SUPREME COURT OF THE UNITED STATES
_________________
Nos. 14–46, 14–47, and
14–49
_________________
MICHIGAN, et al., PETITIONERS
14–46
v.
ENVIRONMENTAL PROTECTION AGENCY,
et al.
UTILITY AIR REGULATORY GROUP,
PETITIONER
14–47
v.
ENVIRONMENTAL PROTECTION AGENCY,
et al.
NATIONAL MINING ASSOCIATION,
PETITIONER
14–49
v.
ENVIRONMENTAL PROTECTION AGENCY,
et al.
on writs of certiorari to the united states
court of appeals for the district of columbia circuit
[June 29, 2015]
Justice Kagan, with whom Justice Ginsburg,
Justice Breyer, and Justice Sotomayor join,dissenting.
The Environmental Protection Agency placed
emissions limits on coal and oil power plants following a lengthy
regulatory process during which the Agency carefully considered
costs. At the outset, EPA determined that regulating plants’
emissions of hazardous air pollutants is “appropriate and
necessary” given the harm they cause, and explained that it
would take costs into account in developing suitable emissions
standards. Next, EPA divided power plants into groups based on
technological and other characteristics bearing significantly on
their cost structures. It required plants in each group to match
the emissions levels already achieved by the best-performing
members of the same group—benchmarks necessarily reflecting
those plants’ own cost analyses. EPA then adopted a host of
measures designed to make compliance with its proposed emissions
limits less costly for plants that needed to catch up with their
cleaner peers. And with only one narrow exception, EPA decided not
to impose any more stringent standards (beyond what some plants had
already achieved on their own) because it found that doing so would
not be cost-effective. After all that, EPA conducted a formal
cost-benefit study which found that the quantifiable benefits of
its regulation would exceed the costs up to nine times
over—by as much as $80 billion each year. Those benefits
include as many as 11,000 fewer premature deaths annually, along
with a far greater number of avoided illnesses.
Despite that exhaustive consideration of costs,
the Court strikes down EPA’s rule on the ground that the
Agency “unreasonably . . . deemed cost
irrelevant.”
Ante, at 15. On the majority’s
theory, the rule is invalid because EPA did not explicitly analyze
costs at the very first stage of the regulatory process, when
making its “appropriate and necessary” finding. And
that is so even though EPA later took costs into account again and
again and . . . so on. The majority thinks entirely
immaterial, and so entirely ignores, all the subsequent times and
ways EPA considered costs in deciding what any regulation would
look like.
That is a peculiarly blinkered way for a court
to assess the lawfulness of an agency’s rulemaking. I agree
with the majority—let there be no doubt about this—that
EPA’s power plant regulation would be unreasonable if
“[t]he Agency gave cost no thought
at all.”
Ante, at 5 (emphasis in original). But that is just not what
happened here. Over more than a decade, EPA took costs into account
at multiple stages and through multiple means as it set emissions
limits for power plants. And when making its initial
“appropriate and necessary” finding, EPA knew it would
do exactly that—knew it would thoroughly consider the
cost-effectiveness of emissions standards later on. That context
matters. The Agency 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—and given that
the emissions limits finally issued would depend crucially on those
accountings. Indeed, EPA could not have measured costs at the
process’s initial stage with any accuracy. And the regulatory
path EPA chose parallels the one it has trod in setting emissions
limits, at Congress’s explicit direction, for every other
source of hazardous air pollutants over two decades. The
majority’s decision that EPA cannot take the same approach
here—its micromanagement of EPA’s rulemaking, based on
little more than the word “appropriate”—runs
counter to Congress’s allocation of authority between the
Agency and the courts. Because EPA reasonably found that it was
“appropriate” to decline to analyze costs at a single
stage of a regulatory proceeding otherwise imbued with cost
concerns, I respectfully dissent
I
A
The Clean Air Act Amendments of 1990, as the
majority describes, obligate EPA to regulate emissions of mercury
and other hazardous air pollutants from stationary sources
discharging those substances in large quantities. See
ante,
at 2. For most industries, the statute prescribes the same
multi-step regulatory process. At the initial stage, EPA must
decide whether to regulate a source, based solely on the quantity
of pollutants it emits and their health and environmental effects.
See 42 U. S. C. §§7412(a)(1), (a)(2), (c)(1),
(c)(3);
ante, at 2. Costs enter the equation after that,
affecting the emissions limits that the eventual regulation will
require. Under the statute, EPA must divide sources into categories
and subcategories and then set “floor standards” that
reflect the average emissions level already achieved by the
best-performing 12% of sources within each group. See
§7412(d)(3);
ante, at 3. Every 12% floor has cost
concerns built right into it because the top sources, as successful
actors in a market economy, have had to consider costs in choosing
their own emissions levels. Moreover, in establishing categories
and subcategories at this first stage, EPA can (significantly)
raise or lower the costs of regulation for each source, because
different classification schemes will alter the group—and so
the emissions level—that the source has to match.[
1] Once the floor is set, EPA has to
decide whether to impose any stricter
(“beyond-the-floor”) standards, “taking into
consideration,” among other things, “the cost of
achieving such emissions reduction.” §7412(d)(2); see
ante, at 3. Finally, by virtue of a longstanding Executive
Order applying to significant rules issued under the Clean Air Act
(as well as other statutes), the Agency must systematically assess
the regulation’s costs and benefits. See Exec. Order No.
12866, 58 Fed. Reg. 51735, 51738, 51741 (1993) (applying to all
rules with an annual economic effect of at least $100 million).
Congress modified that regulatory scheme for
power plants. It did so because the 1990 amendments established a
separate program to control power plant emissions contributing to
acid rain, and many thought that just by complying with those
requirements, plants might reduce their emissions of hazardous air
pollutants to acceptable levels. See
ante, at 2. That
prospect counseled a “wait and see” approach, under
which EPA would give the Act’s acid rain provisions a chance
to achieve that side benefit before imposing any further
regulation. Accord-ingly, Congress instructed EPA to “perform
a study of the hazards to public health reasonably
anticipated” to result from power plants’ emissions
after the 1990 amendments had taken effect. §7412(n)(1)(A).
And Congress provided that EPA “shall regulate” those
emissions only if the Agency “finds such regulation is
appropriate and necessary after considering the results of the
[public health] study.”
Ibid. Upon making such a
finding, however, EPA is to regulate power plants as it does every
other stationary source: first, by categorizing plants and setting
floor standards for the different groups; then by deciding whether
to regulate beyond the floors; and finally, by conducting the
cost-benefit analysis required by Executive Order.
EPA completed the mandated health study in 1998,
and the results gave much cause for concern. The Agency concluded
that implementation of the acid rain provisions had failed to curb
power plants’ emissions of hazardous air pollutants. Indeed,
EPA found, coal plants were on track to increase those emissions by
as much as 30% over the next decade. See 1 EPA, Study of Hazardous
Air Pollutant Emissions from Electric Utility Steam Generating
Units—Final Report to Congress, p. ES–25 (1998). And
EPA determined, focusing especially on mercury, that the substances
released from power plants cause substantial health harms. Noting
that those plants are “the largest [non-natural] source of
mercury emissions,”
id., §1.2.5.1, at 1–7,
EPA found that children of mothers exposed to high doses of mercury
during pregnancy “have exhibited a variety of developmental
neurological abnormalities,” including delayed walking and
talking, altered muscles, and cerebral palsy.
Id.,
§7.2.2, at 7–17 to 7–18; see also 7 EPA, Mercury
Study Report to Congress, p. 6–31 (1997) (Mercury Study)
(estimating that 7% of women of childbearing age are exposed to
mercury in amounts exceeding a safe level).
Informed by its public health study and
additional data, EPA found in 2000 that it is “appropriate
and necessary” to regulate power plants’ emissions of
mercury and other hazardous air pollutants. 65 Fed. Reg.
79830.[
2] Pulling apart those
two adjectives, the Agency first stated that such regulation is
“appropriate” because those pollutants
“present[ ] significant hazards to public health and the
environment” and because “a number of control
options” can “effectively reduce” their emission.
Ibid. EPA then determined that regulation is
“necessary” because other parts of the 1990
amendments—most notably, the acid rain
provisions—“will not adequately address” those
hazards.
Ibid. In less bureaucratic terms, EPA decided that
it made sense to kick off the regulatory process given that power
plants’ emissions pose a serious health problem, that
solutions to the problem are available, and that the problem will
remain unless action is taken.
B
If the regulatory process ended as well as
started there, I would agree with the majority’s conclusion
that EPA failed to adequately consider costs. Cost is almost always
a relevant—and usually, a highly important—factor in
regulation. Unless Congress provides otherwise, an agency acts
unreasonably in establishing “a standard-setting proc-ess
that ignore[s] economic considerations.”
Industrial Union
Dept., AFL–CIO v.
American Petroleum Institute,
448 U. S. 607, 670 (1980) (Powell, J., concurring in part and
concurring in judgment). At a minimum, that is because such a
process would “threaten[ ] to impose massive costs far
in excess of any benefit.”
Entergy Corp. v.
Riverkeeper, Inc., 556 U. S. 208, 234 (2009) (Breyer, J.,
concurring in part and dissenting in part). And accounting for
costs is particularly important “in an age of limited
resources available to deal with grave environmental problems,
where too much wasteful expenditure devoted to one problem may well
mean considerably fewer resources available to deal effectively
with other (perhaps more serious) problems.”
Id., at
233; see
ante, at 7. As the Court notes, that does not
require an agency to conduct a formal cost-benefit analysis of
every administrative action. See
ante, at 14. But (absent
contrary indication from Congress) an agency must take costs into
account in some manner before imposing significant regulatory
burdens.
That proposition, however, does not decide the
issue before us because the “appropriate and necessary”
finding was only the beginning. At that stage, EPA knew that a
lengthy rulemaking process lay ahead of it; the determination of
emissions limits was still years away. And the Agency, in making
its kick-off finding, explicitly noted that consideration of costs
would follow: “As a part of developing a regulation”
that would impose those limits, “the effectiveness and costs
of controls will be examined.” 65 Fed. Reg. 79830. Likewise,
EPA explained that, in the course of writing its regulation, it
would explore regula-tory approaches “allowing for least-cost
solutions.”
Id., at 79830–79831. That means the
Agency, when making its “appropriate and necessary”
finding, did not decline to consider costs as part of the
regulatory process. Rather, it declined to consider costs at a
single stage of that process, knowing that they would come in later
on.
The only issue in these cases, then, is whether
EPA acted reasonably in structuring its regulatory process in that
way—in making its “appropriate and necessary
finding” based on pollution’s harmful effects and
channeling cost considerations to phases of the rulemaking in which
emission levels are actually set. Said otherwise, the question is
not whether EPA can reasonably find it “appropriate” to
regulate without thinking about costs, full stop. It cannot, and it
did not. Rather, the question is whether EPA can reasonably find it
“appropriate” to trigger the regulatory process based
on harms (and technological feasibility) alone, given that costs
will come into play, in multiple ways and at multiple stages,
before any emission limit goes into effect.
In considering that question, the very nature of
the word “appropriate” matters. “[T]he word
‘appropriate,’ ” this Court has recognized,
“is inherently context-dependent”: Giving it content
requires paying attention to the surrounding circumstances.
Sossamon v.
Texas, 563 U. S. 277 , ___ (2011) (slip
op., at 7). (That is true, too, of the word
“necessary,” although the majority spends less time on
it. See
Armour & Co. v.
Wantock, 323 U. S. 126
–130 (1944) (“[T]he word ‘necessary’ . . .
has always been recognized as a word to be harmonized with its
context”).) And here that means considering the place of the
“appropriate and necessary” finding in the broader
regulatory scheme—as a triggering mechanism that gets a
complex rulemaking going. The interpretive task is thus at odds
with the majority’s insistence on staring fixedly “at
this stage.”
Ante, at 11 (emphasis in
original). The task instead demands taking account of the entire
regulatory process in thinking about what is
“appropriate” in its first phase. The statutory
language, in other words, is a directive to remove one’s
blinders and view things whole—to consider what it is fitting
to do at the threshold stage given what will happen at every
other.
And that instruction is primarily given to EPA,
not to courts: Judges may interfere only if the Agency’s way
of ordering its regulatory process is
unreasonable—
i.e., something Congress would never have
allowed. The question here, as in our seminal case directing courts
to defer to agency interpretations of their own statutes, arises
“not in a sterile textual vacuum, but in the context of
implementing policy decisions in a technical and complex
arena.”
Chevron U. S. A. Inc. v.
Natural
Resources DefenseCouncil, Inc., 467 U. S. 837, 863 (1984)
. EPA’s experience and expertise in that arena—and
courts’ lack of those attributes—demand that judicial
review proceed with caution and care. The majority actually phrases
this principle well, though honors it only in the breach: Within
wide bounds, it is “up to the Agency to decide
. . . how to account for cost.”
Ante, at 14.
That judges might have made different regulatory
choices—might have considered costs in different ways at
different times—will not suffice to overturn EPA’s
action where Congress, as here, chose not to speak directly to
those matters, but to leave them to the Agency to decide.
All of that means our decision here properly
rests on something the majority thinks irrelevant: an understanding
of the full regulatory process relating to power plants and of
EPA’s reasons for considering costs only after making its
initial “appropriate and necessary” finding. I
therefore turn to those issues, to demonstrate the simple point
that should resolve these cases: that EPA, in regulating power
plants’ emissions of hazardous air pollutants, accounted for
costs in a reasonable way.
II
A
In the years after its “appropriate and
necessary” finding, EPA made good on its promise to account
for costs “[a]s a part of developing a regulation.” 65
Fed. Reg. 79830; see
supra, at 7. For more than a decade, as
EPA deliberated on and then set emissions limits, costs came into
the calculus at nearly every turn. Reflecting that consideration,
EPA’s final rule noted that steps taken during the regulatory
process had focused on “flexib[ility] and
cost-effective[ness]” and had succeeded in making “the
rule less costly and compliance more readily manageable.” 77
Fed. Reg. 9306, 9376. And the regulation concluded that “the
benefits of th[e] rule” to public health and the environment
“far outweigh the costs.”
Id., at 9306.
Consistent with the statutory framework, EPA
initially calculated floor standards: emissions levels of the
best-performing 12% of power plants in a given category or
subcategory. The majority misperceives this part of the rulemaking
process. It insists that EPA “must promulgate certain
. . . floor standards no matter the cost.”
Ante, at 11. But that ignores two crucial features of the
top-12% limits: first, the way in which any such standard
intrinsically accounts for costs, and second, the way in which the
Agency’s categorization decisions yield different standards
for plants with different cost structures.
The initial point is a fact of life in a market
economy: Costs necessarily play a role in any standard that uses
power plants’ existing emissions levels as a benchmark. After
all, the best-performing 12% of power plants must have considered
costs in arriving at their emissions outputs; that is how
profit-seeking enterprises make decisions. And in doing so, they
must have selected achievable levels; else, they would have gone
out of business. (The same would be true even if other regulations
influenced some of those choices, as the majority casually
speculates. See
ante, at 13.) Indeed, this automatic
accounting for costs is why Congress adopted a market-leader-based
standard. As the Senate Report accompanying the 1990 amendments
explained: “Cost considerations are reflected in the
selection of emissions limitations which have been achieved in
practice (rather than those which are merely theoretical) by
sources of a similar type or character.” S. Rep. No.
101–228, pp. 168–169 (1989). Of course, such a standard
remains technology-forcing: It requires laggards in the industry to
catch up with frontrunners, sometimes at significant expense. But
the benchmark is, by definition, one that some power plants have
achieved economically. And when EPA made its “appropriate and
necessary” finding, it knew that fact—knew that the
consequence of doing so was to generate floor standards with cost
considerations baked right in.
Still more, EPA recognized that in making
categorization decisions, it could take account of multiple factors
related to costs of compliance—and so avoid impracticable
regulatory burdens. Suppose, to use a simple example, that curbing
emissions is more technologically difficult—and therefore
more costly—for plants burning coal than for plants burning
oil. EPA can then place those two types of plants in different
categories, so that coal plants need only match other coal plants
rather than having to incur the added costs of meeting the top oil
plants’ levels. Now multiply and complexify that example many
times over. As the Agency noted when making its “appropriate
and necessary” finding, EPA “build[s]
flexibility” into the regulatory regime by “bas[ing]
subcategorization on . . . the size of a facility; the
type of fuel used at the facility; and the plant type,” and
also “may consider other relevant factors such as geographic
conditions.” 65 Fed. Reg. 79830; see S. Rep. No.
101–228, at 166 (listing similar factors and noting that
“[t]he proper definition of categories . . . will
assure maximum protection of public health and the environment
while minimizing costs imposed on the regulated community”).
Using that classification tool, EPA can ensure that plants have to
attain only the emissions levels previously achieved by peers
facing comparable cost constraints, so as to further protect plants
from unrealistic floor standards.
And that is exactly what EPA did over the course
of its rulemaking process, insisting on apples-to-apples
comparisons that bring floor standards within reach of diverse
kinds of power plants. Even in making its “appropriate and
necessary” finding, the Agency announced it would divide
plants into the two categories mentioned above:
“coal-fired” and “oil-fired.” 65 Fed. Reg.
79830.[
3] Then, as the
rulemaking progressed, EPA went further. Noting that different
technologies significantly affect the ease of attaining a given
emissions level, the Agency’s proposed rule subdivided those
two classes into five: plants designed to burn high-rank coal;
plants designed to burn low-rank virgin coal; plants that run on a
technology termed integrated gasification combined cycle; liquid
oil units; and solid oil units. See 76 Fed. Reg. 25036–25037.
EPA explained that by subcategorizing in that way, it had spared
many plants the need to “retrofit[ ],”
“redesign[ ],” or make other “extensive
changes” to their facilities.
Id., at 25036. And in
its final rule, EPA further refined its groupings in ways that
eased compliance. Most notably, the Agency established a separate
subcategory, and attendant (less stringent) floor, for plants in
Hawaii, Puerto Rico, Guam, and the Virgin Islands on the ground
that plants in those places have “minimal control over the
quality of available fuel[ ] and disproportionately high
operational and maintenance costs.” 77 Fed. Reg.
9401.[
4]
Even after establishing multiple floor standards
that factored in costs, EPA adopted additional “compliance
options” to “minimize costs” associated with
attaining a given floor—just as its “appropriate and
necessary” finding explicitly contemplated.
Id., at
9306; 76 Fed. Reg. 25057; see 65 Fed. Reg. 79830. For example, the
Agency calculated each floor as both an “input-based”
standard (based on emissions per unit of energy
used) and
an“output-based” standard (based on emissions per unit
of use-ful energy
produced), and allowed plants to choose
which standard they would meet. That option, EPA explained, can
“result in . . . reduced compliance costs.”
76 Fed. Reg. 25063. Similarly, EPA allowed plants to meet a given
12% floor by averaging emissions across all units at the same site,
instead of having to meet the floor at each unit. Some plants, EPA
understood, would find such averaging a “less costly
alternative.” 77 Fed. Reg. 9385. Yet again: EPA permitted
“limited use” plants—those primarily burning
natural gas but sometimes switching to oil—to comply with the
final rule by meeting qualitative “work practice
standards” rather than numeric emissions limits.
Id.,
at 9400–9401. EPA explained that it would be
“economically impracticable” for those plants to
demonstrate compliance through emissions testing, and that an
alternative standard, focused on their adoption of pollution
control techniques, would allow them to both reduce emissions and
avoid “extra cost.”
Id., at 9401. And the list
goes on. See,
e.g.,
id., at 9409–9410 (allowing
extra year for plants to comply with emissions limits where
“source-specific construction, permitting, or labor,
procurement or resource challenges” arise);
id., at
9417 (describing additional “compliance options”).
With all that cost-consideration under its belt,
EPA next assessed whether to set beyond-the-floor standards, and
here too, as it knew it would, the Agency took costs into account.
For the vast majority of coal and oil plants, EPA decided that
beyond-the-floor standards would not be “reasonable after
considering costs.”
Id., at 9331. The Agency set such
a standard for only a single kind of plant, and only after
determining that the technology needed to meet the more lenient
limit would also achieve the more stringent one. See
id., at
9393; 76 Fed. Reg. 25046–25047. Otherwise, EPA determined,
the market-leader-based standards were enough.
Finally, as required by Executive Order and as
anticipated at the time of the “appropriate and
necessary” finding, EPA conducted a formal cost-benefit
analysis of its new emissions standards and incorporated those
findings into its proposed and final rules. See
id., at
25072–25078; 77 Fed. Reg. 9305–9306, 9424–9432.
That analysis estimated that the regulation’s yearly costs
would come in at under $10 billion, while its annual measureable
benefits would total many times more—between $37 and $90
billion. See
id., at 9305–9306;
ante, at 4. On
the costs side, EPA acknowledged that plants’ compliance with
the rule would likely cause electricity prices to rise by about 3%,
but projected that those prices would remain lower than they had
been as recently as 2010. See 77 Fed. Reg. 9413–9414. EPA
also thought the rule’s impact on jobs would be about a wash,
with jobs lost at some high-emitting plants but gained both at
cleaner plants and in the pollution control industry. See
ibid. On the benefits side, EPA noted that it could not
quantify many of the health gains that would result from reduced
mercury exposure. See
id., at 9306. But even putting those
aside, the rule’s annual benefits would include between 4,200
and 11,000 fewer premature deaths from respiratory and
cardiovascular causes, 3,100 fewer emergency room visits for
asthmatic children, 4,700 fewer non-fatal heart attacks, and
540,000 fewer days of lost work. See
id., at 9429.
Those concrete findings matter to these
cases—which, after all, turn on whether EPA reasonably took
costs into account in regulating plants’ emissions of
hazardous air pollutants. The majority insists that it may ignore
EPA’s cost-benefit analysis because “EPA did not rely
on” it when issuing the initial “appropriate and
necessary” finding.
Ante, at 15 (quoting Solicitor
General); see also
SEC v.
Chenery Corp., 318
U. S. 80 –94 (1943). At one level, that description is
true—indeed, a simple function of chronology: The kick-off
finding preceded the cost-benefit analysis by years and so could
not have taken its conclusions into account. But more
fundamentally, the majority’s account is off, because EPA
knew when it made that finding that it would consider costs at
every subsequent stage, culminating in a formal cost-benefit study.
And EPA knew that, absent unusual circumstances, the rule would
need to pass that cost-benefit review in order to issue. See Exec.
Order No. 12866, 58 Fed. Reg. 51736 (“Each agency shall
. . . adopt a regulation only upon a reasoned
determination that the benefits of the intended regulation justify
its costs”). The reasonableness of the Agency’s
decision to consider only the harms of emissions at the threshold
stage must be evaluated in that broader context. And in thinking
about that issue, it is well to remember the outcome here: a rule
whose benefits exceed its costs by three to nine times. In making
its “appropriate and necessary” finding, EPA had
committed to assessing and mitigating costs throughout the rest of
its rulemaking; if nothing else, the findings of the Agency’s
cost-benefit analysis—making clear that the final emissions
standards were cost-effective—show that EPA did just
that.
B
Suppose you were in charge of designing a
regulatory process. The subject matter—an industry’s
emissions of hazardous material—was highly complex, involving
multivarious factors demanding years of study. Would you
necessarily try to do everything at once? Or might you try to break
down this lengthy and complicated process into discrete stages? And
might you consider different factors, in different ways, at each of
those junctures? I think you might. You know that everything must
get done in the end—every relevant factor considered. But you
tend to think that “in the end” does not mean “in
the beginning.” And you structure your rulemaking process
accordingly, starting with a threshold determination that does not
mirror your end-stage analysis. Would that be at least (which is
all it must be) a “reasonable policy choice”?
Chevron, 467 U. S., at 845.
That is the question presented here, and it
nearly answers itself. Setting emissions levels for hazardous air
pollutants is necessarily a lengthy and complicated process,
demanding analysis of many considerations over many years. Costs
are a key factor in that process: As I have said, sensible
regulation requires careful scrutiny of the burdens that potential
rules impose. See
supra, at 6–7. But in ordering its
regulatory process, EPA knew it would have the opportunity to
consider costs in one after another of that rulemaking’s
stages—in setting the level of floor standards, in providing
a range of options for plants to meet them, in deciding whether or
where to require limits beyond the floor, and in finally completing
a formal cost-benefit analysis. See 65 Fed. Reg. 79830–79831;
supra, at 9–15. Given that context, EPA reasonably
decided that it was “appropriate”—once again, the
only statutory requirement relevant here—to trigger the
regulatory process based on the twin findings that the emissions in
question cause profound health and environmental harms and that
available pollution control technologies can reduce those
emissions. By making that decision, EPA did no more than commit
itself to developing a realistic and cost-effective
regulation—a rule that would take account of every relevant
factor, costs and benefits alike. And indeed, particular features
of the statutory scheme here indicate that EPA’s policy
choice was not just a minimally reasonable option but an eminently
reasonable one.
To start, that decision brought EPA’s
regulation of power plants into sync with its regulation of every
other significant source of hazardous pollutants under the Clean
Air Act. For all those types of sources (totaling over 100), the
Act instructs EPA to make the threshold decision to regulate based
solely on the quantity and effects of pollutants discharged; costs
enter the picture afterward, when the Agency takes up the task of
actually establishing emissions limits. See
supra, at
3–4. Industry after industry, year after year, EPA has
followed that approach to standard-setting, just as Congress
contemplated. See,
e.g., 58 Fed. Reg. 49354 (1993) (dry
cleaning facilities); 59 Fed. Reg. 64303 (1994) (gasoline
distributors); 60 Fed. Reg. 45948 (1995) (aerospace manufacturers).
And apparently with considerable success. At any rate, neither
those challenging this rule nor the Court remotely suggests that
these regulatory regimes have done “significantly more harm
than good.”
Ante, at 7. So when making its
“appropriate and necessary” finding for power plants,
EPA had good reason to continue in the same vein. See,
e.g.,
Entergy, 556 U. S., at 236 (opinion of Breyer, J.)
(noting that the reasonableness of an agency’s approach to
considering costs rests in part on whether that tack has met
“with apparent success in the past”). And that is
exactly how EPA explained its choice. Stating that it would
consider the “costs of controls” when “developing
a regulation,” the Agency noted that such an “approach
has helped build flexibility in meeting environmental objectives in
the past,” thereby preventing the imposition of
disproportionate costs. 65 Fed. Reg. 79830. Indeed, as EPA further
commented in issuing its rule, it would seem “inequitable to
impose a regulatory regime on every industry in Amer-ica and then
to exempt one category” after finding it repre-sented
“a significant part of the air toxics problem.” 77 Fed.
Reg. 9322 (quoting 136 Cong. Rec. 36062 (1990) (statement of Sen.
Durenberger)).
The majority’s attempt to answer this
point founders on even its own statement of facts. The majority
objects that “the whole point of having a separate provision
about power plants” is to “treat[ ] power plants
differently from other stationary sources.”
Ante, at 11 (emphasis in original). But turn back about 10
pages, and read what the majority says about
why Congress
treated power plants differently: because, as all parties agree,
separate regulatory requirements involving acid rain “were
expected to have the collateral effect of reducing power
plants’ emissions of hazardous air pollutants, although the
extent of the reduction was unclear.”
Ante, at 2; see
supra, at 4–5. For that reason alone (the majority
does not offer any other), Congress diverted EPA from its usual
regulatory path, instructing the Agency, as a preliminary matter,
to complete and consider a study about the residual harms to public
health arising from those emissions. See
ante, at 2–3;
supra, at 5. But once EPA found in its study that the acid
rain provisions would not significantly affect power plants’
emissions of hazardous pollutants, any rationale for treating power
plants differently from other sources discharging the same
substances went up in smoke. See 65 Fed. Reg. 79830. At that point,
the Agency would have had far more explaining to do if, rather than
following a well-tested model, it had devised a new scheme of
regulation for power plants only.
Still more, EPA could not have accurately
assessed costs at the time of its “appropriate and
necessary” finding. See 8 Mercury Study, at 6–2 (noting
the “many uncertainties” in any early-stage analysis of
pollution control costs). Under the statutory scheme, that finding
comes before—years before—the Agency designs emissions
standards. And until EPA knows what standards it will establish, it
cannot know what costs they will impose. Nor can those standards
even be reasonably guesstimated at such an early stage. Consider
what it takes to set floor standards alone. First, EPA must divide
power plants into categories and subcategories; as explained
earlier, those classification decisions significantly affect what
floors are established. See
supra, at 4, and n. 1,
11–12. And then, EPA must figure out the average emissions
level already achieved by the top 12% in each class so as to set
the new standards. None of that can realistically be accomplished
in advance of the Agency’s regulatory process: Indeed, those
steps are the very stuff of the rulemaking. Simi-larly, until EPA
knows what “compliance options” it will develop, it
cannot know how they will mitigate the costs plants must incur to
meet the floor standards. See
supra, at 13–14. And
again, deciding on those options takes substantial time. So there
is good reason for different considerations to go into the
threshold finding than into the final rule. Simply put, calculating
costs before starting to write a regulation would put the cart
before the horse.
III
The central flaw of the majority opinion is
that it ignores everything but one thing EPA did. It forgets that
EPA’s “appropriate and necessary” finding was
only a first step which got the rest of the regulatory process
rolling. It narrows its field of vision to that finding in
isolation, with barely a glance at all the ways in which EPA later
took costs into account. See
supra, at 10–11 (in
establishing floor standards);
supra, at 13–14 (in
adopting compliance options);
supra, at 14 (in deciding
whether to regulate beyond the floor);
supra, at 14–15
(in conducting a formal cost-benefit analysis as a final check). In
sum, the major-ity disregards how consideration of costs infused
the regulatory process, resulting not only in EPA’s adoption
of mitigation measures,
ante, at 13–14, but also in
EPA’s crafting of emissions standards that succeed in
producing benefits many times their price.
That mistake accounts for the majority’s
primary argument that the word “appropriate,” as used
in §7412(n)(1)(A), demands consideration of costs. See
ante, at 6–7. As I have noted, that would be true if
the “appropriate and necessary” finding were the only
step before imposing regulations on power plants. See
supra,
at 6–7. But, as should be more than clear by now, it was just
the first of many: Under the Clean Air Act, a long road lay ahead
in which the Agency would have more—and far
better—opportunities to evaluate the costs of diverse
emissions standards on power plants, just as it did on all other
sources. See
supra, at 4, 7, 9–15. EPA well understood
that fact: “We evaluate the terms ‘appropriate’
and ‘necessary,’ ” it explained, in light of
their “statutory context.” 76 Fed. Reg. 24986. And EPA
structured its regulatory process accordingly, with consideration
of costs coming (multiple times) after the threshold finding. The
only way the majority can cast that choice as unreasonable, given
the deference this Court owes to such agency decisions, is to blind
itself to the broader rulemaking scheme.
The same fault inheres in the majority’s
secondary argument that EPA engaged in an “interpretive
gerrymander[ ]” by considering environmental effects but
not costs in making its “appropriate and necessary”
finding.
Ante, at 8–9. The majority notes—quite
rightly—that Congress called for EPA to examine both subjects
in a study of mercury emissions from all sources (separate from the
study relating to power plants’ emissions alone). See
ante, at 8. And the majority states—again,
rightly—that Congress’s demand for that study
“provides direct evidence that Congress was concerned with
[both] environmental effects [and] cost.”
Ante, at 9
(internal quotation marks omitted). But nothing follows from that
fact, because EPA too was concerned with both. True enough, EPA
assessed the two at different times: environmental harms (along
with health harms) at the threshold, costs afterward. But that was
for the very reasons earlier described: because EPA wanted to treat
power plants like other sources and because it thought harms, but
not costs, could be accurately measured at that early stage. See
supra, at 17–20. Congress’s simple request for a
study of mercury emissions in no way conflicts with that choice of
when and how to consider both harms and costs. Once more, the
majority perceives a conflict only because it takes so partial a
view of the regulatory process.
And the identical blind spot causes the
majority’s sports-car metaphor to run off the road. The
majority likens EPA to a hypothetical driver who decides that
“it is ‘appropriate’ to buy a Ferrari without
thinking about cost, because he plans to think about cost later
when deciding whether to upgrade the sound system.”
Ante, at 11. The comparison is witty but wholly inapt. To
begin with, emissions limits are not a luxury good: They are a
safety measure, designed to curtail the significant health and
environmental harms caused by power plants spewing hazardous
pollutants. And more: EPA knows from past experience and expertise
alike that it will have the opportunity to purchase that good in a
cost-effective way. A better analogy might be to a car owner who
decides without first checking prices that it is “appropriate
and necessary” to replace her worn-out brake-pads, aware from
prior experience that she has ample time to comparison-shop and
bring that purchase within her budget. Faced with a serious hazard
and an available remedy, EPA moved forward like that sensible car
owner, with a promise that it would, and well-grounded confidence
that it could, take costs into account down the line.
That about does it for the majority’s
opinion, save for its final appeal to
Chenery—and
Chenery cannot save its holding. See
ante, at 14. Of
course a court may not uphold agency action on grounds different
from those the agency gave. See
Chenery, 318 U. S., at
87. But equally, a court may not strike down agency action without
considering the reasons the agency gave.
Id., at 95. And
that is what the majority does. Indeed, it is difficult to know
what agency document the majority is reading. It denies that
“EPA said . . . that cost-benefit analysis would be
deferred until later.”
Ante, at 13. But EPA said
exactly that: The “costs of controls,” the Agency
promised, “will be examined” as “a part of
developing a regulation.” 65 Fed. Reg. 79830. Tellingly,
these words appear nowhere in the majority’s opinion. But
what are they other than a statement that cost concerns, contra the
majority, are
not “irrelevant,”
ante, at
13 (without citation)—that they are simply going to come in
later?
And for good measure, EPA added still extra
explanation. In its “appropriate and necessary”
finding, the Agency committed to exploring “least-cost
solutions” in “devel-oping a standard for
utilities.” 65 Fed. Reg. 79830. The Agency explained that
such an approach—particularly mentioning the use of averaging
and subcategorization—had offered “opportunit[ies] for
lower cost solutions” and “helped build flexibility in
meeting environmental objectives in the past.”
Ibid.;
see
supra, at 7, 18
. Then, in issuing its proposed
and final rules, EPA affirmed that it had done just what it said.
EPA recognized that standard-setting must “allow the industry
to make practical investment decisions that minimize costs.”
76 Fed. Reg. 25057. Accordingly, the Agency said, it had
“provid[ed] flexibility and compliance options” so as
to make the rule “less costly” for regulated parties.
77 Fed. Reg. 9306. EPA added that it had rejected beyond-the-floor
standards for almost all power plants because they would not be
“reasonable after considering costs.”
Id., at
9331. And it showed the results of a formal analysis finding that
the rule’s costs paled in comparison to its benefits. In sum,
EPA concluded, it had made the final standards
“cost-efficient.”
Id., at 9434. What more would
the majority have EPA say?
IV
Costs matter in regulation. But when Congress
does not say how to take costs into account, agencies have broad
discretion to make that judgment. Accord,
ante, at 14
(noting that it is “up to the Agency to decide (as always,
within the limits of reasonable interpretation) how to account for
cost”). Far more than courts, agencies have the expertise and
experience necessary to design regula-tory processes suited to
“a technical and complex arena.”
Chevron, 467
U. S., at 863. 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 proc-ess with a formal analysis
demonstrating that the bene-fits 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.”
Ante, at 14.
The majority arrives at a different conclusion
only by disregarding most of EPA’s regulatory process. It
insists that EPA must consider costs—when EPA did just that,
over and over and over again. It concedes the importance of
“context” in determining what the “appropriate
and necessary” standard means, see
ante, at 7,
10—and then ignores every aspect of the rulemaking context in
which that standard plays a part. The result is a decision that
deprives the Agency of the latitude Congress gave it to design an
emissions-setting process sensibly accounting for costs and
benefits alike. And the result is a decision that deprives the
American public of the pollution control measures that the
responsible Agency, acting well within its delegated authority,
found would save many, many lives. I respectfully dissent.