Special Topics in Environmental Management

EPA Says Cost of Compliance with MATS is Reasonable

In one of his last authored opinions on environmental law, the late Justice Antonin Scalia expressed the will of a 5–4 Supreme Court majority in Michigan v. EPA (No. 14–46 June 29, 2015) when he wrote that the EPA had erred when it determined that it was appropriate and necessary under Section 112 of the Clean Air Act (CAA) to promulgate its Mercury and Air Toxics Standards (MATS) without consideration of cost.

But the ruling was a mixed victory for owners and operators of the nation’s coal-fired power plants that face costs of almost $10 billion a year to comply with the rule. While stating that the EPA must indeed go back and consider cost before ordering compliance, the majority did not say that the Agency must engage in a formal and complex cost benefit analysis, essentially a demonstration that the value derived from all benefits accruing from MATS balanced the high cost of compliance. Rather, Scalia wrote that the Court did not hold that the law unambiguously required that the Agency, when considering cost, had to conduct a formal cost-benefit analysis in which each advantage and disadvantage is assigned a monetary value.

“It will be up to the Agency to decide (as always, within the limits of reasonable interpretation) how to account for cost,” wrote Scalia.

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