The U.S. Supreme Court heard sharply contrasting arguments on 25 March about whether the U.S. Environmental Protection Agency (EPA) properly interpreted a rule that regulates airborne mercury and other emissions from coal- and oil-fired power plants. Cost-benefit analyses also differed significantly.
Exposure to mercury at sufficient levels can affect the human nervous system and other parts of the body. According to EPA, coal-burning power plants are the largest human-caused source of airborne mercury emissions in the United States.
The court’s decision, expected by the end of the current term in June, could have significant regulatory, financial, and public health ramifications.
The case, Michigan v. Environmental Protection Agency, revolves around the interpretation of the word “appropriate” in a section of the 1990 amendments to the federal Clean Air Act (CAA) that calls for EPA to conduct a study of public health hazards that could reasonably be anticipated to occur because of emissions from electric utility steam generating units. The final sentence of the section states, “The Administrator shall regulate electric utility steam generating units under this section, if the Administrator finds such regulation is appropriate and necessary after considering the results of the study required by this subparagraph.”
The Supreme Court granted a hearing on the case limited to the question of whether EPA “unreasonably refused to consider costs in determining whether it is appropriate to regulate hazardous air pollutants emitted by electric utilities.” The current case also incorporates two similar cases: Utility Air Regulatory Group v. EPA and National Mining Association v. EPA.
What Is Meant by “Appropriate”?
EPA argued in its written court filing that costs do not come into play in the first part of its regulatory process. The agency “concluded that costs are not relevant to the decision whether to regulate such emissions, but that costs should instead be taken into account when setting emission standards,” according to the agency’s written arguments. EPA also concluded that quantifiable annual benefits of those standards to regulate mercury and other emissions would exceed costs by $27 billion to $80 billion, in 2007 dollars.
The petitioners, who represent the state of Michigan and 20 other states, argued in their written position that the word “appropriate” is ambiguous and that it renders EPA “free to find it appropriate to regulate without any regard for the regulation’s cost.” The petitioners stated that all relevant context “confirms that Congress did not intend for EPA to act with deliberate indifference to cost when answering the basic regulatory question whether it is appropriate to regulate.”
They also stated that it would achieve just $4 million to $6 million in annual health benefits by reducing hazardous air pollutants at an annual cost of $9.6 billion to industry. The petitioners argued that the regulation’s costs “are wholly disproportionate to their benefits.” They stated that airborne mercury regulation cobenefits of lower emissions of particulate matter, which EPA estimated, “are not relevant benefits for the purpose of deciding whether it is appropriate to regulate [hazardous air pollutant] emissions from electric utilities.”
During oral arguments, several justices pushed Michigan solicitor general Aaron Lindstrom about the meaning of “appropriate.” Justice Ruth Bader Ginsburg said, “The word ‘appropriate,’ I think, is commonly used to indicate that the expert agency will do what it finds fit based on its expertise.” Justice Sonia Sotomayor noted, “All we have to find is a plausible reading to uphold the EPA’s interpretation.”
Justice Elena Kagan commented that it is a stretch to say that silence on the part of Congress about cost means that consideration of cost is required. “Congress knows how to require consideration of costs. To get from silence to this notion of a requirement seems to be a pretty big jump,” she said.
Lindstrom maintained that “agencies are supposed to not ignore an essential part of the problem as they engage in reasoned decision-making.” He added, “I don’t think [Congress] is silent when it tells the agency to look at all of the circumstances.”
Justice Antonin Scalia weighed in: “I’m not even sure I agree with the premise that when Congress says nothing about cost, the agency is entitled to disregard costs. I would think it is classic arbitrary and capricious agency action for an agency to command something that is outrageously expensive and in which the expense vastly exceeds whatever public benefit can be achieved.” He added, “Sure, [EPA has] to consider the results of the study. It doesn’t say they can’t consider everything else. And the word ‘appropriate’ seems to suggest that they may consider other stuff.”
Different Classes of Power Plants
Lawyers and justices also jousted over EPA’s ability to establish different classes of power plants and regulate them differently.
Solicitor General Donald Verrilli Jr. pointed to a section of the CAA amendments that affirms the “Administrator’s authority to establish subcategories under this section, as appropriate.”
Verrilli said, “If there is such a vast difference in the technologies that the group of [power plant] entities is using that there would be a vast difference in cost, that might be a basis to treat them as a different subcategory.”
Sotomayor said that minimum emissions standards “can vary dramatically depending upon how the categories and subcategories are set up” by EPA for various power plants.
Lindstrom rebutted, “Any subcategorization that was going to happen has already occurred, because we are talking about the rule that’s been promulgated, and despite any subcategorization that happened, there is still $9.6 billion in costs that are being imposed on an annual basis.”
Questions About Cost
Lawyer Paul Smith, representing industry respondents in support of EPA, said that his clients agree with the government that the EPA was not required to engage in a cost-benefit analysis before making the initial listing decision to regulate hazardous pollutants emitted by power plants.
He added that about 90% of the $9.6 billion capital cost to industry already has been spent and that the electric power industry has not experienced dramatic upheavals because of that expenditure. “The rule takes effect in the middle of April, and so the idea that the result here was somehow ludicrous or outlandishly expensive is belied by the fact that the industry is bringing itself into full compliance.”
Scalia commented, “Instead of going to jail? Is that it?”
Smith reiterated that industry already has taken significant steps, “and the situation now is, we are ready to finally have national standards.”
—Randy Showstack, Staff Writer
Citation: Showstack, R. (2015), Supreme Court hears case about regulating power plants, Eos, 96, doi:10:1029/2015EO027249. Published on 27 March 2015.