Supreme Court rejects Obama and EPA coal plant restrictions

WY: Coal Bed Methane Drilling
GILLETTE, WY - JUNE 12: (US NEWS AND WORLD REPORT AND NEWSWEEK OUT) Golden evening light bathes the newly built KFx coal thermal upgrading plant that produces the company's K-Fuel June 12, 2006, in Gillette, Wyoming. The $80 million USD northeastern Wyoming project came on line in early 2006 with its first test burn of Powder River Basin coal in March, 2006. K-Fuel is described by KFx as the "unleaded gasoline" equivalent for the coal-fired industry. The company takes low-grade coal, removes 80% of the moisture, increases BTU (heat content) per pound by 30% to 40%, and reduces mercury content by 70% (the element that is credited with fouling water around the world). Sulfur dioxide and nitrogen oxides will also be removed by 30%. The KFx facility, using 8300 BTU coal, will produce annually 750,000 tons of 11,000 BTU coal using the Lurgi Mark 4 process, a modified 50 year-old German engineering procedure (the equivalent eastern Appalachian coal is 11,000 BTU). KFx has an agreement with Kiewit Coal Company to construct a ten unit plant in Gillette and with Arch Coal Company for a twenty unit facility at Coal Creek within 2 1/2 years. (Photo by Robert Nickelsberg/Getty Images)
Photograph by Robert Nickelsberg — Getty Images

In a major setback to the Obama administration’s efforts to curb pollution, the Supreme Court has rejected new rules that put limits on mercury and acid gases from aging US power plants. The judges ruled that the Obama administration didn’t appropriately take into account the billions of dollars it would require to upgrade or close mostly older coal plants to curb pollution.

The Environmental Protection Agency’s rule, adopted in 2012, was already taking effect. The restrictions were based on the EPA’s interpretation of the Clean Air Act.

But power plant industry groups and coal-heavy states challenged the EPA’s rule and said they posed a heavy financial burden. The Supreme Court decision agreed with the challengers that the EPA needed to take into account the cost of restricting the pollution before issuing the rule.

The problem with doing the cost-benefit analysis of limiting pollution from coal plants is that the methods and opinions about the health benefits and the financial costs can be very different for the two sides. The industry groups said the costs were larger than the benefits, while the EPA found the benefits larger than the costs.

The EPA had decided it would take costs into account at a later stage. The court rejected that notion. But the court’s decision also keeps the possibility open that the ruling could be enforced with new cost-based analysis.

However, the decision could leave the EPA and the Obama administration more vulnerable to court challenges of its attempts to curb other emissions and pollution from power plants of all kinds. Coal power plants are the largest source of carbon emissions in the U.S.

Shares of coal companies rallied Monday.