In a 5–4 ruling Monday, the Supreme Court found fault with the EPA’s regulation of toxic heavy metal pollution from coal and oil-fired plants, claiming that the agency failed to prove the regulations “appropriate and necessary” because they did not initially take costs into consideration.
To Justice Elena Kagan, who wrote the Court’s dissent, that reasoning failed to acknowledge all the other times the EPA took cost into consideration throughout the regulatory process.
That is a peculiarly blinkered way for a court to assess the lawfulness of an agency’s rulemaking. I agree with the majority — let there be no doubt about this — that EPA’s power plant regulation would be unreasonable if ‘[t]he Agency gave cost no thought at all.’ … But that is just not what happened here. Over more than a decade, EPA took costs into account at multiple stages and through multiple means as it set emissions limits for power plants. And when making its initial ‘appropriate and necessary’ finding, EPA knew it would do exactly that — knew it would thoroughly consider the cost-effectiveness of emissions standards later on. That context matters.
When first deciding to regulate mercury pollution from power plants, Kagan noted that the EPA made its decision based on the fact “that power plants’ emissions pose a serious health problem, that solutions to the problem are available, and that the problem will remain unless action is taken.”
Kagan said the EPA didn’t consider costs in the first stage of the regulatory process because it knew that it would have a chance to consider costs later on.
“[T]he Agency, when making its ‘appropriate and necessary’ finding, did not decline to consider costs as part of the regulatory process,” she wrote. “Rather, it declined to consider costs at a single stage of that process, knowing that they would come in later on.”
Later in the dissent, Kagan argued that it would be impossible for an agency to anticipate all the consequences of a particular regulation during the regulation’s very first stages:
Suppose you were in charge of designing a regulatory process. The subject matter — an industry’s emissions of hazardous material — was highly complex, involving multivarious factors demanding years of study. Would you necessarily try to do everything at once? Or might you try to break down this lengthy and complicated process into discrete stages? And might you consider different factors, in different ways, at each of those junctures? I think you might.
Moreover, Kagan argued, the EPA made a decision to regulate mercury emissions from power plants before it designed those emission standards, making it impossible to calculate potential costs associated with standards that hadn’t even been created yet.
“Simply put,” Kagan wrote, “calculating costs before starting to write a regulation would put the cart before the horse.”
In the majority opinion, Scalia compared the EPA to a potential car owner looking to purchase a Ferrari without thinking about the costs of the car. It was a metaphor that Kagan didn’t love:
The comparison is witty but wholly inapt. To begin with, emissions limits are not a luxury good: They are a safety measure, designed to curtail the significant health and environmental harms caused by power plants spewing hazardous pollutants. And more: EPA knows from past experience and expertise alike that it will have the opportunity to purchase that good in a cost effective way. A better analogy might be to a car owner who decides without first checking prices that it is “appropriate and necessary” to replace her worn-out brake-pads, aware from prior experience that she has ample time to comparison shop and bring that purchase within her budget.
When deciding to regulate mercury pollution from power plants, Kagan contined, the EPA did not ignore the question of cost. Instead, it chose to wait until it had a better idea of what the emission regulations would be to consider the cost that those regulations would incur.
“The majority arrives at a different conclusion only by disregarding most of EPA’s regulatory process,” Kagan wrote. “It insists that EPA must consider costs — when EPA did just that, over and over and over again.”
The majority’s decision, Kagan concluded, ignored the latitude given to the EPA by Congress about how to best account for costs and benefits when designing emissions regulations.
“And the result,” she wrote, “is a decision that deprives the American public of the pollution control measures that the responsible Agency, acting well within its delegated authority, found would save many, many lives.”