The Supreme Court’s latest opinion in an environmental rule challenge, this to the Mercury and Air Toxics Standard, or MATS, raises more questions than it answers. As discussed on this blog site (see here, here and here,) the Court in Michigan v. EPA held that EPA had not reasonably considered costs when determining to regulate power plant mercury emissions. EPA must factor cost into its initial determination that it is “appropriate and necessary” to regulate hazardous pollutants from power plants. The Court passed no judgment on whether EPA can meet that burden.
At the heart of the issue was Congress’ acknowledgement that the 1990 Clean Air Act Amendments would subject power plants to numerous controls to reduce sulfur dioxide, nitrogen oxides, and particulates. Section 112 of the Act requires EPA to regulate power plants if “regulation is appropriate and necessary after considering the results of the study.” Congress further acknowledged that these measures also might reduce hazardous air pollutants, and that no one knew at the time whether additional controls would be required to protect human health from air toxics emitted by power plants.
To determine that, EPA was required to conduct a study. In 1998, EPA’s study concluded that regulation of coal and oil fired power plants was “appropriate and necessary.” EPA reaffirmed this finding in 2012, noting that mercury and other hazardous air pollutants were “appropriate” to regulate because they posed a risk to human health and the environment and that controls were available to reduce the pollutants. EPA found that it was “necessary” to regulate because other pollutant emission limits and requirements did not eliminate the risks.
The Court, in a 5-4 decision written by Justice Scalia, analyzed EPA’s action through the Chevron deference standard, determining that “EPA strayed far beyond those bounds when it read §7412(n)(1) to mean that it could ignore cost when deciding whether to regulate power plants.” Ultimately, the Court held that “Chevron allows agencies to choose among competing reasonable interpretations of a statute; it does not license interpretive gerrymanders under which an agency keeps parts of statutory context it likes while throwing away parts it does not.” Id. at 9.
The Court went on to reject EPA’s contention that it need not factor cost into its initial determination to regulate because the agency must take cost into consideration when later determining how much to regulate. The Court colorfully remarked that: “By EPA’s logic, someone could decide whether it is ‘appropriate’ to buy a Ferrari without thinking about cost, because he plans to think about cost later when deciding whether to upgrade the sound system.” The Court’s strong language cautioning EPA to use “reasoned decision making” and not “gerrymander” statutory requirements should give EPA pause as it is set to promulgate greenhouse gas reduction measures for power plants in its Clean Power Plan this summer. Numerous comments filed in the so-called Clean Power Plan rulemaking docket have charged EPA with overstepping its statutory boundaries, and the Court seems to be signaling its disfavor of such action.
Since the decision, speculation as to whether and how EPA will fix MATS has been rampant.
- Will EPA abandon MATS completely, requesting vacatur? Not likely. In public remarks and testimony before a Congressional subcommittee during the week of July 6, Administrator Gina McCarthy cited the health benefits already achieved by the rule, indicating the agency would not back down.
- Can EPA fix the rule based on the current administrative record? Some believe that EPA can simply re-jigger its existing analysis and logic, fronting the cost issue in the “appropriate and necessary” finding, perhaps calling this a “technical amendment” to the rule.
- Will EPA seek a stay of the existing rule while it recalculates costs and re-proposes the rule? Because the rule went into effect in April 2015, companies already have installed a range of controls from activated carbon injection to installation of flue gas desulfurization equipment. Each type of control has costs and benefits, as well as impact on other pollutants. Many of these controls may remain operational to comply with other CAA requirements; therefore, a stay may have disproportionate impacts on industry members as some cease to operate controls and others continue to operate them.
- But could EPA’s re-proposal result in even more stringent emission limits? Absolutely. Would EPA be wise to lower the standards further? Given the cost and disruption caused by MATS so far, absolutely not.
- And how will any of these possibilities affect the “already regulated” argument that will be used to attack the Clean Power Plan? Section 111(d), the basis for the Clean Power Plan, prohibits regulation (whether of the source or the pollutant remains to be decided) if a Section 112 standard exists. So if MATS goes away, does the legal basis for the Clean Power Plan become stronger?
How the ongoing, never-ending EPA effort to achieve hazardous pollutant reductions from power plants will play out remains to be seen. The Supreme Court’s close reading of the directives contained in the statute, coupled with its references to balanced costs and benefits, leaves the impression that any rule with wide reach better be well-reasoned and justified. No doubt EPA is taking notice.