U.S. Supreme Court Strikes Down EPA MATS Rule

Jonathan Lee, Senior Energy Market Intelligence Manager at ENGIE Insight

On June 28, 2015, the United States Supreme Court ruled against the Environmental Protection Agency’s (EPA) Mercury and Air Toxics Standards (MATS) rule. In a 5 to 4 decision, the High Court said the EPA unreasonably interpreted the Clean Air Act when deciding to move forward with the regulations.

The EPA’s MATS rule is aimed at reducing the amount of mercury and other hazardous emissions produced by coal-fired power plants. However, when determining whether the regulations met the “appropriate and necessary” benchmark, the Court said the EPA failed to consider the cost of compliance, and therefore acted in a manner outside of its mandate. The regulation will now return to the D.C. Circuit Court, where it will either be revised or completely scrapped.

This development does little, however, to alter the U.S. shift away from coal to natural gas as a source for generating electric power. MATS gave power plant owners three years to install the necessary equipment to comply with the rule by its effective date of April 16, 2015. Owners had to determine well in advance of the Court’s recent decision whether it made economic sense to retrofit the plant or retire it all together. Long-term decisions and billions of dollars have already been invested and many owners have said the ruling does not alter their already-scheduled coal plant closures. Nearly 4.6 percent of the nation’s coal power plant capacity is shutting down this year.

The question moving forward will be if the Supreme Court’s decision affects the way the EPA regulates and interacts with the energy industry in the future. The environmental agency currently has plans to finalize regulations on the amount of carbon dioxide emitted from existing power plants, a directive that could have a big impact on the U.S. generating mix.

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