In the case of Michigan, et al., v. EPA, decided June 29, 2015, the U.S. Supreme Court, in a 5 to 4 ruling, held that EPA, when deciding whether it was appropriate and necessary to regulate Hazardous Air Pollutants (HAP), such as mercury and other toxic pollutants emitted from electric utility power plants, must consider the costs of compliance "at this stage" of the rulemaking proceedings.
In its 2012 rulemaking, EPA excluded any consideration of costs when deciding it was "appropriate"--as required by the Clean Air Act (CAA), 42 U.S.C. § 7412(n)(1)(A)--to impose the requirements of these new rules on these utilities. In the 1990 amendment to the CAA, EPA was directed by Congress to develop National Emission Standards for Hazardous Air Pollutants, but it also established a "unique procedure" to determine the applicability of the HAP program to fossil-fueled power plants. EPA was accordingly directed to perform a study of the hazards to public health reasonably anticipated to occur as a result of emissions by power plants of HAP pollutants after the imposition of the requirements of the law. This study was completed in 1998. However, EPA also determined that it was free to interpret the term "appropriate" so as to allow the agency to ignore the consideration of costs when it made the initial decision to regulate.
Justice Scalia, writing for the narrow majority, held that EPA's interpretation of this term in this context was unreasonable and must be rejected. The Court noted that the estimated costs of compliance were $9 billion per year while the estimated benefits amounted to $4-$6 million per year. The judgment of the DC Circuit Court, reported at 748 F.3d 1222(CADC 2014) was reversed. Justice Kagan dissented, joined by Justices Ginsburg, Breyer, and Sotomayor.