In the Clean Air Act (CAA), Congress directed the EPA to study the impact of power plant emissions on public health and then to regulate power plants if the study indicated that regulation was “appropriate and necessary.” 

After conducting a study, the EPA found regulation “appropriate” because (1) power plants’ emissions posed risks to human health and the environment and (2) controls were available to reduce these emissions. It found regulation “necessary” because the CAA;’s other provisions did not eliminate these risks.

The EPA’s cost-benefit analysis estimated that the regulations would cost power plants $9.6 billion per year. Although the EPA could not fully quantify the benefits of reducing power plants’ emissions, its best estimate was a benefit of $4 to $6 million per year. The costs to power plants were thus between 1,600 and 2,400 times as great as the quantifiable benefits. However, when the EPA considered other benefits of the regulations, which were not covered by this provision of the CAA, such as the impact on global warming and a reduction of fine particulate matter, their benefit estimate increased to $37 to $90 billion per year. In any event, although it had conducted a cost-benefit analysis, the EPA decided that, under the statute, it should issue regulations without regard to costs.

Twenty-three states and the National Mining Association challenged the EPOA’s decision to ignore costs when issuing these regulations. The Court of Appeals upheld the EPA’s decision. The Supreme Court granted certiorari.

Questions:

1. Should the EPA have considered cost when issuing power plant regulations?

2. What was the cost of the proposed power plant regulations per year?

3. What was the annual benefit from the modifications?

4. Was the Supreme Court persuaded by those numbers?

5. What was the standard under which the EPA was to make its decision?