The case, Michigan v. EPA, centres on the EPA’s first limits on mercury, arsenic and acid gases emitted by coal-fired power plants, known as mercury and air toxics (MATS).
Opponents, including the National Federation of Independent Business and the National Mining Association, have charged that it is among the costliest regulations ever issued.
The EPA estimated its rule, which took effect for some plants in April, would cost $US9.6 billion ($A12.51 billion), produce between $37 billion and $90 billion in benefits and prevent up to 11,000 premature deaths and 130,000 asthma cases annually.
However, the EPA concluded that its regulatory impact analysis should have “no bearing on” the determination of whether regulations are appropriate, as set forth in the Clean Air Act of 1990.
Industry groups and some 20 states had challenged the EPA’s decision to regulate emissions.
The challengers, including the National Mining Association, said that while the Clean Air Act required the regulation to be “appropriate and necessary”, the EPA had contravened this rule by deciding to regulate the emissions without first doing a cost-benefit analysis.
The Justices ruled that the EPA should have taken into account the costs to utilities and others in the power sector before even deciding whether to set limits for the toxic air pollutants it regulated in 2011.
Speaking for the majority in the Supreme Court’s 5-4 ruling, Justice Antonin Scalia wrote: “It is not rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits. Statutory context supports this reading.”
Scalia was joined in the majority by Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito and Anthony Kennedy.
Writing for the minority, Justice Elena Kagan – who sided with the EPA along with Justices Sonia Sotomayor, Stephen Breyer and Ruth Bader Ginsburg – said they believed the EPA properly considered costs at a later stage in the regulation, something that it had done in other rules and that the courts had allowed.
“The majority’s decision that EPA cannot take the same approach here – its micromanagement of EPA’s rulemaking, based on little more than the word ‘appropriate’ – runs counter to Congress’s allocation of authority between the Agency and the courts,” she said.
The EPA said it re-writing the regulation was now on the cards, once it reviews the decision.
“EPA is disappointed that the Court did not uphold the rule, but this rule was issued more than three years ago, investments have been made and most plants are already well on their way to compliance,” EPA spokeswoman Melissa Harrison said in a statement.
She said the EPA “remains committed to ensuring that appropriate standards are in place to protect the public from the significant amount of toxic emissions from coal and oil-fired electric utilities and continue reducing the toxic pollution from these facilities”
California Republican Kevin McCarthy, the House Majority Leader, cheered the ruling.
“The mere fact that the EPA wished to ignore the costs of its rules demonstrates how little the agency is concerned about the effects it has on the American people,” he said.
“The Supreme Court’s decision today vindicates the House’s legislative actions to rein in bureaucratic overreach and institute some common sense in rulemaking.”
The rule will technically remain in place while the Court of Appeals for the District of Columbia Circuit decides how the EPA can proceed.
National Mining Association President Hal Quinn said the ruling was a “vindication of common sense that is missing in much of the administration’s regulatory actions”
“The decision effectively puts EPA on notice: reckless rulemaking that ignores the cost to consumers is unreasonable and won’t be tolerated,” he said.
Environmental Defense Fund general counsel Vickie Patton called the ruling “unfortunate”
“While today’s decision is a setback, EPA has ample information to swiftly address the Court’s concerns,” she said.
Anna Aurilio, director of Environment America’s Washington office, said the court’s decision “to let polluters off the hook” was a “huge setback for our kids' health”