The Supreme Court voted Monday that the EPA cannot stop power plants from releasing hazardous chemicals without first proving that the clean air is worth more than the companies would have to spend to stop polluting.

The case, Michigan v EPA, arose after the Obama administration endorsed limitations on hazardous emissions like mercury under the Clean Air Act. Challengers argued that the cost of compliance—estimated at close to $10 billion—far outweighed the environmental benefits.

From the New York Times:

The agency responded that it was not required to take costs into account when it made the initial determination to regulate. But the agency added that it did so later in setting emissions standards and that, in any event, the benefits far outweighed the costs.

The two sides had very different understandings of the costs and benefits involved. Industry groups said the government had imposed annual costs of $9.6 billion to achieve about $6 million in benefits. The agency said the costs yielded tens of billions of dollars in benefits.

Though the EPA argued they acted properly by first considering the threshold issue of public health, the Court ultimately disagreed. In the majority opinion, authored by Justice Scalia, the court ruled against the EPA, concluding that the agency had failed to undertake the initial, required cost-benefit analysis.

Our reasoning so far establishes that it was unreasonable for EPA to read §7412(n)(1)(A) to mean that cost is irrelevant to the initial decision to regulate power plants. The Agency must consider cost—including, most importantly, cost of compliance—before deciding whether regulation is appropriate and necessary.

The case has been remanded back to the lower court for a new accounting of costs.

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