalia wrote.
The EPA said it had no such obligation to consider cost, but after making the initial determination to regulate emissions from coal-fired plants came forward with studies showing that the annual benefits could exceed $80 billion.
During oral arguments in March, Roberts questioned whether the benefits cited by the EPA would result from its regulations, or from other factors.