Why The Supreme Court's EPA Decision Isn't A Big Deal

In a 5-4 decision, Justice Antonin Scalia wrote for the majority that the agency must consider costs before deciding whether or not regulation is "appropriate and necessary." The Court's decision was typically partisan, with liberal Justices Ginsburg, Sotomayor, Breyer and Kagan making up the minority.

Industry groups and some states triggered the litigation, complaining that the first-ever national limits on mercury and a series of toxic air pollutants released by power plants resulted in costs of up to $9.6 billion. The EPA, in a losing effort, maintained that it should not have to assess the financial tradeoff.

Related Link: New EPA Guidelines Have Uncertain Implications For Transportation Industry

Not So Bad

Yet, the ramifications of the ruling are relatively limited. In a statement given to Benzinga, the EPA noted that the "decision was about how and when the Agency considered costs...not [the] EPA's Clean Air Act authority to limit hazardous air pollutants."

• "Power plants are by far the worst industrial polluters.
• "Controlling toxic emissions is both technologically and economically feasible.
• "The resulting pollution reductions will yield between $37 billion and $90 billion in health benefits every year.
• "The public will receive $3–$9 in health benefits for every $1 that the protections cost the power industry."

Indeed, Earthjustice staff attorney Jim Pew told Benzinga that the decision was "a narrow one" and leaves the EPA with significant wiggle room. "It doesn't vacate the rule and certainly doesn't require the EPA to rescind the rule."

According to Pew, the EPA simply needs to alter its justification of the law, including a cost-benefit analysis. Although the EPA derived the $3–$9 figure displayed above in its research leading up to the regulation, it didn't present it as justification for the policy. Pew thinks that the EPA could meet the Supreme Court's requirements simply by citing the cost evaluation in its reasoning for imposing limits on mercury and air pollutants. Furthermore, he said "they could extend it further," but mentioning that the stated health benefits are based only on one of many air pollutants that the EPA seeks to restrict, implies that the actual upside is much greater.

Bloomberg Intelligence Litigation analyst Brandon Barnes told Benzinga that the ruling was not likely to impede imposition of carbon-emission and ozone-related proposals by the EPA.

"There doesn't need to be any practical blow from this decision at all," Pew summed up.

Related Link: U.S. Supreme Court Invalidates EPA Mercury Emissions Regulations

The Court's Logic

Barnes described the Court's position on Monday as "the kind of decision-making they frequently engage in with rule-making issues." Pew said that "Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc." established a precedent for addressing questions of bureaucratic policy-making.

The first question the justices ask, according to Pew, is whether "the agency's interpretation is contrary to the plain meaning of the law. That was not the case in this ruling."

The second question: "Is the agency's interpretation unreasonable?" The Court decided it was on the grounds that it contained no cost-benefit analysis.

But Barnes saw the debate was far from cut-and-dry, which is why the justices divided along partisan lines. "When they can bring ambiguity into things," he said, "they can [also] bring in their ideological views."

But regardless of whether or not the Court made the "right" choice on Monday, the fact remains that it exercised restraint and, in Pew's words, "left the EPA with plenty of opportunity."