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Michigan v. EPA (U.S. Sup. Ct.)

Michigan v. EPA involved a challenge to the EPA’s Air Toxics Rule—a regulation that addresses the risks associated with the emissions of hazardous air pollutants (HAPs) like mercury and arsenic from coal- and oil-fired power plants.  When deciding whether to regulate power plant emissions, the EPA considered the related risks to public health and the environment—reserving cost consideration for later in the regulatory process.  In the Clean Air Act (CAA) provision governing the EPA’s decision, Congress required the agency to study the hazards to public health associated with power plant emissions and, following consideration of the study’s results, to regulate power plant HAP emissions if the EPA “Administrator finds such regulation is appropriate and necessary.”

Various states and industry groups challenged the EPA’s Air Toxics Rule in the U.S. Court of Appeals for the D.C. Circuit, arguing that the CAA’s use of the word “appropriate” required the EPA to consider costs when adding power plants to the list of regulated sources.  The D.C. Circuit rejected this argument and upheld the EPA’s actions, concluding that the EPA’s interpretation of the CAA was “clearly permissible.”  Michigan and two other parties then filed petitions for review, all of which were granted by the Supreme Court and subsequently consolidated.

On March 4, 2015, CAC filed an amicus curiae brief defending the EPA’s interpretation of this key CAA provision, explaining why the EPA’s interpretation was reasonable in light of the text and structure of the CAA.  In particular, our brief provided an extensive analysis of the meaning of the key term at issue— “appropriate”—its dictionary definition, its ordinary use, its use in legal sources, and its use in the provision at issue in this case.  While not defined in the CAA, the term “appropriate” in no way requires the consideration of costs, nor is the consideration of costs inherent in any of the term’s varied usages across legal contexts. Furthermore, the Supreme Court itself has described the term as “open-ended,” “ambiguous,” and “inherently context-dependent,” contradicting Michigan’s view that the term “compels” the EPA to consider compliance costs before deciding to regulate power plants’ HAP emissions.  Finally, strong contextual evidence—both in the specific provision at issue and in the CAA more generally—reinforces the D.C. Circuit’s conclusion that the EPA’s decision to exclude cost considerations when deciding whether to regulate power plants was reasonable and within its discretion.

The Court heard oral argument on March 25, 2015.

On June 29, 2015, the Court ruled against the EPA, holding that the agency had interpreted the provision at issue unreasonably when it deemed cost irrelevant to the decision whether to regulate power plants.  Writing for an ideologically divided, 5-4 majority, and over a powerful dissent by Justice Kagan, Justice Scalia offered a cramped reading of an ambiguous phrase, stating that “[r]ead naturally . . . [appropriate and necessary] plainly encompasses cost,” defying the phrase’s varied usage across legal contexts, none of which inherently includes cost consideration.  While the Court’s conservative Justices believe the “EPA strayed well beyond the bounds of reasonable interpretation in concluding that cost is not a factor relevant to the appropriateness of regulating power plants,” their interpretation of this single phrase flies in the face of the regulation’s purpose—to address the hazardous effect of HAP emissions if it is found appropriate and necessary for human and environmental health.