The U.S. Supreme Court plunked a setback into the lap of the Environmental Protection Agency Monday by trashing the agency's regulation of emissions of mercury and other air toxins (MATS) from electricity-generating plants. The court overturned a lower-court decision in the case of Michigan v. EPA stating that the agency had acted reasonably when it chose not to consider compliance costs first in its effort to control those emissions. The justices split 5-4, with the four liberals on the side of the EPA and the four conservatives and Justice Anthony Kennedy on the side of industry and the states that had sued.

The ruling—Michigan v. Environmental Protection Agency and two other consolidated cases—is a major disappointment for environmentalists and drag on the Obama administration's efforts to reduce toxic emissions. While it doesn't bar the EPA from regulating these toxins, it means the agency has to start over, this time considering costs as one of the factors BEFORE making a decision about whether to limit emissions.

It was under the Clinton administration that the EPA began work on the mercury and air toxins rules. That was stopped when George W. Bush became president and restarted when President Obama was elected.

The EPA considered cost irrelevant to its decision to regulate MATS. It agreed that it could have interpreted a provision in the law that cost is relevant but "chose to read the statute to mean that cost makes no difference to the initial decision to regulate," the majority decision written by Justice Antonin Scalia stated. The agency argued that it was appropriate to consider only public health risks—not industry costs—when it decided to regulate emissions from coal- and oil-fired generation plants.