US Supreme Court Decision on EPA MATS Rule

The US Supreme Court’s June 29th 2015 decision to send the US Environmental Protection Agency’s Mercury and Air Toxics Standards (“MATS”) rule back to the DC Circuit Court, while a narrow victory for opponents, is by no means the end of the debate. The Supreme Court ruled that EPA did not adequately consider the costs of the rule – which would cap emissions of mercury, toxic metals, and related pollutant emissions from oil- and coal-fired power plants. The decision brings the debate to the DC Circuit Court to determine if the rule remains in effect while the cost of compliance is considered or whether EPA needs to vacate the rule until the costs analysis is completed. EPA’s authority to limit toxic pollutants from the nation’s coal- and oil-fired, new and existing, electricity utility steam generating units (EGUs) power plants, is not at issue. MATS was promulgated in December 16, 2011 and published on February 16, 2012. At around the same time, EPA revised the new performance standards (NSPS) in regards to particulate matter (PM), sulphur dioxide (SO2), and nitrogen oxides (NOx) for new fossil-fuel-fired EGUs. To date, most of the affected power generation facilities covered by MATS are already investing in mercury controls to comply, as compliance deadline was April 2015.

The Supreme Court ruled in a 5-4 decision against EPA’s MATS rule, finding that EPA did not perform the due diligence to consider the costs and benefits impact before deciding whether to impose limits on the toxic emissions on the power plants. The Supreme Court issued the ruling with specific details to be worked out in the lower courts during the next coming months, with Justice Antonin Scalia writing in the majority opinion that, “the agency must consider cost – including, most importantly, cost of compliance – before deciding whether regulation is appropriate and necessary.” Justice Scalia went on to say, “Reasonable regulation ordinarily requires paying attention to the advantages and the disadvantages of agency decisions.”

The Supreme Court ruling will have impact on a number of our nation’s electric energy utility providers. US Energy Information Administration reports approximately 500 coal-fired electric power plants still in operation in the US, of which, two-thirds already invested billions of dollars to install scrubbers or switch to natural-gas generation, to comply with the April compliance date.  Any changes to the remaining plants upgrades and/or closure plans after the court ruling would be limited, due to other federal and state rules and mandates. The ruling could delay the need to make large investments to comply with MATS, which might also be impacted by EPA’s proposed Clean Power Plan rule, expected to be finalized later this summer. If nothing else, the Supreme Court ruling provides time for affected generators to consider a broader range of issues and potential costs before committing to large capital investment in existing generation.

You can obtain a copy of the Final Rule that was submitted to the Federal Register on November 19th, 2014 at the following link on the EPA website regarding MATS:   http://www.epa.gov/ttn/atw/utility/matsssfinalruletsd110414.pdf

Source: http://www.eia.gov/electricity/annual/html/epa_04_01.html

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