Early Tuesday morning, the U.S. Court of Appeals for the Washington, D.C., circuit ordered the U.S. Environmental Protection Agency (EPA) to reconsider the agency’s mercury rule following the June decision by the U.S. Supreme Court that the ruling was unlawful because the EPA had failed to consider the costs of the rule before implementing it. The appeals court did not, however, vacate its original ruling. In other words, the EPA must continue its review of the cost of implementing the rule, but the rule is untouched.
This is not what the coal industry was hoping for. When the Supreme Court ruled in July that EPA must consider costs before adopting new rules, coal stocks in one of the country’s hardest hit industries got a bit of a boost. On the day of the ruling, Peabody Energy Corp. (NYSE: BTU) jumped more than 9% and Arch Coal Inc. (NYSE: ACI) rose some 12.5%.
The EPA has said it is on track to complete its cost review by April 15, 2016, according to a report at the Washington Post.
According to EPA estimates presented to the Supreme Court, the mercury rule that took effect in April for some coal-fired power plants would have cost $9.6 billion, produced $37 billion to $90 billion in benefits, and prevented 11,000 premature deaths and 130,000 asthma cases annually. The agency’s mistake, according to the Supremes, was in its interpretation of the Clean Air Act, concluding that the agency’s impact analysis should have no bearing on whether its regulations are appropriate.
There was never any question about EPA’s authority to adopt the rule and little reason to believe that a further review would change anything. As EPA Administrator Gina McCarthy noted in June, a significant number of regulated coal-fired power plants have already adopted measures to comply with the new rules.
Peabody’s stock tumbled more than 5% Tuesday to post a new 52-week low of $7.18, against a high of $129.30. The company completed a one-for-15 reverse stock split on October 1.
Arch Coal’s stock was up more than 20% Tuesday to $1.07, after the company announced it would exercise its 30-day grace period before making a $90 million interest payment.