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High Court Weighs EPA Mercury Rule

Justices will determine whether agency must consider both costs and public health in deciding whether to regulate air pollution

by Glenn Hess
May 4, 2015 | A version of this story appeared in Volume 93, Issue 18

A photo of a coal power plant.
Credit: Jim Urquhart/Reuters/Newscom
PacifiCorp’s Jim Bridger Plant in Wyoming burns 8 million to 9 million tons of coal annually.

The Environmental Protection Agency’s first-ever regulation limiting releases of mercury and other toxic air pollution from power plants is facing its final legal hurdle. The Supreme Court is considering whether EPA went too far when it finalized a rule to protect public health that the agency estimates will cost electric utilities and their customers almost $10 billion per year.

Mercury is a potent neurotoxin; tiny doses can harm children’s development and pose risks for fetuses of pregnant women. Coal-burning power plants, which are the largest source of mercury in the U.S., are facing a series of EPA regulations that require owners to invest in pollution controls or shut down aging facilities.

The justices are evaluating industry and state arguments that EPA violated the Clean Air Act by failing to consider the potential financial burden before it decided to issue those emission limits. “Congress did not intend for EPA to act with deliberate indifference to cost when answering the basic regulatory question of whether it is appropriate to regulate,” the plaintiffs’ brief asserts.

EPA’s Mercury & Air Toxics Standards, which began to take effect in April, require power plants to reduce their emissions of mercury by 90%. The pollution control technology needed to strip mercury out of the plants’ releases to the air will also reduce emissions of acid gases such as hydrogen chloride by 88% and particulate-forming sulfur dioxide by 41%—providing what the agency calls “cobenefits.” EPA believes that the regulation will produce between $37 billion and $90 billion in public health cost savings per year.

That means lower health care costs for downwind residents, fewer lost workdays, and a reduction in early deaths. Up to 11,000 people die prematurely as a result of power plant pollution each year, according to the agency.

The high court is expected to issue a ruling in the case, Michigan v. EPA, by the end of June. The decision could set an important precedent on whether the agency needs to consider the potential costs before it decides whether regulation is warranted under the Clean Air Act.

When Congress amended that federal law in 1990, it directed EPA to aggressively control emissions of mercury and more than 180 other hazardous air pollutants. The statute says the agency “shall regulate” the major sources of these pollutants where it is “appropriate and necessary.”

EPA concluded that it was both appropriate and necessary to regulate mercury from power plants based in part on studies of Americans who rely on fish for a substantial part of their diet. Mercury pollution from these facilities may be making fish unsafe for human consumption in 65% of the U.S. waters that receive atmospheric fallout of the metal, according to the agency.

EPA also says the acid gases and microscopic particles emitted by electric utilities can cause asthma, lung problems, and heart disease.

In December 2011, the agency finalized new standards requiring about 1,400 generating units at 600 power plants, most of which burn coal and are in the South and upper Midwest, to install high-tech scrubbers and other devices to remove the pollutants. At the time, the Energy Information Administration reported that 64% of the facilities had already installed pollution control equipment to comply with the new standards.

“By affirming these vital emission standards, the Supreme Court would also help level the playing field for the two-thirds of coal-fired plants that have already upgraded their plants,” says Graham McCahan, a staff attorney at the Environmental Defense Fund, an advocacy organization.

But industry groups such as the National Mining Association and nearly two dozen states assert that EPA’s regulation amounts to a prohibitively expensive “overreach” by the Obama Administration.

A large portion of U.S. air pollution comes from power plants. SOURCE: EPA
A graphic showing the percentage of several air pollutants that are attributable to power plants in the U.S.
A large portion of U.S. air pollution comes from power plants. SOURCE: EPA

They argue that the benefits of controlling the utility emissions of mercury amount to only $4 million to $6 million annually and that the rest of the benefits come from the reduction of particulate pollution, which is regulated by other EPA programs.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit upheld the new standards last year. But 21 states, the mining association, and the Utility Air Regulatory Group, a utility lobbying group, petitioned the Supreme Court to hear the case. They contend that the Clean Air Act required EPA to take into account compliance costs when it was deciding whether to regulate toxic air emissions from power plants.

“EPA has expressly refused to consider the cost of its regulation, which will result in rate increases for citizens across the country, and threatens the reliability of the electricity grid by forcing the closure of many power plants,” says Michigan Attorney General William D. Schuette.

Supporters of the rule hope the justices will lean toward giving EPA deference to interpret the Clean Air Act as it did when it decided to consider only public health risks in determining that the rule was necessary. EPA has said it took the cost of technology into account at a later stage in the regulatory process when it crafted the specific emission standards.

During arguments before the high court last month, U.S. Solicitor General Donald B. Verrilli Jr. defended the agency. He called it “certainly appropriate for EPA to list power plants for regulation based solely on health and environmental hazards.” The relevant section of the Clean Air Act, Verrilli pointed out, does not mention costs anywhere in its text.

The Court’s four-member liberal wing largely voiced support for EPA’s approach. For instance, Justice Elena Kagan said the argument that the agency must consider costs despite the law’s silence on the issue is at odds with a 2001 Supreme Court decision.

In that case, Whitman v. American Trucking Associations,the justices unanimously agreed that EPA is prohibited from considering cost when setting national ambient air quality standards for ground-level ozone and other common air pollutants.

Congress has often explicitly required EPA to consider the cost of its regulations but said nothing to that effect in the Clean Air Act’s provision on power plant emissions, Kagan said. “Congress knows how to require consideration of costs,” she remarked. “To get from silence to this notion of a requirement seems to be a pretty big jump.”

Justices Ruth Bader Ginsburg and Sonia M. Sotomayor both signaled that the Court should defer to an agency’s interpretation of an ambiguous statute as long as the agency’s reading is reasonable.

Ginsburg said Congress often directs an “expert agency,” such as EPA, to use its judgment to determine whether regulation is appropriate. “Is there any case in all of our decisions where we have said even though there was no instruction to consider costs, EPA is required to consider costs?” she asked.

Sotomayor added that all the Supreme Court has to do is find that EPA made a “plausible reading” of the Clean Air Act to rule in the agency’s favor.

But several members of the Court’s conservative majority criticized EPA’s position. Justice Antonin Scalia, who authored the 2001 decision on costs under the Clean Air Act, called the mercury regulation “outrageously expensive.” He said the decision not to conduct a cost-benefit analysis early in the rule-making process was “a silly way” to interpret the statutory language.

Chief Justice John G. Roberts Jr. said the rule’s estimated $9.6 billion annual price tag “raises the red flag” because only a “tiny proportion” of the calculated benefits are attributable to a reduction in mercury emissions.

“I’m just questioning the legitimacy” of counting cobenefits from reductions of particulates that are regulated under other sections of the Clean Air Act, Roberts said. He described that approach as an “end run” around the statutory language.

On the other hand, Justice Anthony M. Kennedy, who has often been the swing vote on the nine-justice Court, expressed sympathy for both sides of the issue. He said the word “appropriate” is ambiguous, which suggests Congress gave EPA some leeway.

But Kennedy also seemed skeptical of the agency’s decision to wait and consider cost later in the regulatory process, whenit set the exact emission standards. Once EPA decided that power plants should be regulated, “at that point, the game is over,” he said.

Although the justices were clearly divided over the mercury rule, the Court has sided with EPA in recent decisions. Last year, the justices upheld a rule that curbs air pollution that drifts across state lines, deferring to EPA’s reading of the clean air law. The Court also largely validated the agency’s plan to regulate major sources of greenhouse gas emissions.  


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