A federal appeals court on Friday will hear oral arguments on the Environmental Protection Agency's expensive mercury and air pollutant rules for power plants, which could lead to the end of the regulations.
The Supreme Court in June sent the regulations back to the D.C. Circuit Court of Appeals, ruling that the EPA had to assess the cost of the rules because the agency did not have the discretion to disregard the cost of complying with the regulations.
The decision means there is legal precedent directing how EPA assesses other utility regulations deemed costly, which gives states ammunition in opposing the agency's landmark climate change rules for power plants, notably the Clean Power Plan. The plan is the centerpiece of President Obama's climate change agenda and his hope of securing a global deal to lower emissions in Paris this month.
The appeals court judges will have to decide whether to tell the EPA to do its cost assessment or if it requires stiffer action such as terminating the rule entirely.
"If the D.C. Circuit remands to EPA, [the mercury and air pollutant rule, or MATS,] may remain in effect while the agency is considering the required costs and benefits," law firm Jones Day said in an analysis. "If the court vacates the rule, however, the EPA must begin the regulatory process again."
"In that case, power companies may not have to comply with upcoming deadlines under the MATS Rule unless state rules or permit conditions require otherwise," Jones Day said.
The D.C. Circuit had affirmed the rule in the case in a 2-1 decision, which spurred businesses and 20 states led by Michigan to appeal the ruling to the Supreme Court. The high court only addressed EPA's stance that it did not have to assess the cost of complying with the rules, which the utility industry says is as high as $9.6 billion a year.
The rule has prompted power plants to close because of the high cost of complying. Republican lawmakers and some Democrats have characterized the rules as part of the administration's "war on coal" because of the cost-prohibitive effects it has had on the nation's coal plants.
EPA issued a proposed supplemental finding last month that reaffirms that it is "appropriate and necessary" to regulate mercury and other pollutants from power plants after the costs of doing so have been considered under the high court's ruling.