Washington (Platts)--23Feb2009

The US Supreme Court on Monday said it will not hear an electric utility
industry appeal seeking to reinstate a Bush administration rule to reglate
mercury emissions from coal-fired power plants.

The court declined to hear a case brought by the Utility Air Regulatory
Group, a team of Washington-based attorneys that represents American Electric
Power, Southern Company and other large electric utilities.

UARG appealed to the Supreme Court after a lower court in February 2008
struck down the Bush administration rule that would have established a
cap-and-trade system for reducing mercury emissions. The Supreme Court
rejected the appeal without comment.

The rule, which was issued by the Environmental Protection Agency in
2005, was largely supported by industry, in part because the proposed
cap-and-trade system would have allowed power plant operators to buy and sell
emission allowances, while avoiding installing expensive technology to capture
mercury.

A number of states and environmental groups sued EPA over the rule,
saying it was too weak to protect the public from mercury, a neurotoxin. They
argued that under the Clean Air Act, EPA had to require all power plants to
install mercury-specific pollution controls, an approach known as 'maximum
achievable control technology,' or MACT.

In its order striking down the rule, the US Court of Appeals for the
District of Columbia Circuit said EPA violated the Clean Air Act by not basing
the mercury rule on the more stringent MACT approach.

Earlier this month, the Obama administration told the Supreme Court that
it would not join UARG in trying to get the industry-backed mercury rule
reinstated. The Supreme Court's decision Monday not to hear UARG's appeal
clears the way for Obama's EPA to craft an entirely new rule that will likely
require coal-fired power plants to install equipment to control their mercury
emissions.

In a filing with the high court earlier this month, the Obama
administration made it clear that it will push for much more stringent
regulation of power-plant mercury emissions that the Bush administration had
done.

A number of key Democratic lawmakers in Congress, led by Senator Thomas
Carper of Delaware, have also introduced legislation that would require
coal-fired power plants to install state-of-the-art mercury-reduction
equipment.

--Brian Hansen, brian_hansen@platts.com