Justices spar in Michigan case over EPA pollution rules

Washington — U.S. Supreme Court justices sparred Wednesday over whether environmental regulators can ignore costs when deciding to regulate pollution from power plants to improve public health in Michigan and beyond.

The combined case, known as Michigan v. EPA, will determine whether mercury, arsenic and other hazardous pollutants from coal-fired power plants will be regulated for the first time under the Clean Air Act. Although the statute directs the EPA to regulate power plants when “appropriate and necessary,” it’s silent on whether the agency should pay attention to cost.

The justices appeared split over the issue, with the court’s slim majority of conservatives skeptical about the EPA’s justifications.

Justice Antonin Scalia said Congress’ “silence” on cost doesn’t entitle the EPA to disregard it.

“I would think it’s classic arbitrary and capricious agency action for an agency to command something that is outrageously expensive, and in which the expense vastly exceeds whatever public benefit can be achieved,” Scalia said.

Justice Sonia Sotomayor disagreed, noting the statute directs the EPA to study only the public-health risks posed by power generators.

“The study at issue that Congress commanded was simply a study,” Sotomayor said.

“If the study is directed only at public-health hazards, it doesn’t talk at all about cost — just public health hazards — why in the world would one assume that Congress was thinking about cost?”

Justice Elena Kagan noted the court has sometimes interpreted silence as deference to the agency’s discretion.

“Clearly, Congress required this in other places. Congress knows how to require consideration of costs,” Kagan said. “To get from silence to this notion of a requirement seems to be a pretty big jump.”

Michigan Solicitor General Aaron D. Lindstrom argued on behalf of 21 states siding with mining and utility industries that oppose the new rules. They say the regulations would mean higher prices for consumers and force power generators out of business.

Lindstrom said Congress’ silence on cost doesn’t mean the EPA should ignore what is an important part of the problem. “You have to look at all of the relevant circumstances if you’re engaged in a reasoned decision,” he said.

The states that Lindstrom is representing want the justices to overturn a lower court ruling upholding the EPA’s regulations, which go into effect next month.

In court briefs, the states said the estimated $9.6 billion cost for utilities in pursuit of $4 million to $6 million in benefits is unreasonable and contrary to the language of the law. EPA valued the impact of its new rules on people’s health at an estimated $30 billion to $97 billion, avoiding up to 11,000 premature deaths and 4,700 heart attacks.

U.S. Solicitor General Donald B. Verrilli Jr., arguing on behalf of the EPA, noted the Clean Air Act applies the same “regulatory logic” to power plants that it applies to every other source of pollution when regulating hazardous emissions.

The agency is to consider public health risks only when deciding whether to regulate; cost is considered at a later rule-making stage, Verrilli said.

The EPA did so, finding the rules’ benefits will exceed the costs by a 3-1 ratio. The agency says coal- and oil-fired power plants are the largest domestic source of mercury emissions, which settle in lakes and streams. Prenatal and adult exposure to mercury, which is highly toxic, can cause neurological damage and impair the body’s immune and cardiovascular systems.

Chief Justice John Roberts Jr. contested Verrilli’s argument, saying it raises a “red flag” that the EPA would see such a “tiny proportion of benefit” from the program.

“I think it’s unusual for an agency to say — when they want to do something — that that’s the only thing we could do,” Roberts said.

Justice Anthony Kennedy wanted to know if the EPA could have “reasonably” considered costs when deciding whether to regulate power plants.

“I don’t think the statutory text unambiguously forbids them from considering costs,” Verrilli responded. “But they determined that the best reading of the statutory text is that power plants ... are no differently situated than any other source of hazardous air pollutants” regulated under the law.

Justice Samuel Alito seemed unconvinced. He said Congress wanted to at least leave open the possibility that power plants would not be regulated, even when their emissions exceeded levels of other regulated sources of pollution.

“I don’t see another reason why they would treat them differently,” Alito said.

The new rules have factored into the planned retirement of dozens of coal-fired generators nationwide this year and next. While many operators invested in pollution-control “scrubbers” to reduce stack emissions, others decided to close their oldest and dirtiest plants. The closures have prompted concerns about potential energy shortfalls.

Paul Smith, representing industry and other groups supporting the EPA, told the justices that roughly 90 percent of the capital costs of compliance have already been spent.

“And the industry has not experienced the kinds of upheavals that are being described,” Smith said. “The rule takes effect in the middle of April, and so the idea that the result here was somehow ludicrous or outlandishly expensive is belied by the fact that the industry is bringing itself into full compliance.”

The EPA’s rule applies to more than 50 boilers at 21 power plants in Michigan, according to the state Department of Environmental Quality. The state’s two largest utilities, CMS Energy Corp. and DTE Energy, have said they’re unlikely to alter plans to retire a total of nine aging coal-fired plants in 2016, regardless of the high court’s ruling.

Several facilities have completed installation of the pollution-control equipment, including DTE’s Monroe Power plant. Others are in the process of installing the technology.

Michigan has regulations mirroring the federal regulations, and those rules aren’t being challenged.

Robert Sedler, a constitutional law professor at Wayne State University Law School, said the issue isn’t as ideological as “pure” constitutional questions.

“On a whole, the court will sometimes find that the agency acted unreasonably — usually it’s when they did something that the statute under which they operate clearly prohibited them from doing,” Sedler said. “Otherwise, the court is forced to uphold the regulations based on the deference upon which the agency relies.”

A decision in the case is expected by June.

mburke@detroitnews.com

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