On June 29, 2015 the U.S. Supreme Court blocked one of the Obama administration’s most ambitious environmental initiatives, an Environmental Protection Agency (EPA) regulation meant to limit emissions of mercury and other toxic pollutants from coal-fired power plants, according to a New York Times report.

Industry groups and about 20 states had challenged the EPA’s decision to regulate the emissions, saying the agency had failed to take into account the punishing costs its rule would impose.

The Clean Air Act required the regulation to be “appropriate and necessary.” The challengers said the agency had run afoul of that law by deciding to regulate the emissions without first undertaking a cost-benefit analysis.

Writing for the majority, in the 5-to-4 decision, 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.”

The EPA had argued that it was not required to take costs into account when it made the initial determination to regulate. But the agency added that it had done so later in setting emissions standards and that, in any event, the benefits far outweighed the costs.

The two sides had very different understandings of the costs and benefits involved. Industry groups said the government had imposed annual costs of $9.6 billion to achieve about $6 million in benefits. The agency said the costs yielded tens of billions of dollars in benefits.

In dissent, Justice Elena Kagan wrote: “The agency acted well within its authority in declining to consider costs at the opening bell of the regulatory process given that it would do so in every round thereafter — and given that the emissions limits finally issued would depend crucially on those accountings.”

The decision, Michigan v. Environmental Protection Agency, No. 14-46, does not strike down the rule, but it means the EPA will have to review and rewrite it, taking costs into consideration.

What this means to you
In a 5-4 decision, the U.S. Supreme Court ruled the EPA had run afoul of the Clean Air Act by deciding to regulate power plant emissions without first undertaking a cost-benefit analysis.

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