Supreme Court Whacks Obama’s Power Plant Rules

President Barack Obama’s environmental agenda took a hit Monday from the Supreme Court after a 5-4 ruling sent a landmark mercury-emissions rule back to a lower court for review. But the judicial setback might actually hide a silver lining, by clearing the legal path for even more ambitious rules to fight climate change.

The Supreme Court found that the Environmental Protection Agency had not considered the huge costs of the rule — more than $9 billion a year — when it set out to regulate emissions of mercury and other toxic substances from power plants. The rule, almost two decades in the making, went into effect in April.

Monday’s ruling came as a surprise, because courts have generally given the Environmental Protection Agency wide latitude to implement new standards under the Clean Air Act. And the EPA did weigh the anticipated costs and benefits of the rule, but at a later stage in the process than the Supreme Court thought reasonable. Justice Antonin Scalia, writing for the majority, said the EPA’s decision to regulate the sector and then figure out how much it would cost is akin to deciding to buy a Ferrari without considering the price tag.

Despite the court’s ruling, the mercury rule — known as the Mercury and Air Toxics Standards or MATS — is not dead yet. The D.C. Circuit Court of Appeals will now review the case. It could vacate the law entirely or send it back to the EPA for a fresh tally of the costs and benefits. What’s more, since utilities had spent years preparing for the rule, most U.S. power plants have already complied with the new standards by installing scrubbers to clean smokestack emissions. That means that the practical implications of the Supreme Court ruling may be limited.

If the circuit court scraps the MATS rule altogether, it could actually make life easier for the Obama administration and its legacy environmental initiative to limit the emissions of greenhouse gases from power plants. The EPA is working with states to finalize new standards to limit emissions from existing power plants by the middle of next year. In 2013, the EPA slapped emission limits on new power plants.

Like other EPA initiatives, the power plant rule will almost certainly face additional legal challenges. Opponents argue that power plant emissions cannot be regulated by two different parts of the Clean Air Act. In other words, as long as the MATS rule is alive and in effect, it creates a legal headache for the even more ambitious carbon emissions rules. But if the mercury standards are struck down, so too would be one big potential legal hurdle to the Clean Power Plan.

Facing up to the threat of climate change is on Obama’s mind this week: Climate is at the top of the agenda for a two-day visit from Brazilian President Dilma Rousseff. Obama is trying to build momentum for December’s big United Nations climate summit in Paris. The United States, the European Union, and several other countries have already detailed their plans to curb carbon emissions over the next decade. Brazil, the sixth-largest emitter of greenhouse gases, could announce its own emissions goals during Rousseff’s visit.

And the world’s biggest source of carbon pollution, China, could also put its cards on the table with its first-ever pledge to cut greenhouse gases. Chinese Premier Li Keqiang said in Brussels Monday that Beijing will submit its own emissions plan to the UN either Monday or Tuesday.

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