Justices pepper lawyers with questions on EPA, MATS, cost

Attorneys representing the electric utility industry, various states and the U.S. Environmental Protection Agency appeared before the U.S. Supreme Court on March 25 and argued whether EPA had properly considered the cost implications of the Mercury and Toxics Standards (MATS).

“EPA’s view that it can decide whether to regulate electric utilities without considering costs is contrary to the text and structure of Section 7412,” Michigan Solicitor General Aaron Lindstrom said in his opening statement on behalf of the state petitioners. Lindstrom said that EPA found it “appropriate” and “necessary” to regulate for “public health harms” regardless of cost.

Lindstrom was quickly stopped by Justice Elena Kagan, who suggested EPA was also moving to regulate “because there are technologies that can redress or remedy those public health harms.”

Lindstrom appeared to maintain that EPA had already made the decision to regulate prior to addressing the technology issue.

Judge Sonia Sotomayor asked if regulation was only appropriate and necessary if the hazardous air pollutants (HAPs) at issue were not being controlled by other technology.

Kagan also suggested that the states were incorrect in trying to dissect the words “appropriate” and “necessary” rather than concentrating on the phrase as a whole.

Justice Ruth Bader Ginsburg suggested that the “expert agency” EPA is entitled to a certain degree of leeway in defining appropriate. “[Y]ou are saying that appropriate necessarily embodies a cost calculation and yet this is a statute that uses cost, directs EPA to consider costs multiple, multiple times,” Ginsburg said.

Kagan further said that if Congress wanted to require that costs be considered in pollution control rules, it could have said so explicitly.

Justice Antonin Scalia, however, took a different view. Scalia doubts that congressional silence on cost means that an agency “is entitled to disregard costs … for an agency to command something that is outrageously expensive and – and in which the expense vastly exceeds whatever public benefit …can be achieved,” Scalia said.

Lindstrom said that a study finding a public health need by EPA should not be “the end of the analysis.” The attorney for the states went on to say that the Acid Rain Program, “in particular, was an economically-based approach that was determined to regulate in a cost-effective manner.”

But Kagan injected that the Acid Rain Program didn’t solve all the air pollution problems associated with electric power generation.

Lindstrom argued that because the Acid Rain program was targeted at utilities and was “entirely based on cost effectiveness,” it seems odd that Congress would want follow-up rules to say “costs are irrelevant. That’s backwards.”

William Brownell of appeared on behalf of industry petitioners.

“To begin, power plants are the most regulated source category under the Clean Air Act both before 1990 and after the 1990 Amendments,” Brownell said. The industry attorney then proceeded to tick off a list of some major EPA air rules.

Most of the $9.6bn in costs associated with the EPA rule at issue stem from “acid gas regulation which the agency has concluded presents no public health risk,” Brownell said.

Kagan said that cost issues are often affected by the way they are categorized. “So you’re having the EPA consider costs before the EPA can know what the costs are,” Kagan said.

Brownell took issue with this interpretation. “And – and I want to emphasize that this is not an argument about whether or not to regulate mercury where there’s been an identified public health risk. It’s whether the regulatory regime that has been defined here under Section 7412,” the industry lawyer said.

Federal attorney defends the EPA rule     

 U.S. Solicitor General Donald Verrilli Jr., appeared on behalf of the federal government and the U.S. Justice Department.

EPA’s interpretation “is the most natural and certainly a permissible reading of the statutory text which directs EPA to focus on health concerns and doesn’t mention costs,” Verrilli said.

The rule also “applies the same regulatory logic to power plants that Congress directed EPA to apply to regulate hazardous air pollution from every other type of source,” Verrilli said.

Prior legal decisions don’t appear to “preclude the EPA from considering costs,” the federal government attorney said in response to a question from Chief Justice John Roberts.

Attorney Paul M. Smith of Washington, D.C., appeared on behalf of a group of industry respondents that agree with EPA’s position that EPA was not required to do a cost-benefit analysis prior to the initial listing.

The case, No. 14-46 Michigan versus EPA, comes to the high court from the U.S. Court of Appeals for the District of Columbia Circuit. The U.S. Supreme Court agreed to hear the dispute in November. It was consolidated with another related case and scheduled for one hour of oral argument before the Justices.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.