Operators of electric generating plants that burn coal or oil have a right to try to convince the government that regulating poisons that come out of their smokestacks will cost them too much and thus should not go ahead, the Supreme Court ruled by a five-to-four vote on Monday. The decision focused on the very hazardous pollutant mercury but may apply to others as well.

When Congress orders an agency to begin regulating an industry, but says it should do so only if “appropriate and necessary,” the agency must take costs into account before it issues any orders, according to the ruling in a group of cases under the name Michigan v. Environmental Protection Agency.

The decision, written by Justice Antonin Scalia, at least temporarily blocked a ruling by the EPA that it would go ahead and regulate power plants while delaying, until it actually issued specific controls to specific plants, any review of how much it would cost to abide by regulation. Scalia said the agency did not have to follow any particular method of gauging the costs, but it had to fashion some way to calculate that prior to doing any regulating.

Congress chose, in a revision of the Clean Air Act, to treat power plants as a special group, and it told the EPA to regulate their hazardous emissions only if the agency found that it was “appropriate and necessary” to do so. The EPA interpreted that mandate to mean that it was to take into account, at the outset, only whether regulation of the plants’ emissions was necessary to protect public health and safety. It would (and did) look at costs at a later stage, when calculating just what controls to impose on any given facility.

The EPA approach was challenged by two dozen states and by trade groups representing the electric generating industry and coal mining. They argued that the cost factor was so crucial that it had to be weighed before any regulation, at all, was undertaken. The agency’s decision to go ahead with a regulatory program for power plants had been upheld by the U.S. Court of Appeals for the District of Columbia Circuit.

The Court majority accepted the challengers’ argument that EPA regulation of hazardous emissions from the power plants would cost nearly $10 billion but would only result in benefits measured at only about $4 million to $6 million per year. That, Justice Scalia wrote, emphasized the vital role that costs were to play in the regulatory decision.

While Scalia conceded that the EPA might be able to show that regulating the power plants’ smokestack emissions would have benefits other than reducing mercury pollution, thus showing additional benefits when health and safety were given cost valuations, he said that was not an issue at this point. The only question, he wrote, was whether the EPA was wrong in refusing to make the cost-benefit analysis upfront, before starting any regulatory program.

The Scalia opinion was supported by Chief Justice John G. Roberts, Jr., and by Justices Samuel A. Alito, Jr., Anthony M. Kennedy, and Clarence Thomas. Thomas filed a separate concurring opinion, to continue his campaign to persuade the Court to yield less to federal government agencies in deciding what federal laws require them to do — an interpretative task he believes belongs largely to the courts.

Justice Elena Kagan dissented, in an opinion joined by Justices Stephen G. Breyer, Ruth Bader Ginsburg, and Sonia Sotomayor. Kagan wrote that the EPA has actually examined the costs of regulating power plants over and over again, and was being faulted for not doing so at a very early stage in the process.

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Recommended Citation: Lyle Denniston, Opinion analysis: Power plants stymie smokestack controls, SCOTUSblog (Jun. 29, 2015, 5:37 PM), https://www.scotusblog.com/2015/06/opinion-analysis-power-plants-stymie-smokestack-controls/