A divided Supreme Court on Monday ruled that the Environmental Protection Agency must take cost into account when deciding whether to regulate mercury and other toxins emitted from coal-burning power plants.
In a case that pit states against each other, and split the energy industry as well, the court’s 5-4 conservative majority said the EPA acted unreasonably in not considering cost at the start of its decision-making.
“Agencies have long treated cost as a centrally relevant factor when deciding whether to regulate,” Justice Antonin Scalia wrote. “Consideration of cost reflects the understanding that reasonable regulation ordinarily requires paying attention to the advantages and the disadvantages of agency decisions.”
The ruling overturns a major piece of President Barack Obama’s environmental agenda, but it’s not clear how much of a practical impact it’s going to have.
“This continues to be a priority for the president because of the important public health benefits associated with this law,” White House spokesman Josh Earnest told reporters Monday. “The goal of . . . this specific rule was to try to reduce incidents of asthma attacks, and in some cases even, incidents of premature death.”
The EPA adopted the rule in 2012. In the years since, many companies invested in scrubbers for their coal-fired power plants to make sure they would be in compliance when the rule became final in April.
Separate EPA limits on sulfur dioxide that cross state lines could mean such scrubbers are needed regardless of the court’s decision.
But the court ruling does give energy companies more time, as the EPA must reconsider the mercury rule and now must take into account the costs to the industry.
“Thanks to today’s ruling, the EPA will finally have to listen to the nation’s concerns with this poorly constructed, costly rule,” said Mike Duncan, president of the American Coalition for Clean Coal Electricity, an industry group. “Elitist ideas usually carry lofty price tags.”
The court’s decision also could also affect future EPA rules, forcing the agency to consider the expense when deciding whether to regulate.
More than 20 states, led by Michigan and including Idaho, Kentucky, Missouri, South Carolina and Texas joined in the challenge to the EPA.
From the other side, the attorneys general for 16 states including California and North Carolina rallied behind the EPA.
Further complicating the order of battle, some big energy companies including the Texas-based Calpine Corp. support the EPA, while coal giant Peabody Energy and others oppose it.
The case involved the recurring cost-vs.-benefit dilemma in controlling pollution and challenged how the executive branch interpreted an ambiguous term written by members of Congress. In particular, the case centered on the meaning of the word “appropriate.”
The federal Clean Air Act requires the EPA to decide whether it is “appropriate and necessary” to regulate hazardous air pollutants emitted by electric utilities fueled by coal or oil. This threshold question precedes the actual setting of power plant emission standards. While “necessary” means protecting health, the meaning of “appropriate” is open to interpretation.
“Appropriate is a capacious term,” Justice Anthony Kennedy noted during oral argument.
The meaning of the word can also shift with the political winds.
In just a dozen years, as presidential administrations have changed, a Democrat-led EPA first issued a regulatory finding that it is “appropriate and necessary” to regulate electric power plants, then a Republican-led EPA reversed that finding. This reversal was then overturned in court, and then a Democrat-led EPA issued an “appropriate” finding yet again.
Citing the dangers of pollution, the Obama administration’s EPA now argues the initial decision under the Clean Air Act to regulate need not consider cost, but instead can turn strictly on health effects. Cost comes into play when it comes to setting the actual regulatory standards, the EPA says.
Mercury emissions from power plants fall into water and accumulate in fish, while other toxins like arsenic and hydrochloric acid also poison the environment and endanger public health. Regulators estimate strict emissions controls can prevent between 4,200 and 11,000 premature deaths and 4,700 non-fatal heart attacks annually.
The EPA further estimated that about 7 percent of American women of childbearing age were being exposed to mercury in amounts that exceed a health protective level. The agency also found the cancer-related risks posed by other metals emitted by power plants presented a potential public-health concern.
Justice Elena Kagan, writing for the four liberal dissenters, said the EPA acted reasonably in formally considering only the benefits of cleaner air at the threshold stage when deciding whether to regulated.
“By making that decision, EPA did no more than commit itself to developing a realistic and cost-effective regulation, a rule that would take account of every relevant factor, costs and benefits alike,” Kagan wrote.
Challengers, citing the estimated $9.6 billion in annual costs imposed by tighter emission standards, contend that figuring out what’s appropriate includes weighing what industry and consumers will pay for tougher rules. The annual estimate covers the amortized cost of new equipment installation as well as operating expenses.
House Majority Leader Kevin McCarthy, R-Calif., called the high court’s ruling a blow to an EPA that “continues to burden the public with more and more cost,” while the group Environment America called it “a huge setback for our kids’ health.”
“Today, a majority of the Supreme Court came down in favor of polluters’ bottom lines over American lives,” said Sen. Ed Markey, D-Mass.
Lesley Clark of the Washington Bureau contributed.