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EPA's Greenhouse Gas Powers Aired in Supreme Court

Updated from 12:51 a.m. EST with justices' sentiment during arguments and information about supporters of the administration's argument.

NEW YORK (TheStreet) -- The Supreme Court Monday heard arguments on an aspect of the Environmental Protection Agency's power to regulate greenhouse gas emissions from single-source polluters. At least two companies are showing they are poised to take advantage of the discussion in the area of developing technologies.

Granted authority by a 2007 court decision to include greenhouse gases from motor vehicles in its oversight of pollutants from new technology under the Clean Air Act, the EPA in 2009 extended that regulation to include emissions of greenhouse gases from single-point polluters like electric plants. Existing guidelines for the issuance of permits were too strict for realistic implementation of the greenhouse gas oversight, so the EPA had to set new ones, causing some critics to say the authority was rewriting the law arbitrarily.

In accepting six petitions seeking review of the issue, the Supreme Court consolidated the arguments and limited its consideration to the narrowly defined question of "whether EPA permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouses gases."

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The court declined to consider several other challenges to the EPA, including whether or not the EPA had proven greenhouse gases to be a public health threat. The lead case is the Utility Air Regulatory Group v. Environmental Protection Agency, No. 12-1146.

A surprise to no one, news reports Monday afternoon indicate the court was divided during the 90-minute argument. Justice Antonin Scalia was a leading critic of the EPA's arguments, backed by Justice Samuel Alito and to a lesser extent Chief Justice John Roberts. Four liberal judges on the other hand, Stephen G. Breyer, Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor appeared supportive of the administration. Assuming Roberts and Justice Clarence Thomas (who maintained his usual silence during the arguments) side with Scalia and Alito, the deciding vote will likely be cast by Justice Anthony Kennedy. Kennedy appeared critical of the administration at points but did not indicate his support for either position.

Siding with the EPA are environmental groups and state regulators, including New York, California and Illinois. The American Thoracic Society, a group representing 15,000 members from the medical community, filed a brief on the health costs of climate change caused by greenhouse gas emissions.

Calpine (CPN - Get Report), a private gas and geothermal power company, also supports the EPA's position. News sources report Calpine said it has gone through the permitting program six times and found it "neither overly burdensome nor unworkable." Calpine said it did not have to buy expensive new equipment, however its focus on newer technologies and clean power alternatives gives it an advantage over more traditional power generators in a tighter regulatory scenario.

By all accounts a decision striking down this aspect of the EPA's regulatory power won't derail the Obama administration's efforts to set new standards for greenhouse gas emissions, but in the short term it could substantially reduce pressure on industrial sources, particularly new plants. It would also further encourage political opponents who have claimed the EPA and the Obama administration generally have overstepped their authority.

If the EPA's position is upheld, on the other hand, it will make future challenges in the area of greenhouse gas emissions more difficult.

Some have raised concern that a decision against the EPA here could slow momentum of emerging technology and innovation, particularly surrounding reduction of carbon dioxide emissions. 

General Electric (GE - Get Report) Monday issued a statement saying it will spend another $10 billion by 2020 on its "ecoimagination" budget, involving research into energy projects such as waterless fracking and gas turbine efficiency. In a press release, the company said it has so far spent $12 billion on the ecoimagination research channel, with a commitment of $15 billion by 2015.

Monday's announcement extends the program by another $10 billion over another five years.

In the press release, the company said the program "has generated more than $160B in revenue. GE's own operations have seen a 34 percent reduction in greenhouse gas (GHG) emissions since 2004 and a 47 percent reduction in freshwater use since 2006, realizing $300M in savings."

The timing of the story in the media to coincide with the Supreme Court hearing likely isn't coincidental. The energy industry is the fastest growing area for GE. Whether the court's decision goes the EPA's way or not, pressures to lessen emission of greenhouse gases are likely to increase in the long term, shifting those developing technologies to the center of the energy landscape.

The report by GE of renewed investment in research sends a signal to the government and the industry that, like Calpine, it sees itself as a player in developing technology to meet the demands of a changing industry. 

-- Written by Carlton Wilkinson in New York

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