The consolidated cases of Michigan v. Environmental Protection Agency, Utility Air Regulatory Group v. Environmental Protection Agency, and National Mining Association v. Environmental Protection Agency challenge a 2012 Environmental Protection Agency (EPA) regulation intended to limit mercury and other emissions from mostly coal-fired power plants. 

Before regulating emissions from electric utilities, the Clean Air Act (CAA) requires the EPA Administrator to find that regulation is “appropriate and necessary” based on a public health hazards study.  The simple legal question in this complicated case is whether EPA unreasonably refused to consider costs in making its determination that regulation was “appropriate.” 

In 1990 Congress required EPA to identify stationary sources for 189 hazardous air pollutants and adopt maximum achievable control technology standards (MACT) for limiting their emissions.  But the CAA regulates emissions from electric utilities differently than from other stationary sources.  Before EPA may regulate electric utilities under the MACT program, it must perform a health hazards study and determine whether regulation of them is appropriate and necessary.

In 2000 EPA determined it would regulate mercury and other emissions from electric utilities, but it reversed course in 2005.  Then in 2012 EPA issued the final rule challenged in this case which concluded that regulating electric utilities was appropriate and necessary.  EPA “rejected the 2005 interpretation that authorizes the Agency to consider other factors (e.g., cost).”

The D.C. Circuit agreed with EPA that it was not required to consider costs.  “Appropriate” isn’t defined in the relevant section of the CAA and dictionary definitions of the term don’t mention costs.   Throughout the CAA “Congress mentioned costs explicitly where it intended EPA to consider them.”   

A dissenting judge pointed that the cost of regulation in this case is nearly $10 billion dollars annually and opined that the cost of complying will “likely knock a bunch of coal-fired electric utilities out of business and require enormous expenditures by other coal and oil-fired electric utilities.”

States are involved in this case on both sides.  Last term the Supreme Court decided two significant Clean Air Act cases, EPA v. EME Homer City Generation, involving the CAA’s Good Neighbor Provision and Utility Air Regulatory Group v. EPA, involving greenhouse gases and stationary sources.