Oil and gas groups did not respond immediately when the US Supreme Court ruled on June 29 that the US Environmental Protection Agency acted unreasonably when it said costs were irrelevant in regulating mercury and air toxics emissions from coal-fired power plants. But the decision potentially could affect other evolving EPA regulations that would apply to the industry.
"EPA must consider cost-including cost of compliance-before deciding whether regulation is appropriate and necessary," the 5-to-4 decision on Michigan vs. EPA said. "It will be up to the agency to decide (as always, within the limits of reasonable interpretation) how to account for cost."
Business organizations outside oil and gas said the ruling matters. "The Supreme Court upheld a fundamental precept of smart regulation today-that a rigorous cost-benefit analysis is a necessary component of any major regulatory proposal," Business Roundtable Pres. John Engler said. "The ruling establishes an important and valuable precedent for evaluating proposed and pending federal regulations. Requiring agencies to weigh the economic costs of proposed regulations will lead to better rulemaking and fairer outcomes for businesses, workers, and families," he said.
US Chamber of Commerce Pres. Thomas J. Donohue, meanwhile, said, "The Supreme Court made it clear that EPA cannot turn a blind eye when it imposes massive costs on our economy in return for minimal environmental benefit. The decision affirms the common-sense principle that Congress requires agencies to consider the consequences of regulations they impose on businesses and consumers."
National Association of Manufacturers Senior Vice-Pres. and General Counsel Linda Kelly said, "Today, the Supreme Court called out the EPA for a systematic problem-failure to appropriately consider costs-that the agency has repeatedly used to issue overly aggressive regulations that place manufacturers at a competitive disadvantage."
'A balanced approach'
Manufacturers depend on affordable, reliable energy supplies to remain competitive, and face other pending regulations-such as ozone and greenhouse gases-which will impose further burdens, Kelly said. "We need a balanced approach to regulations that considers both costs and benefits to continue to create jobs and economic growth," she said.
The American Petroleum Institute has warned that EPA's proposal to reduce National Ambient Air Quality Standards to 65 ppb came as several US metropolitan areas were having trouble meeting the current 70 ppb limit.
It said that a recent NERA Economic Consulting study found a stricter ozone regulation could reduce US gross domestic product by $270 billion/year and $3.4 trillion from 2017 to 2040, and result in 2.9 million fewer jobs or job equivalents annually on average through 2040.
Those seem like potential costs EPA may have to consider now.