At issue is a rule, decades in the making, which would forbid these generating units from releasing mercury, arsenic and dozens of other hazardous pollutants into the air.
The regulation, adopted by the Environmental Protection Agency in 2012 and slated to take effect this year, has been lauded by public health experts who say it will save thousands of lives and benefit hundreds of thousands of asthma sufferers.
Twenty-one states with Republican governors, led by Michigan, joined with the electric power and coal industries to oppose the rule. Lawyers for the power producers say the rule will force the closure of older coal-fired plants and could increase electricity rates 3% across the nation. In the court, they alleged — and the EPA agreed — that the costs were not carefully weighed when the regulation was put forth.
But the cost loomed large during Wednesday's argument.
Defending the rule, U.S. Solicitor Gen. Donald Verrilli said the EPA was following the Clean Air Act. It told the agency to study "the health hazards" posed by these toxic air pollutants and adopt regulations that were "appropriate and necessary," without making any reference to costs.
He also said the benefits of the rule go far beyond removing mercury and could total more than $37 billion a year from avoided deaths and illnesses.
But he ran into steadily skeptical questions from the conservatives, as well as from liberal Justice
"It's a lot of money, $9 billion," he told the administration's attorney. "It begins to look a little irrational to say, 'I'm not going to take it into account at all.'"
"Nine billion is a big number," Verrilli replied. "This is an industry with $360 billion a year in annual revenues … so the cost is about 2.5% of revenues."
The justices sounded closely split on the EPA's rule.
The case is a major test of whether the court will move to rein in one of the Obama administration's most ambitious environmental regulations. In the past, the justices have said they would uphold an agency's regulations so long as they reflect a reasonable interpretation of the law.
Justices Elena Kagan and Ruth Bader Ginsburg cited that rule and wondered why it would not apply in this case. After all, they said,
"Is there any case in all of our decisions where we have said … EPA is required to consider costs?" Ginsburg asked. "Is there any such decision?"
The solicitor general for Michigan, Aaron Lindstrom, conceded he could not cite one.
The rule, unless stopped by the high court, will affect about 600 power plants nationwide. It is expected to hit hardest in parts of the Midwest and South that depend most heavily on coal for producing electric power.
The court's ruling in Michigan vs. EPA could also figure prominently in the upcoming legal battle over the Obama administration's plans for imposing regulations to limit greenhouse gas. Industry lawyers and Republican state attorneys general say they will fight those rules, too, arguing the administration is overstepping its authority under the law.