A PENNY SAVED IS A PENNY EARNED

By PEPPER BOWEN

In 2001, Justice Scalia delivered the opinion of the Court in Whitman v. American Trucking Associations (hereinafter American Trucking). American Trucking was a landmark decision that held the Clean Air Act (CAA) made no implied authorization to the Environmental Protection Agency (EPA) to consider the costs of implementing air quality standards. In fact, explicit authorization would be required for the EPA to consider such costs. Therefore the EPA was prevented from considering implementation costs in setting the national ambient air quality standards (NAAQS). 

Ambient air is just the natural outdoor air that people and animals breathe. The air is comprised of gases, largely nitrogen and oxygen, but also has chemical and industrial pollutants, such as the smoke and ash found in smog. These NAAQS are an attempt to define an acceptable level of ambient air pollution for both public health and public welfare protection (i.e. primary and secondary standards). In allowing for cost blind and health based drivers to determinations air quality, the EPA could establish criteria reflecting the latest scientific knowledge of identifiable effects on and protection of public health or welfare and, in doing so, was the most agile means available to manage and protect air quality.

That was until Monday. 

June 29, 2015, Justice Scalia penned another momentous opinion for the Court with Michigan v. E.P.A.. In this decision, the Court held the “EPA unreasonably deemed cost irrelevant when it decided to regulate power plants.” However, this decision was considering a deeply fundamental question: the meaning of the “appropriate and necessary” standard, which governs the initial decision to regulate.

Power plants produce more CO₂ than any other industry in the US. The combustion is largely released into the atmosphere through smoke stacks creating an acute effect on the ambient air. New regulations would require a reduction of pollution emitted at a substantial cost to the plant. In fact, the Regulatory Impact Analysis conducted by the EPA estimated “the regulation would force power plants to bear costs of $9.6 billion per year.” But the EPA “could not fully quantify the benefits of reducing power plants' emissions of hazardous air pollutants [and], to the extent it could, it estimated that these benefits were worth $4 to $6 million per year.”

Though under American Trucking the EPA is not supposed to consider cost, the Majority distinguished American Trucking from Michigan v EPA by pointing out the former was to do with public health and safety. The Court rejected the principle established under American Trucking that the CAA directs the EPA to regulate on the basis of a factor that does not include cost, because the Act should be read to imply the consideration of cost anyway. 

Under Michigan v. E.P.A., for the EPA to “regulate emissions of hazardous pollutants from power plants it finds ‘appropriate and necessary’ requires as least some attention to cost.” (Emphasis added) But most importantly, the cost of compliance must be considered “before deciding whether regulation of power plants under the Clean Air Act is appropriate and necessary.”