The Fuse

Supreme Court Tosses Key Provision of President Obama’s Air Pollution Initiative

by R. Kress | June 29, 2015

The Supreme Court today overturned a key White House air pollution initiative, ruling that the Environmental Protection Agency (EPA) failed to do its due diligence in determining cost to the energy industry when issuing power plant emissions regulations in 2011.

Split with a 5-to-4 decision, the court overturned a prior, appeals court ruling from 2014 that allowed EPA to limit mercury and other toxic emissions from power plant smokestacks—the first time the Obama administration had attempted to use the Clean Air Act to regulate mercury and other pollutants. In this case—Michigan v. EPA—the high court determined that EPA had acted “unreasonably” in its interpretation of the Clean Air Act that empowers the agency to regulate pollutants from power plants when “appropriate and necessary.”

Determining that it was, in fact, appropriate and necessary, the EPA began enforcing the new regulations—Mercury and Air Toxics regulations (MATS)—in April, requiring oil and coal power plants to use special “scrubbers” to remove or reduce pollutants. Mercury in particular is especially toxic for children and fetuses still in-utero. According to the agency, every year more than 75,000 newborn children are at increased risk of acquiring a learning disability when their mothers are exposed while pregnant. Along with the other toxins under scrutiny in these new regulations, including arsenic, nickel, cadmium and chromium, EPA argued power plant emissions were putting the nation’s children at greater risk for respiratory problems, developmental delays and other birth defects.

EPA calculated that the costs to implement the regulations could reach some $9.6 billion each year but found that their benefits would outweigh their price tag by a magnitude of 3 to 1—generating between $37 billion and $90 billion in annual benefits. On the human scale, the EPA estimated that these regulations would prevent 11,000 premature deaths and 130,000 asthma cases each year. The plaintiffs in the case argued that the agency’s estimates were inflated.

Ultimately, the actual numbers were not the deciding factor. The court’s ruling came down to EPA’s interpretation of the word “appropriate” in the Clean Air Act. The court weighed whether or not it was “appropriate and necessary” for the EPA to regulate without first calculating the cost of complying with the new restrictions and found that EPA had to factor in compliance costs for regulation to be, in fact, “appropriate”.

“It is not rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits,” the majority opinion authored by Justice Antonin Scalia concluded. “EPA strayed well beyond the bounds of reasonable interpretation in concluding that cost is not a factor relevant to the appropriateness of regulating power plants.”

EPA argues it did in fact conduct cost-benefit analysis of the new regulations at various points in its research to establish new regulations, but not in the early, initial phases—a point that Justice Elena Kagan underscores in her dissent on behalf of the four liberal judges.

“EPA could not have accurately assessed costs at the time of its ‘appropriate and necessary’ finding…” Justice Kagan writes. “Until EPA knows what standards it will establish, it cannot know what costs they will impose. Nor can those standards even be reasonably guesstimated at such an early stage…. Simply put, calculating costs before starting to write a regulation would put the cart before the horse.”

Today’s decision is being hailed by Republican leaders who had decried the regulations as part of the President’s “war on coal.” Senate Majority Leader Mitch McConnell (R—KY) praised today’s decision: “Obama administration officials like to pretend that the costs of their massive and regressive regulations either don’t exist or don’t matter.”

The White House is expressing its disappointment in today’s outcome and says the administration is reviewing the decision. In the meantime, press secretary Josh Earnest says the ruling will not have “any impact on the ability of the administration to develop and implement the Clean Power Plan.”

EPA is also reviewing the decision and determining what the next step will be—even mulling a revision of the now-overturned regulations.

“EPA is disappointed that the Court did not uphold the rule, but this rule was issued more than three years ago, investments have been made and most plants are already well on their way to compliance,” the agency said in a statement released today. Meantime, EPA says that it is continuing to ensure “that appropriate standards are in place to protect the public from the significant amount of toxic emissions from coal and oil-fired electric utilities and continue reducing the toxic pollution from these facilities.”