U.S. Supreme Court Hears Latest Texas v. EPA Challenge

Texas again went head-to-head with the Environmental Protection Agency before the U.S. Supreme Court on Wednesday, this time challenging federal limits on the emission of pollutants like mercury, acid gases and other toxic metals from power plants.

Joined by 20 other states, Texas is arguing that the EPA didn't properly consider the $10 billion annual price tag of its regulations, which “threatens to drive a number of coal-fired electric utilities out of business.” The rules target more than 50 coal- and oil-fired power plants across Texas, and industry and labor groups are also challenging them.

The EPA counters that Congress never directed the agency to consider costs the way Texas and other states think it should have. And in any case, the agency argues, the benefits far outweigh the costs. The agency asserts that the rule prevents up to 11,000 premature deaths per year. Mercury, a highly toxic chemical that can build up in the human body, is linked to brain abnormalities and developmental disorders.

“The [mercury] rule will importantly reduce serious hazards to the public,” the American Academy of Pediatrics wrote in a legal brief supporting the EPA. “Those hazards … are particularly acute for vulnerable groups, including children who can suffer debilitating, lifelong effects” from toxic pollution.

The lawsuit is one of 32 that Texas has filed against the federal government during President Obama’s administration. While five have so far been definitively successful, none have prevailed at the Supreme Court level.

Of the 19 Texas cases specifically lodged against the EPA, Texas won three before the U.S. 5th Circuit Court of Appeals — all of which challenged the agency’s disapproval of state air quality programs. But Supreme Court justices have almost always struck down Texas’ protests of federal pollution standards, from limits on greenhouse gas emissions to restrictions on air pollution that crosses state lines.

“EPA usually wins on challenges to rules. In fact, EPA usually wins period,” said David Spence, a professor of environmental law and business at the University of Texas at Austin. That’s because the courts usually defer to agencies when they make regulatory decisions based on science, he said.

Still, Spence and many others were surprised that the Supreme Court decided to take this particular case. Congress has often directed the EPA to consider the cost of regulations, but lawmakers never did so explicitly in the case of the mercury rules.

Back in 1990, Congress simply asked the agency to study the effects of mercury and other toxic air pollution from power plants, and to decide whether regulating them would be “appropriate and necessary.” The EPA under President Bill Clinton decided that it was. The EPA under President George W. Bush changed its mind. And then a court challenge tossed out the Bush administration policy. What followed was the 2012 Mercury and Air Toxics Standard — the one the Supreme Court is now evaluating.

At the heart of the case is whether deeming regulations “appropriate and necessary” should include an aggressive consideration of costs early in the process. The plaintiffs say yes; the defendants say no. The D.C. Circuit Court agreed with the defendants last year, pointing out that the courts have previously said the EPA doesn’t need to consider costs that way unless Congress directly tells it to. 

If the high court disagrees, a key issue will be how the benefits of environmental regulations should be quantified. Right now, the EPA says the benefits of the mercury rule could total as much as $80 billion, which dwarfs the estimated $10 billion cost.

Opponents say the $80 million figure is misleading. Only $4 million to $6 million of it comes directly from reducing mercury pollution, they argue; the rest is a “co-benefit.” That’s because removing mercury from the air also removes the particulate matter it's often attached to — leading to increased health benefits.

During oral arguments on the case Wednesday, Chief Justice John Roberts said that type of co-benefit calculation “raises the red flag” and looks like the EPA is trying to reduce particulate pollution through the back door. That would be an “end-run" around a separate part of the Clean Air Act that the agency must follow for that type of pollution, he said.  

“It’s not an end-run, and it’s not a boot strap,” responded U.S. Solicitor General Donald Verrilli, who was defending the EPA. Calculating co-benefits is “a perfectly appropriate way to deal with getting at metals and other pollutants that would be hard to get at directly,” he said.

The co-benefits debate will be moot if the high court decides the EPA didn’t have to consider the price tag of the mercury rules in the first place, or that it has adequately done so already. The justices appeared divided on that issue Wednesday.

"Congress knows how to require consideration of costs," and it said nothing in this case, Justice Elena Kagan said while questioning Aaron Lindstrom, Michigan’s solicitor general. Lindstrom was arguing on behalf of Texas and the other state challengers. “To get from silence to this notion of a requirement seems to be a pretty big jump," Kagan added. 

But Justice Antonin Scalia saw things very differently. “I would think it’s classic ‘arbitrary and capricious’ agency action for an agency to command something that is outrageously expensive," he said, "and in which the expense vastly exceeds whatever public benefit can be achieved.”