The Latest Supreme Court Ruling on Energy: What It Means

plant energy efficiency

The United States Supreme Court and its nine Justices have dominated the news cycle over the past week, first with an Affordable Care Act decision and then with a pivotal ruling on gay marriage.

A lesser-known – but still important – decision was just reached that could have far-reaching consequences for those in the energy industry.

On Monday, the Supreme Court handed down a ruling that essentially put a (temporary) stop to the Obama Administration’s previously imposed limits on power plants through the country. The ruling, split among ideological lines in a 5-4 vote, scales back an ambitious EPA regulation that was designed to limit toxic emissions and pollutants, including mercury, from coal-fired power plants.

The regulation was controversial from the beginning and was attacked by the industry and 20 states for the costs that it would allegedly impose on power plants that ran afoul of its new standards. Their chief claim was that under the Clean Air Act, regulations have to be “appropriate and necessary”. As such, the regulation’s standards and costs were excessive and far exceeded the risk of emissions.

The Supreme Court largely agreed with this line of reasoning, citing that calling for billions of dollars of costs versus a comparatively-smaller amount of perceived benefits was “not rational, never mind ‘appropriate’”.

This ruling doesn’t mean that the regulation is dead, however. It only means that the EPA will have to go back to the drawing board to revise the regulation based on a cost-benefit analysis, since the agency did not factor costs into the equation when originally devising the regulation.

Redrafting the regulation will not get rid of its limitations – the EPA has said it is determined to move forward with the program – but it should water down the restrictions to the point where power plant owners can breathe a sigh of relief.

For now, however, the regulations in question will more than likely remain on the books until the EPA completes its revisions. This may not be accomplished before the end of President Obama’s term in 2016 – meaning that a new president could scrap the regulations altogether.