United States: Interpreting The Supreme Court's Mercury Emissions Decision

Last Updated: August 20 2015
Article by Bernice I. Corman and John F. Cooney

By a vote of 5–4 (with Justice Kennedy in the majority), the Supreme Court has reversed and remanded a regulation issued by the Environmental Protection Agency (EPA) under the Clean Air Act that limited emissions of mercury and other airborne toxics from electric power plants, because the agency failed to consider the costs of regulation at the start of the rulemaking process.1

Issued under a unique provision of the Act regulating hazardous air pollutant (HAP) emissions from power plants, the decision is unlikely to have substantial long-term effects on the electric-generating sector or rules governing hazardous air pollution by other industry sectors.

Decision is unlikely to have substantial long-term effects on the electric-generating sector.

However, the decision is important on several grounds. First, it confirms the importance of prevailing on a motion to stay pending appeal while the courts consider an industry's challenge to an EPA rule. Second, both the majority and the dissenters discussed the role that the EPA's analysis of costs will play in the review of its rules, a factor of great significance as the agency prepares to promulgate a new generation of rules to address emissions of greenhouse gases (GHGs). Third, combined with several other decisions issued late in the Supreme Court's term, Michigan will reinforce the current debate among the justices concerning whether the practice of judicial deference to agency interpretations of governing law should be reconsidered.

The majority and the dissenters discussed the role that the EPA's analysis of costs will play in the review of its rules, a factor of great significance.

WON'T CHANGE INDUSTRY IMMEDIATELY, BUT HAS LONG-TERM IMPLICATIONS

The unique provision of law governing regulation of toxic emissions from power plants, Section 112(n)(1)(A) of the Clean Air Act, has several steps. First, the EPA must make a threshold determination whether regulation of HAPs remains "appropriate and necessary" given other controls Congress imposed on power plants, including through 1990 amendments establishing acid rain requirements. Second, if the EPA determines that additional emission limitations should be imposed, the EPA must establish standards that require the maximum degree of HAP emissions reductions and consider the cost of achieving such reductions, among other factors.2

In 1998, the EPA concluded that regulation of HAPs emitted by coal- and oil-fired power plants was "appropriate and necessary." More than a decade later, it reaffirmed that finding but admittedly did not consider the costs of the controls in making that decision. In developing its proposed standard, however, the EPA gave extensive consideration to costs, including these considerations in the formal Regulatory Impact Analysis that the agency submitted to the Office of Management and Budget in conjunction with the present rule. In issuing the rule in 2012, the EPA estimated the quantifiable benefits of the reduction in hazardous air pollutants at $4–$6 million per year, and the costs to power plants at $9.6 billion per year (or 1,600 to 2,400 times the benefits from reduced emissions of hazardous air pollutants). However, the EPA calculated that the ancillary or cobenefits from reduction of nonhazardous pollutants (fine particulates and sulfur dioxide) raised the benefits to $37–$90 billion per year.

In Michigan, the majority held that the EPA violated the boundaries of reasonable interpretation of the statute by its failure to consider costs in the first stage of the process. While conceding that the term "appropriate and necessary" is extremely broad and confers a great deal of discretion, the Court held that it is unreasonable to read this phrase as an invitation to ignore cost, especially in a context in which agencies have long considered costs a centrally relevant factor when deciding whether to regulate. In essence, the majority would nearly require an express authorization from Congress in order for an agency to ignore the costs of its action. The dissenters, on the other hand, would have upheld the rule on the ground that the EPA properly found it "appropriate" to defer consideration of costs to the later stage of the proceeding, because the agency had conducted an extensive analysis of costs at that stage, and costs came into its calculus at nearly every turn in setting the actual emission standards.

The majority would nearly require an express authorization from Congress in order for an agency to ignore costs.

The direct effects of Michigan are likely to be limited:

  • The statutory provision governing regulation of hazardous air pollutant emissions from power plants is unique and does not apply to such emissions from other industry sectors, nor does it apply to the emissions of other types of air pollutants, such as greenhouse gases, from power plants.
  • The decision will not apply directly to questions concerning the EPA's obligation to consider costs under other sections of the Clean Air Act. The courts will have to consider each provision of the Act separately in order to determine whether it authorizes the EPA to ignore costs in setting standards, as it has found with regard to other sections of the Act.3 In particular, the EPA's forthcoming rule regulating GHG emissions from power plants will be promulgated under Section 111(d) of the statute, rather than Section 112. Michigan thus will not serve as a direct precedent if the Court reviews the EPA's consideration of costs in setting power plant GHG limits.
  • The practical effects of the decision may also be fairly constrained. An estimated 75 percent of affected power plants have either already installed the required control technology or closed. While it is impossible to predict what the rule that will emerge from the remand process will look like, that rule will impact the minority of power plants (the estimated 25 percent that sought and obtained an additional year to come into compliance with the rule's requirements). Regardless, the decision may have less effect on these plants than will the present dynamic of replacing power plant coal-firing capacity with natural gas.
  • On remand, the EPA may be able to issue a revised rule promptly. While several of the EPA's assumptions will surely need updating— for example, to reflect the fact that the revised rule will impact only 25 percent of the industry, or to reflect data generated by the plants that came into compliance showing that they spent substantially less than the EPA projected, the EPA already has compiled the bulk of the facts and analyses on which to base a reissued rule.

The principal issue would appear to be whether the EPA lawfully may rely upon the ancillary or cobenefits of regulating pollutants other than mercury and air toxics in justifying the cost of a rule issued under Section 112(n). The majority recognized but explicitly did not address this issue, which may play a significant role in judicial review of future rules. The decision did note in dicta that in a cost-benefit assessment, the decision as to which benefits to quantify would be "up to the Agency to decide (as always, within the limits of reasonable interpretation)."

However, several points presented by Michigan are likely to prove significant.

  • The case identifies the critical nature of the preliminary fencing when a challenger seeks a stay of an EPA rule pending review. In Michigan, many of the parties commenced efforts to comply with the rule, so that they would be finished by the effective date if the rule were upheld. Many of the estimated 75 percent of the industry that already installed the required controls were sympathetic to the EPA's position by the time this reached the Supreme Court, because they did not want the slower starters to obtain a competitive advantage. This lesson on the importance of an injunction will not be lost on clients and counsel in future cases.

This lesson on the importance of an injunction will not be lost on clients and counsel.

  • The briefs discussed what factors should be taken into account in consideration of costs in a proper regulatory impact analysis. Both the majority and the dissenters discussed these factors at some length, albeit in dicta. Indeed, the dissent recognized that without clear direction from Congress, an agency acts improperly in establishing a rule that ignores economic considerations. The EPA will correctly interpret this exchange as providing advance guidance on the standards to which it will be held in assessing the reasonableness of its consideration of costs in future rulemakings. The bottom line is that there currently appears to be a majority that is prepared to take a critical look at how the EPA conducts its cost assessments.
  • Finally, Justice Thomas's separate, but solo, concurrence in Michigan will add to the continued debate that the Court needs to rethink its practice of broadly deferring to agency interpretations of statutes and their own regulations, which practice has gov erned for the last three decades. In Perez v. Mortgage Bankers Association, decided in March 2015, Justices Alito, Scalia, and Thomas submitted concurrences that questioned the courts' deference to agency interpretations of their own rules and, in Justice Thomas's case, deference to their interpretation of their authorizing statutes.

Concurrence in Michigan will add to the continued debate that the Court needs to rethink its practice of broadly deferring to agency interpretations.

In late June, Chief Justice Roberts's decision in King v. Burwell, upholding payment of subsidies to persons who bought insurance from state exchanges established under the Affordable Care Act, had the effect of undermining the legitimacy of Chevron. He concluded that ambiguous statutory language implicitly delegates to agencies the authority to "fill in the gaps," except in extraordinary cases, which include cases posing questions of deep economic and political significance. The chief justice found that in such cases, it is the Court's responsibility to interpret congressional ambiguity itself, by evaluating the language in light of the context of the statute as a whole.

Within days of issuance, parties challenging agency actions have seized upon the King decision and have already filed letters with courts submitting King as supplemental authority in pending cases. These parties argued that the statute involved in their cases has such great economic and political significance that the reviewing court should follow the chief justice's lead, ignore Chevron, and interpret the statute de novo.

CONCLUSION

For these reasons, Michigan v. EPA is a case well worth reviewing. In several dimensions it is a harbinger of potential changes that may affect judicial review of agency actions over the next few years.

NOTES

1. Michigan v. EPA, No. 14-46 (June 29, 2015).

2. See Section 112(n)(1)(A) (referencing "this Section").

3. See, e.g., Whitman v. American Trucking, 531 U.S. 457 (2001).

Originally published by Wiley Periodicals, Inc.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions