In a 5 to 4 split decision, the U.S. Supreme Court ruled on Monday, June 29th, that the U.S. Environmental Protection Agency (“EPA”) unreasonably interpreted the federal Clean Air Act (“CAA”) when EPA decided deemed that costs were irrelevant in deciding whether to regulate hazardous air emissions from electric utility sources under section 112 of the CAA.  Michigan v. EPA, No. 14-46 (U.S. June 29, 2015): SCOTUS MATS Decision The majority opinion was authored by Justice Scalia and was joined by the Chief Justice and Justices Thomas, Kennedy, and Alito.  Specifically at issue was whether the EPA was required by section 112(n)(1), 42 U.S.C. § 7412(n)(1), to consider compliance costs in determining that it was “appropriate and necessary” to regulate toxic air emissions from fossil fuel-fired utilities. (See section 112 here.) Due to issues such as grid reliability, Congress did not initially list electric utilities as a source category to be regulated under the air toxics provisions of the 1990 CAA amendments.  Instead, Congress ordered EPA to study the hazards to public health that could reasonably anticipated to occur as a result of such emissions and then to regulate electric utilities if it found that regulation was “appropriate and necessary” after performing the study.

In addressing the question of whether regulation was appropriate and necessary, EPA focused only on health impacts and did not consider compliance costs.  The agency found that regulation was appropriate because the power plants’ emissions of mercury and other hazardous air pollutants posed risks to human health and the environment, and that controls were available to reduce these emissions.  In 2012, the EPA issued its final electric utility mercury and air toxics standards (“MATS”) rule.   A history of that rulemaking may be found here. EPA noted that during the rulemaking it did consider costs in deciding what level of emissions reduction should be achieved by the affected sources. Thus, EPA asserted that it had taken costs into account consistent with the statute’s requirements.
Continue Reading U.S. Supreme Court Reverses and Remands MATS to D.C. Circuit for EPA Failure to Consider Costs