Regulatory Reform

Previewing Michigan v. EPA


Despite having already announced several significant decisions this week, the U.S. Supreme Court is poised to hand down another on Monday dealing with the Clean Air Act.

The consolidated case Michigan v. Environmental Protection Agency arises from EPA’s 2012 Mercury and Air Toxics Standards (MATS), which target emissions of mercury, acid gasses, and other toxic metals from fossil fuel-fired power plants. EPA laid the groundwork for regulating these pollutants during the Clinton administration, took a step back during the Bush administration, and ultimately finalized and implemented the rule during the Obama administration.

Under Michigan, several states petitioned for review of the MATS rule because of EPA’s failure to consider the costs of compliance when it decided to regulate such emissions. A writ of certiorari was granted by the Supreme Court after the U.S. Court of Appeals for the D.C. Circuit upheld the rule this past April. In a split decision, the three judge panel agreed that EPA had followed Congress’ intent under the Clean Air Act and could reasonably ignore the potential costs to industry.

The petitioners – consisting of twenty-one states and many industry trade groups – argue that “before EPA may regulate such emissions from electric utilities, it is required first to consider any health risks from those emissions and then to decide whether regulation would be ‘appropriate.’” By only taking into account the potential health risks of exposure to mercury, the petitioners contend that EPA “failed to give the term ‘appropriate’ any meaning.” EPA, however, maintains that they fulfilled Congress’ intent under the Clean Air Act.

Oral arguments were heard in March of this year.  Given their lines of questioning, the justices appeared to be divided on the matter. Justices Ginsburg, Kagan and Sotomayor reportedly seemed satisfied with EPA’s decision to not take into account compliance costs. Justices Scalia, on the other hand, often a critic of EPA, seemed to support the argument offered by the petitioners. Justice Kennedy – often viewed as the swing vote on the Court – seemed to show support for EPA’s position by suggesting that Congress had used “capacious” language in directing EPA on how to regulate power plants.

There is some speculation, however, that the petitioners stand a good chance of prevailing based on how other cases have recently been decided. More specifically, Justice Scalia is the only remaining justice who has not yet written a majority opinion in any of the cases argued before the Court in the month of March.

A ruling in favor of EPA will undoubtedly be a victory for the agency and other environmentalist groups who claim the MATS rule will significantly improve human health and prevent more than 3,000 premature deaths each year. Such a ruling would also obviously be a defeat for states and industry groups who cite compliance costs of $9.6 billion annually compared to only $4 – $6 million in annual health benefits. Many states, however, have already started implementing the regulation and, as a result, several gigawatts of installed coal capacity have already been retired as a result of the rule. With this in mind, it is debatable precisely how much of an impact a favorable ruling for the states would have on this particular regulation. That said, a ruling in favor of the states would be a significant rebuke of EPA and could set an important precedent for how future air emissions regulations should be developed.

ALEC will continue to monitor the situation and will post reactions and analysis of the decision sometime early next week after the opinion has been rendered.

In Depth: Regulatory Reform

In his first inaugural address, Thomas Jefferson said that “the sum of good government” was one “which shall restrain men from injuring one another” and “shall leave them otherwise free to regulate their own pursuits of industry.” Sadly, governments – both federal and state – have ignored this axiom and…

+ Regulatory Reform In Depth