REGULATION FLEES ON WINGS OF MERCURY

Often, important court decisions escape serious media attention. One such example may be the recent U.S. Supreme Court opinion concluding that U.S. EPA's regulation requiring power plants to reduce mercury emissions was improperly adopted.*

The federal Clean Air Act states that EPA can regulate emissions of hazardous air pollutants from power plants only if such regulation is "appropriate and necessary". In its rulemaking for mercury from power plants, EPA refused to consider the costs of compliance that would be imposed on the plants, finding that costs were irrelevant to "appropriateness" of such regulation.

The Supreme Court disagreed with EPA's interpretation the law. Accordingly, in this situation, proper regulation depends upon a comparison of the economic cost of compliance with the health or economic benefits. As Justice Scalia wrote for the majority: "The Agency must consider cost--including, most importantly, cost of compliance--before deciding whether regulation is appropriate and necessary."

The Supreme Court remanded the case to the lower court for further proceedings, thus imposing on EPA the obligation of reviewing and revising its regulation after consideration of a cost/benefit analysis that will meet the Supreme Court's requirement.

Mandating that administrative agencies consider costs and benefits in deciding whether and how to impose regulations would seem to be both rational and obvious. Perhaps the importance of the Supreme Court's decision may be that not only are compliance costs relevant but also potentially controlling as to the propriety of regulation. In that sense, cost/benefit analyst can be viewed as a means to mitigate possible agency over-reach and unreasonableness.

What could be interesting is whether the Court's ruling will have impact beyond mercury for all of EPA's efforts to dictate so-called climate change rules, particularly those related to carbon emissions from coal-fired power plants.

Moreover, beyond air pollution, cost/benefit analysis logically should be relevant to all EPA rulemaking affecting water and wastewater utilities, it would seem.

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*Michigan v. EPA, 576 US __ (2015),June 29,2015