Case Law Analysis

As we move forward with administrative agencies, you will see that the judicial system plays a key role in administrative agency conduct. The case below is a case that was decided by the Supreme Court in 2015. After completing the critical reader exercise for Whitman v. American Trucking Association and reading the case below, please answer the questions which follow.

MICHIGAN, Petitioners v. ENVIRONMENTAL PROTECTION AGENCY, Respondent

SUPREME COURT OF THE UNITED STATES

June 29, 2015, Decided

OPINION BY:SCALIA

OPINION

[*2704] Justice Scalia delivered the opinion of the Court.

The Clean Air Act directs the Environmental Protection Agency to regulate emissions of hazardous air pollutants from power plants if the Agency finds regulation "appropriate and necessary." We must decide whether it was reasonable for EPA to refuse to consider cost when making this finding.

EPA identifies a handful of reasons to interpret 7412(n)(1)(A) to mean that cost is irrelevant to the initial decision to regulate. We find those reasons unpersuasive.

Federal administrative agencies are required to engage in "reasoned decisionmaking." Allentown Mack Sales & Service, Inc. v. NLRB, 522 U.S. 359, 374, 118 S. Ct. 818, 139 L. Ed. 2d 797 (1998) (internal quotation marks omitted). "Not only must an agency's decreed result be within the scope of its lawful authority, but the process by which it reaches that result must be logical and rational." Ibid. It follows that agency action is lawful only if it rests "on a consideration of the relevant factors." Motor Vehicle Mfrs. Ass'n of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29, 43, 103 S. Ct. 2856, 77 L. Ed. 2d 443 (1983)

EPA's decision to regulate power plants under 7412 allowed the Agency to reduce power plants' emissions of hazardous air pollutants and thus to improve public health and the environment. But the decision also ultimately cost power plants, according to the Agency's own estimate, nearly $10 billion a year. EPA refused to consider whether the costs of its decision outweighed the benefits. The Agency gave cost no thought at all, because it considered cost irrelevant to its initial decision to regulate. There are undoubtedly settings in which the phrase "appropriate and necessary" does not encompass cost. But this is not one of them. Section 7412(n)(1)(A) directs EPA to determine whether "regulation is appropriate and necessary." Agencies have long treated cost as a centrally relevant factor when deciding whether to regulate. Consideration of cost reflects the understanding that reasonable regulation ordinarily requires paying attention to the advantages and the disadvantages of agency decisions. It also reflects the reality that "too much wasteful expenditure devoted to one problem may well mean considerably fewer resources available to deal effectively with other (perhaps more serious) problems." Against the backdrop of this established administrative practice, it is unreasonable to read an instruction to an administrative agency to determine whether "regulation is appropriate and necessary" as an invitation to ignore cost.

EPA seeks support in this Court's decision in Whitman v. American Trucking Ass'ns., Inc., 531 U.S. 457, 121 S. Ct. 903, 149 L. Ed. 2d 1 (2001). There, the Court addressed a provision of the Clean Air Act requiring EPA to set ambient air quality standards at levels "requisite to protect the public health" with an "adequate margin of safety." 42 U.S.C. 7409(b). Read naturally, that discrete criterion does not encompass cost; it encompasses health and safety. The Court refused to read that provision as carrying with it an implicit authorization to consider cost, in part because authority to consider cost had "elsewhere, and so often, been expressly granted." 531 U.S., at 467, 121 S. Ct. 903, 149 L. Ed. 2d 1. American Trucking thus establishes the modest principle that where the Clean Air Act expressly directs EPA to regulate on the basis of a factor that on its face does not include cost, the Act normally should not be read as implicitly allowing the Agency to consider cost anyway. That principle has no application here. "Appropriate and necessary" is a far more comprehensive criterion than "requisite to protect the public health"; read fairly and in context, as we have explained, the term plainly subsumes consideration of cost.

DISSENT BY:KAGAN

DISSENT

Justice Kagan, with whom Justice Ginsburg, Justice Breyer, and Justice Sotomayor join, dissenting.

Costs matter in regulation. But when Congress does not say how to take costs into account, agencies have broad discretion to make that judgment. Far more than courts, agencies have the expertise and experience necessary to design regulatory processes suited to "a technical and complex arena." And in any event, Congress has entrusted such matters to them, not to us.

EPA exercised that authority reasonably and responsibly in setting emissions standards for power plants. The Agency treated those plants just as it had more than 100 other industrial sources of hazardous air pollutants, at Congress's direction and with significant success. It made a threshold finding that regulation was "appropriate and necessary" based on the harm caused by power plants' emissions and the availability of technology to reduce them. In making that finding, EPA knew that when it decided what a regulation would look like -- what emissions standards the rule would actually set -- the Agency would consider costs. Indeed, EPA expressly promised to do so. And it fulfilled that promise. The Agency took account of costs in setting floor standards as well as in thinking about beyond-the-floor standards. It used its full kit of tools to minimize the expense of complying with its proposed emissions limits. It capped the regulatory process with a formal analysis demonstrating that the benefits of its rule would exceed the costs many times over. In sum, EPA considered costs all over the regulatory process, except in making its threshold finding -- when it could not have measured them accurately anyway. That approach is wholly consonant with the statutory scheme. Its adoption was "up to the Agency to decide."

Questions

(1) What was the outcome of the majority opinion? What was the reasoning behind the Court's decision?

(2) What does the Whitman v. American Truckingcase in your book say about administrative agency power, and how is that related to this case?

(3) What did the dissent say about this decision? Why did the dissent disagree with the winning opinion?