How much would I have to pay you to smash a thermometer and drink its mercury, right now? “A lot”, you are probably thinking, but you have a price. One hit of thermometer mercury isn’t going to kill you. You’d probably Google “mercury poisoning,” make a guess about your risk tolerance, and get back to me with a number.
As long as you think that there is a price, and as long as you think it’s okay for private citizens to guesstimate how much mercury poisoning they’re willing to deal with, you could have sided with a majority at the Supreme Court today.
By a 5 – 4 majority, the Supreme Court dealt a major blow to the Obama Administration’s clean air policies. In Michigan vs. EPA, the Court ruled that the EPA must consider the costs of its first ever mercury regulations on power plants and the industry as a whole.
The market has responded positively. Coal stocks are having a nice day. That’s what happens when the Court decrees that you can, and must, put a price on clean air.
The decision, which broke down along conservative/liberal lines, is a fairly straight-forward application of “law and economics” legal theories. Law and Economics presumes that government action and regulation has knowable economic consequences, and that those consequences should be mitigated wherever possible. Its fundamental equation, B > PL , suggests that if the (B)urden of a regulation is greater than the (L)iability of the harm, times the (P)robability that the harm will occur, then the regulation should not be supported.
That makes a lot of sense… if you live in a world where you think you can capture and reduce the impact of all liabilities to simple economic terms. The burden of erecting a giant meteor trampoline in near Earth orbit outweighs the miniscule probability that we’ll get slammed by an asteroid, even though the liability resulting from a mass extinction event is likely very high. From a Law and Economics perspective, meteors are not a problem.
From a non-robot perspective, we should build a space trampoline if we could. Another competing theory of legal analysis is that the law “shouldn’t suck” if it “doesn’t have to.” The EPA said, somewhat obviously, that a regulatory impact analysis should have no bearing on whether or not we regulate the safe amount of FREAKING MERCURY in the air. Sure, you can go around the bend a little bit with this stuff: there’s always something we can make “more safe” and at the margins we’ve decided that it’s not worth it, both economically and socially. Otherwise, you’d be legally obligated to put your child in a bubble whenever it went outside. But, I’m comfortable with letting professionals at the EPA make that call, as opposed to an unelected actuary in a black robe.
In any event, don’t run out and buy mercury coal stocks just yet. The Supreme Court said that the EPA had to consider the economic impact of its actions. But an EPA estimate suggests that between $37 billion and $90 billion would be saved in unnecessary death, balanced against the $9.6 billion cost of the regulation.
So, again, how much would I have to pay you to drink that thermometer. Because that’s a number we’re going to have to fight about in order to regulate mercury emissions.
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