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Michigan v. Environmental Protection Agency
| What is deference in the context of the administrative state? Deference, or judicial deference, is a principle of judicial review in which a federal court yields to an agency's interpretation of a statute or regulation. The U.S. Supreme Court has developed several forms of deference in reviewing federal agency actions, including Chevron deference, Skidmore deference, and Auer deference. Learn about state-level responses to deference here. |
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| Michigan v. Environmental Protection Agency | |
| Docket number: 14-46 | |
| Court: United States Supreme Court | |
| Court membership | |
| Chief Justice John G. Roberts Associate Justices Antonin Scalia Anthony Kennedy • Clarence Thomas Ruth Bader Ginsburg • Stephen Breyer Samuel Alito • Sonia Sotomayor • Elena Kagan | |
The U.S. Supreme Court issued its ruling in Michigan v. Environmental Protection Agency in June 2015. The court declined to apply Chevron deference—a principle of judicial review that directs a federal court to defer to a federal agency's reasonable interpretation of ambiguous statute that the agency administers. Instead, the court concluded that the U.S. Environmental Protection Agency (EPA), which is tasked with regulating hazardous air pollutants under the Clean Air Act, unlawfully and unreasonably refused to consider costs when it initially decided to regulate mercury and other hazardous air pollutants from coal- and oil-fired power plants.[1]
Under the Clean Air Act's requirements for hazardous air pollutants emitted by power plants, the EPA must take all appropriate and necessary actions before it decides to regulate these pollutants from power plants. However, the EPA did not consider industry costs when it initially decided to regulate these emissions. In a subsequent cost analysis, the EPA estimated that compliance costs to power plants would total $9.6 billion annually. In addition, the EPA's cost analysis found that the benefit of reducing mercury and hazardous air pollutants would total between $4 million and $6 million per year; the cost analysis also found that the EPA's regulation would produce ancillary benefits in the form of fewer particulate matter and sulfur dioxide emissions. The EPA estimated that the total benefits of its regulation would be between $37 billion to $90 billion per year.[1]
Legal challenges to the EPA's actions argued that the EPA had violated the Clean Air Act's appropriate and necessary standard by initially refusing to consider costs and that these costs were between 1,600 and 2,400 times larger than the benefits from reducing mercury and similar emissions.[1]
Why it matters: The Supreme Court declined to apply Chevron deference to the EPA's interpretation of the Clean Air Act. The court observed that Chevron deference requires agencies to "operate within the bounds of reasonable interpretation" and determined that that the EPA had "strayed far beyond those bounds when it read §7412(n)(1) to mean that it could ignore cost when deciding whether to regulate power plants."[1]
Background
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The Clean Air Act Amendments of 1990 established the National Emissions Standards for Hazardous Air Pollutants Program—known as the hazardous air pollutants program. Under the act, the Environmental Protection Agency (EPA) regulates stationary sources (such as factories and refineries) for their emissions of approximately 180 hazardous air pollutants. The program applies to these sources depending on the amount of pollution produced annually by each source. Specifically, the EPA regulates all sources that emit more than 10 tons of a single hazardous pollutant or more than 25 tons of a combination of pollutants per year under this program.[1]
In addition, the Clean Air Act of 1990 established separate regulatory requirements for coal- and oil-fired power plants—known as electric utility steam generating units. These separate requirements were enacted to reduce hazardous air pollutants specifically from power plants: Congress required the EPA to study potential hazards from power plant emissions that could be reasonably anticipated to affect public health and the environment. According to the Clean Air Act, if the EPA concludes that the regulation of these power plants is appropriate and necessary based on the results of the agency's study of power plant emissions, the agency must regulate power plants for their hazardous air pollutants in the same manner as it regulates other major sources, such as refineries or factories, for their hazardous pollutants.[1]
Regulatory process
In 1998, the EPA completed a study of hazardous air pollutants from power plants. In 2000, the agency concluded based on the study that regulation of power plants was appropriate and necessary under the Clean Air Act. In 2011, the EPA affirmed its 2000 decision and issued its regulation.[1]
First, the EPA argued that regulation of power plants was appropriate because mercury and other hazardous emissions posed risks to public health and the environment. In addition, the EPA stated that regulatory options were available to reduce these emissions. Second, the EPA argued that regulation was necessary because the Clean Air Act's other requirements were insufficient to eliminate the environmental and public health risks posed by mercury and other hazardous emissions from power plants. Further, the EPA concluded that costs should not be considered when deciding whether coal- and oil-fired power plants should be regulated for their hazardous air pollutants. The agency then began categorizing power plants and setting emission standards for each category.[1]
EPA costs and benefits estimate
In December 2011, the EPA issued the finalized version of its mercury and air toxics standards for power plants and its regulatory impact analysis quantifying the regulation's costs and benefits. The EPA concluded that the regulation would cost the power plant industry approximately $9.6 billion per year. Though the EPA could not fully calculate the benefits of reducing mercury and other hazardous air pollutants from power plants, the agency estimated that these benefits would range from $4 million to $6 million per year. Further, the EPA concluded that the regulation would have other health benefits—known as ancillary benefits. These benefits included reduced power plant emissions of particulate matter and sulfur dioxide, which are regulated as part of the Clean Air Act's national air quality standards and not the hazardous air pollutants program. The EPA argued that these ancillary benefits would take the form of fewer premature deaths, fewer asthma attacks in children and older adults, fewer hospital visits, and fewer missed days of school or work.[1]
According to the EPA, the combined benefit of the regulation (in the form of fewer mercury and hazardous emissions as well as the ancillary benefits) totaled $37 billion to $90 billion per year, though the EPA stated it did not base its earlier decision to regulate power plants on this estimate. As of 2013, approximately 600 power plants, including 1,400 oil- and coal-fired electric steam generating units, fell under the federal rule; all coal- and oil-fired power plants with a capacity of 25 megawatts or greater were subject to the standards as of 2013.[1][2]
Critics of the EPA, including power plant industry groups and 23 states, argued that the agency overstepped its legal authority when it refused to consider costs in its initial decision to regulate power plant emissions. In addition, critics cited the EPA's regulatory impact analysis that the quantifiable benefit of reducing mercury and other hazardous air pollutants from power plants would produce between $4 million and $6 million in health benefits. According to critics, the costs to power plants would be between 1,600 and 2,400 times as much as the benefit of reducing hazardous air pollutants at power plants, which critics argued violated the Clean Air Act's necessary and appropriate standard.[1][3]
Case history
The petitioners in the case included the states of Alabama, Alaska, Arizona, Arkansas, Idaho, Indiana, Iowa, Kansas, Kentucky, Michigan, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, Texas, Utah, West Virginia, and Wyoming. Other petitioners included industry representatives such as the National Mining Association and the Utility Air Regulatory Group. The petitioners challenged the EPA's mercury rule in the United States Court of Appeals for the District of Columbia Circuit in December 2013, arguing that the agency unlawfully had refused to consider the costs to its regulation. The circuit court sided with the EPA, arguing that the agency acted lawfully when it postponed cost analysis until the agency set specific emission standards.[4]
The Supreme Court granted certiorari on November 25, 2014, and heard oral arguments on March 25, 2015. The court consolidated three separate petitions into one case—Michigan v. Environmental Protection Agency.[4]
Decision
| Question before the court: 1. Did the U.S. Environmental Protection Agency (EPA) unreasonably refuse to consider costs when it decided to regulate hazardous air pollutants, including mercury, from power plants? |
| Decision: Michigan v. EPA (Majority opinion) | ||||
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| Author: Scalia | ||||
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| Justice | Justice | Justice | Chief Justice | Justice |
| Antonin Scalia | Anthony Kennedy | Clarence Thomas | John Roberts | Samuel Alito |
On June 29, 2015, the Supreme Court reversed the D.C. Circuit in a 5-4 decision and ruled against the EPA. The court held that the "EPA interpreted §7412(n)(1)(A) [of the Clean Air Act] unreasonably when it deemed cost irrelevant to the decision to regulate power plants." Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito joined Justice Antonin Scalia, who wrote the majority opinion.[1][6][7]
Scalia wrote for the majority that the EPA's actions went beyond legal boundaries when the agency had concluded it could ignore costs when deciding to regulate power plants. According to the opinion, "The Clean Air Act treats power plants differently from other sources for purposes of the hazardous-air-pollutants program." Specifically, the majority cited the distinction between two programs within the Clean Air Act aimed at limiting hazardous air pollutants: a program for stationary sources more generally, such as refineries and factories, and a program for power plants. The former program does not require cost considerations while the latter program, according to the majority, does require cost consideration due to the appropriate and necessary standard. The majority found that the EPA's refusal to consider costs in its initial decision to regulate power plants was a violation of this appropriate and necessary standard. "It is not rational, never mind 'appropriate,' to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits," Scalia wrote.[1]
The majority on the court and the four dissenting justices rejected the EPA’s argument that the Clean Air Act made cost considerations irrelevant in any decision to regulate hazardous air pollutants from power plants. According to the court, an agency’s regulatory decision can be upheld only on the grounds expressly cited by the agency when it made its initial decision. As a result, the justices concluded that though the EPA's subsequent regulatory impact analysis (which determined total benefits, including ancillary benefits) might otherwise support the agency's initial decision, the EPA expressly stated that it did not cite this analysis to justify its initial decision to regulate. According to the court, if an administrative agency, such as the EPA, does not rely on a specific piece of evidence in its initial regulatory decision, it cannot cite the benefit of that evidence after the fact to justify its earlier decision.[1]
Dissent
| Dissent: Michigan v. EPA | |||
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| Author: Kagan | |||
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| Justice | Justice | Justice | Justice |
| Ruth Bader Ginsburg | Stephen Breyer | Sonia Sotomayor | Elena Kagan |
Joined by Justices Stephen Breyer, Ruth Bader Ginsburg, and Sonia Sotomayor, Justice Elena Kagan authored a dissenting opinion. The dissenting justices argued that the EPA considered the cost of its regulation throughout the regulatory process. Kagan and the dissenting justices concluded that the question of precisely when the agency considered costs was irrelevant since the EPA eventually did consider the cost of its regulation. "The Agency [EPA] acted well within its authority in declining to consider costs at the opening bell of the regulatory process given that it would do so in every round thereafter."[1]
Kagan and the dissenting justices agreed with the majority that the EPA's actions would be unlawful under the Clean Air Act if the agency refused to consider costs at all; the dissenting justices, however, disagreed with the majority's focus on the EPA's initial decision to regulate power plants. According to the dissent, because the EPA ended up considering costs in later regulatory steps, the agency’s mistake in refusing to consider costs earlier was innocuous. In addition, Kagan argued that the EPA could not have considered costs with accuracy at the initial stage of the regulatory process and that the EPA followed a process similar to the agency's process in setting emissions standards for other sources of hazardous air pollutants.[1]
Response
In response to the ruling, EPA spokeswoman Melissa Harrison stated in June 2015, "EPA is disappointed that the Supreme Court did not uphold the rule, but this rule was issued more than three years ago, investments have been made and most plants are already well on their way to compliance." A spokeswoman at the Environmental Defense Fund disagreed with the decision but stated that the mercury rule would eventually be implemented. "While today’s decision is a setback, EPA has ample information to swiftly address the Court’s concerns," said Vickie Patton, general counsel for the Environmental Defense Fund.[8][9]
U.S. House Majority Leader Kevin McCarthy's (R-CA) official statement endorsed the Supreme Court's ruling, saying, "The Supreme Court's decision today vindicates the House's legislative actions to rein in bureaucratic overreach and institute some common sense in rulemaking." The president of the National Mining Association, one of the petitioners in the case, endorsed the decision and called the EPA's activities "reckless rulemaking that ignores the cost to consumers."[8]
Impact
The Supreme Court declined to apply Chevron deference to the EPA's interpretation of the Clean Air Act. Chevron deference is a principle of judicial review that directs a federal court to defer to a federal agency's interpretation of ambiguous statute that the agency administers. The court observed that Chevron deference requires agencies to "operate within the bounds of reasonable interpretation" and determined that that the EPA had "strayed far beyond those bounds when it read §7412(n)(1) to mean that it could ignore cost when deciding whether to regulate power plants."[1]
"Going forward, the case casts a shadow over the scope of agency deference under the so-called Chevron doctrine," observed reporter Jonathan Nash in The Hill following the court's decision.[10]
See also
- Major cases of the Supreme Court October 2014 term
- Supreme Court of the United States
- Clean Air Act
- Implementation of the Clean Air Act
- Mercury and air toxics standards
Footnotes
- ↑ 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 U.S. Supreme Court, "Michigan v. Environmental Protection Agency," June 29, 2015
- ↑ U.S. Environmental Protection Agency, "Cleaner Power Plants," accessed January 5, 2015
- ↑ U.S. Environmental Protection Agency, "Benefits and Costs of Cleaning Up Toxic Air Pollution from Power Plants," accessed October 9, 2014
- ↑ 4.0 4.1 SCOTUSblog, "Argument preview: EPA, on the defensive again," March 24, 2015
- ↑ SCOTUSblog, "Utility Air Regulatory Group v. Environmental Protection Agency," accessed June 29, 2015
- ↑ CNN.com, "Supreme Court: EPA unreasonably interpreted the Clean Air Act," June 29, 2015
- ↑ Associated Press, "High court strikes down power plant regulations," June 29, 2015
- ↑ 8.0 8.1 The Hill, "Supreme Court overturns landmark EPA air pollution rule," June 29, 2015
- ↑ ABC News, "Justices Rule Against EPA Power Plant Mercury Limits," June 29, 2015
- ↑ The Hill, "Michigan v. EPA and the future of Chevron deference," July 16, 2015
