Today, the U.S. Supreme Court held that EPA must consider compliance costs before regulating hazardous air pollutants (HAPs) from coal- and oil-fired power plants. Section 112 of the Clean Air Act authorizes EPA to regulate HAPs from power plants if the Agency finds that regulation is “appropriate and necessary.” 42 U.S.C. § 7412(n)(1)(A). In 2012, the EPA reaffirmed a prior “appropriate and necessary” finding and finalized a rule limiting emissions of mercury and other HAPs from coal- and oil-fired power plants. Notwithstanding an estimated compliance cost of $9.6 billion per year, EPA concluded that costs should not be considered when deciding whether to regulate power plants under Section 112. The Court disagreed and held that “EPA interpreted § 7412(n)(1)(A) unreasonably when it deemed cost irrelevant to the decision to regulate power plants.” With that, the Court instructed “the Agency must consider cost – including, most importantly, cost of compliance – before deciding whether regulation is appropriate and necessary.” It should be noted that the Court left it up to EPA to decide (“within the limits of reasonable interpretation”) how to account for cost.
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