On May 3, 2011, EPA determined that regulation of hazardous air pollutants (HAP) from coal- and oil-fired electric utility steam generating units (EGUs) was appropriate and necessary, and proposed “mercury and air toxics standards” (MATS) pursuant to section 112 of the Clean Air Act (CAA). The agency issued final MATS on February 16, 2012.
In response to challenges, in July 2015, the Supreme Court ruled that “EPA interpreted [the Clean Air Act] unreasonably when it deemed cost irrelevant to the decision to regulate power plants.” In a 5-4 opinion, the majority sided with petitioners (electric utilities and 23 states), who argued that EPA acted improperly in determining that the 2012 MATS were appropriate and necessary without considering the estimated $9.6 billion per year cost of meeting them.
The key statutory phrase in Section 112 of the Clean Air Act, which authorizes EPA to regulate to control hazardous air pollutants, including mercury, is whether the standard is “appropriate and necessary.” In setting the 2012 standards, EPA interpreted this phrase as not requiring it to consider costs. The majority of the Court disagreed. While the Court was not explicit on how EPA should consider costs, it did offer the observation that “[o]ne would not say that it is even rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.”