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 Conservative Justice Anthony Kennedy, based on questions he asked
during a 90-minute oral argument, could be a possible swing vote on
the nine-justice court, with its four liberals appearing to back the
U.S. Environmental Protection Agency's rationale for the regulation.
The case marks the latest legal test to President Barack Obama's
environmental agenda to reach the high court. Industry groups and 21
states led by Michigan challenged the rule, announced in 2012 and
due to go into effect this year.
The conservatives, including Kennedy, asked questions that indicated
they were concerned it was not enough that the agency said it
implicitly considered costs when issuing standards for specific
pollution sources.
Under the section of the Clean Air Act in question, the agency can
regulate power plants for mercury and other toxic pollutants if it
deems it "appropriate and necessary." The provision does not
explicitly state whether the EPA was required to include costs in
making its decision, and the administration decided it did not have
to.
 At one point, Kennedy told Obama administration lawyer Donald
Verrilli "the game is over" if the government did not consider costs
at the early stage of rule-making. But earlier in the hearing,
Kennedy seemed to be open to the idea that the EPA considered costs
at a later stage in the regulatory process when it decided what
specific standards to impose.
"It seems to me like there's an implicit cost consideration there,"
Kennedy said.
Chief Justice John Roberts indicated it was not enough for the
agency to say it implicitly considered costs if there is no evidence
that it did so. Roberts also suggested he was troubled by the
disparity between the costs and benefits of the regulation, saying
it "raises the red flag."
The challengers say the costs are $9.6 billion a year but the
benefits are worth only $4 million to $6 million dollars.
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The government says it did not quantify some of the benefits, but
says they could be worth up to $90 billion annually, including a
reduction in mercury poisoning, which can lead to developmental
delays and abnormalities in children.
Liberal Justice Stephen Breyer appeared eager to find a middle
ground in which the court could acknowledge the EPA did consider
costs at some point.
The way the law is structured, the agency can categorize different
pollution sources based in part on how burdensome the standard would
be, which gives the government "the ability to take into account at
least serious cost problems," Breyer said.
The challengers appealed after an appeals court upheld the
regulation in June 2014.
Companies opposing the rule include Peabody Energy Corp, the
nation’s largest coal producer. Exelon Corp, the biggest U.S.
nuclear power plant operator, is among several power companies
supporting the rule.
A ruling is due by the end of June.
(Additional reporting by Ayesha Rascoe; Editing by Will Dunham)
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