In the next few months, the United States Supreme Court will review, yet again, the United States Environmental Protection Agency’s (the “EPA”) ability to regulate air under the Clean Air Act. This time, the focus is its Mercury Air Toxic Standards, or MATS. The outcome will have consequences for not only air quality but also upcoming litigation over another significant clean air measure.
In 2011, the EPA issued its Mercury Air Toxic Standards (MATS) to reduce air pollution from coal and oil-fired power plants.[i] The rules are authorized under Section 112 of the 1990 Clean Air Act (the “CAA”) amendments.[ii]
The EPA estimates that the standards will save 11,000 lives annually. The reduction in premature fatalities, heart attacks, and asthma attacks could produce up to $ 90 billion in health benefits each year.[iii] According to the EPA, the standards can be met with “widely available technology” and will cost coal and oil-fired power plants $ 9.6 billion per year in compliance and monitoring.[iv]
In March 2012, the Utility Air Regulatory Group, the National Mining Association, and 21 states filed suit in the D.C. Circuit challenging MATS, arguing that the costs of MATS greatly outweigh the benefits. In April 2014, the Court upheld the standards against several challenges.[v] The lengthy D.C. Circuit opinion focuses on the EPA’s decision to ignore costs in deciding whether to list the coal and oil-fired plants as sources of hazardous air pollutants.[vi]Section 112 explicitly requires the EPA to consider costs while setting the standards for plant pollution, but not during the initial decision to regulate.[vii] Instead, the statute asks the EPA to regulate the plants if it is “appropriate and necessary” after considering the danger to public health.[viii] The Court found that the definition of “appropriate” and the legislative intent of the 1990 Clean Air Act Amendments support the Agency’s decision.[ix]
In November 2014, the Supreme Court granted the petition for writ of certiorari.[x] The Court limited itself to considering “whether the Environmental Protection Agency unreasonably refused to consider cost in determining whether it is appropriate to regulate hazardous air pollutants emitted by electric utilities.”[xi]
The EPA appears to have a strong case based on the wording of the statute and precedents such as Whitman v. American Trucking, in which Justice Scalia wrote that the Court has “refused to find implicit in ambiguous sections of the CAA an authorization to consider costs that has elsewhere, and so often, been expressly granted.”[xii]
However, opponents of MATS highlight Entergy Corp v. Riverkeeper Inc, in which the Supreme Court found that the EPA could, at its discretion, consider costs, even where a cost-benefit analysis was not explicitly required by the provision in question.[xiii] Entergy did not require the EPA to consider costs, but some speculate that the decision “could signal that the Supreme Court is shifting its opinion on cost consideration in environmental regulations.”[xiv]
More recently, the Supreme Court upheld the EPA’s Cross-State Air Pollution Rule (Transport Rule) in EPA v. EME Homer City.[xv]The Supreme Court held that the Clean Air Act’s Good Neighbor Provision “does not require EPA to disregard costs,” and that the EPA’s “cost-effective allocation” was permissible, even though the provision does not mention cost as a factor.[xvi] In the MATS case, the Supreme Court could decide that, even though the provision does not mention cost, the EPA not only may, but also must consider cost. Or the Court might determine, as MATS opponents urge, that the word “appropriate” implies consideration of costs. However, that interpretation seems unlikely, given the Court’s reasoning in EME Homer. There, the majority opinion ignored the EPA’s own justification for its cost-benefit analysis, which argued that the word “significantly” implicitly included cost-benefit analysis.[xvii] The Court seems unwilling to read cost where it is not explicitly stated, especially where the statute explicitly requires a cost-benefit analysis in other provisions.
The Court’s precedent in recent years of upholding the EPA’s rulemaking makes a decision in favor of MATS likely. The Court could leave the decision of whether to consider costs to the EPA’s discretion. Though less likely, the Court could even find that the provision actually forbids the EPA from considering costs in the determination of whether to regulate.
It is unclear to some why the Supreme Court decided to hear the case, given the relatively clear statutory language. Perhaps the Court’s recent opinions signal its interest in the question of cost-benefit analysis in agency rulemaking. Cost-benefits analyses, already ubiquitous in federal bureaucracy, place a high burden on agency discretion, and may limit an agency’s ability to pursue congressionally mandated objectives.
The Supreme Court’s decision either way will have consequences another new EPA program, the Clean Power Plan, which will limit carbon dioxide emissions from power plants. States, public utilities, and coal companies who oppose the plan argue that the EPA cannot regulate both toxic emissions (under MATS) and carbon dioxide emissions from power plants. If the Supreme Court strikes down MATS, this challenge disappears, because EPA will no longer regulate both types of emissions. The EPA would most likely rewrite MATS, but it could not be finalized before courts hear Clean Power Plan cases this year.[xviii] Though there are other potential legal challenges, some legal scholars conclude that the Supreme Court’s decision on this case will essentially determine the fate of the Clean Power Plan.[xix]
On a practical level, current plans to shut down or upgrade MATS-noncompliant power plants will probably go forward, because the Supreme Court’s decision will come after the MATS compliance deadline.[xx] Thus, the major impact of the decision will be on the future of the EPA’s authority to regulate under the Clean Air Act.
The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.
Adele Daniel is a General Member on MJEAL. She can be reached at firstname.lastname@example.org.
[i] Basic Information, Mercury and Air Toxics Standards (MATS), http://ww2.epa.gov/mats/basic.html (last visited Mar. 6, 2014); Standards of Performance for New Stationary Sources and National Emission Standards for Hazardous Air Pollutants for Source Categories, 40 C.F.R. §§ 60 and 63 (2012).
[iii] National Emission Standards for Hazardous Air Pollutants, 77 Fed. Reg. 9,304, 9,305-9,306 (Feb. 16, 2012).
[iv] Id. Not surprisingly, those opposed to the rule argue that the benefits are instead between $4 and $6 million. Reply Br. for Pet’rs at 2, Nat’l Min. Ass’n v. E.P.A., 135 S. Ct. 703 (2014).
[v] White Stallion Energy Center, LLC v. EPA, 748 F.3d 1222 (D.C.Cir. 2014).
[vi] Id. at 1236.
[vii] Id. at 1236-1240.
[viii] Hazardous Air Pollutants, 42 U.S.C. § 7412 (1999).
[ix] White Stallion v. EPA, 748 F.3d 1236-1240 (2014).
[x] Nat’l Min. Ass’n v. E.P.A., 135 S. Ct. 703 (2014).
[xii] Whitman v. Am. Trucking Associations, 531 U.S. 457, 467 (also cited in White Stallion v. EPA, 748 F.3d 1238).
[xiii] Patrick Ambrosio, Supreme Court Agrees to Hear Challenges to EPA’s Mercury Standards for Power Plants, Bloomberg BNA (Nov. 25, 2014), http://www.bna.com/supreme-court-agrees-n17179913353; Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208, 226 (2009).
[xiv] Ambrosio, supra note 13.
[xv] EPA v. Homer City, 134 S.Ct. 1584 (2014).
[xvi] Id. at 1610.
[xvii] EPA. v. EME Homer City Generation, L.P.,134 S. Ct. 1584. In his dissent, Scalia mocked the agency’s interpretation of the word as “feeble” and “farfetched.” Id. at 1610.
[xviii] Brian Potts, The Supreme Court’s Hidden Climate Agenda, The Energy Collective (Dec. 29, 2014), http://theenergycollective.com/brian-h-potts/2177041/supreme-courts-hidden-climate-agenda.
[xix] Keith Goldberg, Agency Authority at Stake in High Court Mercury Rule Review, Law 360 (Nov. 25, 2014) http://www.law360.com/articles/599682/agency-authority-at-stake-in-high-court-mercury-rule-review.