The U.S. Supreme Court ruled on June 29, 2015 that the USEPA acted unreasonably when it determined that it was appropriate and necessary to regulate mercury emissions from coal-fired power plants without including a cost analysis. The hazardous air pollutant section of the Clean Air Act (Section 112) states that the agency must first conclude that it is appropriate to regulate a hazardous compound, then propose, post, and promulgate the rule. The Court ruled that the agency failed to consider the cost of the regulation during that initial assessment of whether regulation of mercury was appropriate. The USEPA argued that it could not do an effective cost assessment early in the process until it determined at the required level of mercury emission reduction.
The Supreme Court’s decision does not invalidate the rule, but merely remands it back to the U.S. Court of Appeals, which can either vacate the rule or leave it in place while the USEPA provides further justification of its appropriateness. Absent in the Supreme Court ruling is any requirement on how it should consider costs in the future. The Court concluded that it is up to the Agency to decide how to account for cost.
As legal commentators have stated, if the mercury rule is vacated, it may have the ironic effect of helping the USEPA defend its forthcoming GHG rules for existing power plants, as one legal objection is that the USEPA lacks authority because it already regulates mercury emissions.
Another issue of concern in the Supreme Court ruling is the cost analysis performed by the USEPA when the rule’s parameters were finalized. The USEPA stated that the cost for compliance for would be several billion dollars per year, while the benefits would be in the millions per year range. But this was direct benefits due to decreased mercury emissions. If one considers additional secondary benefits (the same technology reduces other hazardous and non-hazardous air pollutants, such as fine PM, reducing other public health impacts, such as asthma), then the benefits are much greater, and exceed the cost. The Court noted, but did not rule on whether the Agency must look only at direct benefits for the pollutant(s) being regulated or can look at additional benefits, too.
It appears that in the near future, at least, the USEPA in performing its “appropriate and necessary” analysis before proposing a regulation for a hazardous air pollutant will need to determine probable emission limits necessary to at least minimally protect public health, and perform a cost-analysis on that basis.
According to legal commentators, this is among several decisions that appear to contradict each other (for example, a different court ruled that OSHA did not need to perform a cost-benefit analysis to promulgate its worker protection rules). So it is likely that this issue will be discussed in courts in the future.
Please note that this is not intended to be a legal analysis of the Supreme Court ruling. Please speak to a legal professional for an in-depth evaluation. This article is written for the reader’s general knowledge. CCES has the expertise to help your company assess its hazardous air pollutants and recommend the most cost-effective technical strategies to reduce emissions. Contact us today at 914-584-6720 or at karell@CCESworld.com.