U.S.

Supreme Court Blocks Obama’s Limits on Power Plants

By  and CORAL DAVENPORT
A coal-fired power plant in Ghent, Ky. Industry groups and about 20 states challenged the Environmental Protection Agency's decision to regulate emissions — one of the Obama administration's most ambitious environmental initiatives. Luke Sharrett for The New York Times 
WASHINGTON — The Supreme Court on Monday blocked one of the Obama administration’s most ambitious environmental initiatives, an Environmental Protection Agency regulation meant to limit emissions of mercury and other toxic pollutants from coal-fired power plants.
Industry groups and about 20 states had challenged the E.P.A.’s decision to regulate the emissions, saying the agency had failed to take into account the punishing costs its rule would impose.
The Clean Air Act required the regulation to be “appropriate and necessary.” The challengers said the agency had run afoul of that law by deciding to regulate the emissions without first undertaking a cost-benefit analysis.
Writing for the majority, in the 5-to-4 decision, Justice Antonin Scalia wrote: “It is not rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits. Statutory context supports this reading.”
The E.P.A. had argued that it was not required to take costs into account when it made the initial determination to regulate. But the agency added that it had done so later in setting emissions standards and that, in any event, the benefits far outweighed the costs.
The two sides had very different understandings of the costs and benefits involved. Industry groups said the government had imposed annual costs of $9.6 billion to achieve about $6 million in benefits. The agency said the costs yielded tens of billions of dollars in benefits.
In dissent, Justice Elena Kagan wrote: “The agency acted well within its authority in declining to consider costs at the opening bell of the regulatory process given that it would do so in every round thereafter — and given that the emissions limits finally issued would depend crucially on those accountings.”
The decision, Michigan v. Environmental Protection Agency, No. 14-46, does not strike down the rule, but it means the E.P.A. will have to review and rewrite it, taking costs into consideration.
Pollution Limits
In three environmental regulation cases, the court found the Environmental Protection Agency violated the Clean Air Act by failing to undertake a cost-benefit analysis in deciding whether to set limits on emissions of mercury and other toxic pollutants from power plants.
5-4
DISSENT
MAJORITY
Sotomayor
Kagan
Ginsburg
Breyer
Kennedy
Roberts
Scalia
Alito
Thomas
• In the mercury case, the United States Court of Appeals for the District of Columbia Circuit ruled that the agency’s interpretation of the Clean Air Act was reasonable.
More major Supreme Court cases this term »
“The E.P.A. will have to do more homework on costs,” said Sean Donahue, who represents environmental and public health groups that signed on to the agency’s case. “But I’m very confident that the final rule will be up and running and finally approved without a great deal of trouble. This is a disappointment. It’s a bump in the road, but I don’t think by any means it’s the end of this program.”
An E.P.A. spokeswoman, Melissa Harrison, said the agency intended to move forward with the rule.
Ms. Harrison said that since the court’s ruling was about how and when the agency considered costs in its decision about limiting mercury and other toxic emissions and not the agency’s authority to limit them over all, the E.P.A. was committed to protecting the public “from the significant amount of toxic emissions from coal- and oil-fired electric utilities and continue reducing the toxic pollution from these facilities.”
The mercury regulation was one in a series of new Clean Air Actregulations from the Obama administration that President Obama hopes to build into a major environmental legacy. Later this summer the agency is expected to release a set of landmark climate change rules limiting greenhouse gas pollution from power plants — restrictions that have faced legal challenges from industry.
In the term that ended in June 2014, the justices heard cases on two other sets of Clean Air Act regulations — one aimed at limiting power plant pollution that wafts across state lines, the other at cutting planet-warming greenhouse gas emissions. The E.P.A. won the first case and largely prevailed in the second, though the Supreme Court indicated that it remained prepared to impose limits on the agency’s regulatory authority.
Congressional Republicans, who have sought to limit the Clean Air Act rules, celebrated Monday’s decision.
“From its ozone to greenhouse gas to navigable waters rules, the E.P.A. continues to burden the public with more and more costs even as so many are still struggling to get by and improve their lives in this economy,” said Kevin McCarthy of California, the House majority leader. “The Supreme Court’s decision today vindicates the House’s legislative actions to rein in bureaucratic overreach and institute some common sense in rule making.”
Among the remaining questions is whether the current rule will stay in place as the E.P.A. completes its revision of the language, and how long that revision will take.
“The Obama administration will be hard pressed to get that job done before it goes out of office,” said Richard Lazarus, a professor of environmental law at Harvard.
In the meantime, companies could be forced to comply with the existing regulation. The question will go before the United States Court of Appeals for the District of Columbia Circuit, which has frequently decided in favor of Mr. Obama’s E.P.A. rules.
“Given the fact that the E.P.A. has already done a detailed cost benefit analysis justifying the rule, and the fact that the majority of the affected industries have already invested heavily in compliance, there is a good chance that the D.C. Circuit will allow the rule to remain on the books” while the agency makes its revisions, said Patrick Parenteau, an expert on environmental law at Vermont Law School.
Scott Segal, who lobbies on behalf of electric utilities for the firm Bracewell & Giuliani, said the decision should come as a warning to the Obama administration as the E.P.A. prepares to unveil the climate changeregulations this summer.
“They’ll need to take a hard-nosed economic analysis that the Supreme Court calls for,” he said.
A version of this article appears in print on June 30, 2015, on page A12 of the New York edition with the headline: Justices Block the Obama Administration’s Limits on Power Plant Emissions . Order Reprints|  Today's Paper|Subscribe