D.C. Circuit Affirms EPA’s Utility Air Toxics Rule: An “Appropriate” Rule Need Not Be Justified By Cost-Benefit Analysis

Yesterday, the D.C. Circuit Court of Appeals affirmed EPA’s rule setting limits for emissions of mercury and other air toxics from fossil-fuel-fired electric steam generating units.  The focus of the decision – and the issue on which Judge Kavanaugh dissented – was whether EPA was required to consider the costs that would be imposed by the rule.  EPA said no and the majority agreed.

Section 112(n) of the Clean Air Act required EPA to perform a study of the health hazards related to hazardous emissions from EGUs prior to regulating them.  How was EPA to utilize the results of the study?

The Administrator shall regulate [EGUs] under this section, if the Administrator finds such regulation is appropriate and necessary after considering the results of the study required by this subparagraph.

The industry petitioners and Judge Kavanaugh took the position that Congress’s use of the word “appropriate” evidenced an intent to require EPA to consider costs.  To Judge Kavanaugh, “that’s just common sense and sound government practice.”  However, persuasive Judge Kavanaugh may be as a matter of policy, the majority was not persuaded that the law requires a consideration of cost.

As the majority noted, nothing in section 112(n) requires that EPA consider cost.  Indeed, the word “cost” is not mentioned in section 112(n).  Moreover, Congress required EPA to make the “appropriate and necessary” determination based on a study of health impacts, not a study of costs.  Finally, as EPA and the majority noted, the Supreme Court, in Whitman v. American Trucking Ass’ns, cautioned against finding authority – let alone a mandate – to consider costs in ambiguous provisions of the CAA, given that there are sections of the Act which do address costs.

I’m with Judge Kavanaugh as a matter of policy (though it’s worth noting that EPA in fact did a cost-benefit analysis and found that the benefits of the rule substantially outweigh its costs).  On the law, however, the dissent seems pretty much a case of ipse dixit.  When the rule was promulgated, I said that I would be “stunned” if the rule was not upheld on judicial review.  Notwithstanding the dissent, I’d be equally stunned if the Supreme Court flips this decision.  I don’t think that there’s anything here warranting Supreme Court review.

One thought on “D.C. Circuit Affirms EPA’s Utility Air Toxics Rule: An “Appropriate” Rule Need Not Be Justified By Cost-Benefit Analysis

  1. This topic has a long and very focused history with respect to the Clean Air Act (CAA). As someone who was heavily involved in the lobbying effort associated with passage of the Clean Air Act of 1970, I know that two of the more contentious issues were:
    1. Whether costs of control should be considered; and
    2. Whether states’ programs should be subject to Federal over-ride.

    The second issue was believed to be related to the first because it was believed that states were more easily influenced by “industry money”. In the end, control cost considerations were consciously excluded from the CAA of 1970 and Federal authority (vested in the EPA) was made paramount because Congress was persuaded that the protection of public health and welfare was worthwhile at any cost. Note that the National Ambient Air Quality Standards (NAAQS), then and still, were defined by the CAA as protecting health and welfare (“the environment”) with adequate margins of safety. The legislative “counter-reaction” was not long in coming, as the Clean Water Act of 1972 focused on control technologies that had to be explicitly “practicable”, “available” and “economically achievable”.

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