Legal Poison

06.29.15 5:00 PM ET

Supreme Court: If It’s Worth It for Corporations, Pollution May Be Okay

Siding with industry against the Environmental Protection Agency, Supreme Court holds the agency can only regulate air pollution when it’s cost-effective to do so.

While LGBTs and health-care reformers are still nursing their celebratory hangovers, the final Supreme Court case of the 2014-15 term just junked 20 years of environmental regulations.

The case, Michigan v. EPA, specifically dealt with the EPA’s regulation of mercury emissions from power plants under the Clean Air Act—a long, 20-year process that has been opposed by industry at every turn, even as mercury air pollution from coal-fired power plants has irreparably poisoned the Great Lakes .

Today, the clock has been set back. In its third 5-4 decision of the day, with Justice Kennedy again providing the swing vote, industry has prevailed. Writing for the court, Justice Scalia held that the EPA had to factor in costs in deciding whether to regulate, not just how to regulate.

If you think about it, this is an impossible task practically and philosophically.

Practically speaking, the regulatory process for mercury has lasted 20 years—in large part because the EPA weighed dozens of options, evaluating the costs and benefits of each. Today’s decision requires the EPA to balance costs and benefits at the very beginning of the process, before either the costs or the benefits are known.

EPA’s position was that, while costs must, of course, be taken into account in deciding how to regulate toxic chemicals like mercury, the initial decision of whether to regulate them should not be dictated by how much it costs to do so. What matters at that point—whether regulation is “appropriate and necessary” under the statute—is only whether public health is at stake.

In policy-speak—as I wrote in a law review article 20 years ago—the difference is between “risk assessment” and “risk management.” Risk assessment is when you notice a leak in your basement, and decide you have to do something about it. Risk management is when you evaluate your options, and decide what to do.

The difference is obvious, and intuitive. But it does mean that the initial decision may not take cost into account.

Thus the EPA argued that the words “appropriate and necessary” do not imply a balancing of costs and benefits, only a determination of public health. Justice Scalia said this was not “reasonable decisionmaking.” As Justice Kagan said in her dissent, the EPA took costs into account later in the regulatory process. But Justice Scalia said that is not enough—the initial decision, too, must include costs.

This is as incoherent philosophically as it is practically. Think about it this way: Who owns the right to your health?

In the EPA’s reasoning, you do. Under the Clean Air Act, if someone else’s activities are going to meaningfully endanger your health, the government is entitled to stop them.

In Justice Scalia’s reasoning, now the law of the land, the toxic chemical emitters do. If it is economically efficient to poison you with mercury—if the costs to them outweigh the benefits to you, calculating an economic value of your health—then they get to do it.

If this seems outrageous, it’s because it is. Justice Scalia had to focus exclusively on the first sliver of the regulatory process in order to make his argument. “EPA’s interpretation precludes the Agency from considering any type of cost,” he writes. But that’s only true at the initial decision of whether to regulate or not (risk assessment). In subsequent decisions of how to regulate (risk management), cost was taken into account many times.

Which is what makes sense philosophically, as well as practically. Deciding whether to regulate a toxic substance should not be an economic decision. Deciding how to do so should be—of course, the government should choose the most efficient method of regulation, and balance costs and benefits appropriately. But the decision of whether a toxic substance is toxic is a matter of science, not money.

Zooming back a bit, Michigan v. US now starts to look a lot like the corporations-are-people cases like Citizens United and Hobby Lobby. In this growing body of cases, corporate interests have been equated with individual ones. Corporations have rights to free speech and the free exercise of religion.

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Now their right to make money running dirty power plants is equated with the right of human beings to breathe free of mercury pollution. Your rights, their rights—what’s the difference?

Ironically, Justice Scalia’s originalism—which last week had him arguing that if a practice could be banned in 1868, it could be banned in 2015—would have cut the other way here, if he took it seriously. For the first hundred years of U.S. history, there were no corporations as we know them today. Corporate charters were time-bound, limited, and revocable. Only in the Gilded Age did they attain “legal personhood” as we know it today.

This is the point conservatives often miss in decrying the growth of government and regulation. Yes, government has grown well beyond anything the Founders could have imagined. But the Founders could not have imagined today’s mega-corporations either.

Peabody Energy, one of the primary backers of the current lawsuit, has an annual revenue of $6.79 billion. In 1812, the largest non-banking corporation in America, the American Fur Company, was worth about $1 million—about $17.2 million in 2015 dollars.

In other words, just one of the corporations fighting the EPA’s mercury regulations is worth 394 times the largest U.S. corporation in existence two centuries ago. While the growth in governmental power since then, represented by regulations like the Clean Air Act, has indeed been significant, it is dwarfed by the growth in corporate power.

Michigan v. US now stands for the principle that corporate interests are equal in kind to human interests. Whether the EPA should regulate mercury depends on whether it’s cost-effective to do so, treating the costs to industry and the benefits to health equally.

Because corporations are people, right?