A closely divided Supreme Court has determined that EPA must consider cost when regulating emissions of hazardous air pollutants from stationary sources. Under the Clean Air Act, EPA has authority to regulate toxic emissions from power plants if EPA finds such regulation “appropriate and necessary” following completion of a study of public health hazards caused by such emissions. EPA did so, and industry groups and 23 states challenged EPA’s new rule, arguing that EPA unreasonably interpreted the Clean Air Act by not considering cost in the initial decision to regulate.

In yesterday's opinion in Michigan v. EPA, the Supreme Court agreed, and EPA will likely issue the rule again with an explicit consideration of costs. As a practical matter, many power plants have already begun to comply with the regulations, and the on-the-ground impact of the decision may therefore be somewhat limited, at least as to power plants and these specific rules. The requirement that EPA consider costs in regulating toxic emissions, however, is likely to affect future rulemaking.