Michigan v. Envtl. Prot. Agency
135 S. Ct. 2699
| SCOTUS | 2015Background
- The Clean Air Act's §7412 establishes the Hazardous Air Pollutants (HAP) program, generally regulating major and area stationary sources; for most sources, emissions thresholds and threats to health/environment drive the initial coverage decision.
- Congress required a special study and finding for electric utility steam generating units (power plants): EPA must regulate those units under §7412 if it "finds such regulation is appropriate and necessary" after the study (§7412(n)(1)(A)).
- EPA concluded in 2000 (reaffirmed in 2012) that regulation of coal- and oil-fired power plants was "appropriate and necessary," but stated that cost was irrelevant to that initial finding.
- EPA’s Regulatory Impact Analysis estimated annual compliance costs near $9.6 billion and quantifiable direct HAP benefits of only $4–6 million, though including ancillary benefits (reduced PM/SO2) raised quantified benefits to $37–90 billion.
- Petitioners (including 23 States) challenged EPA’s refusal to consider costs at the threshold finding; the D.C. Circuit upheld EPA; the Supreme Court granted review.
Issues
| Issue | Petitioners' Argument | EPA/Government's Argument | Held |
|---|---|---|---|
| Whether EPA may categorically ignore costs when deciding whether regulation of power plants is "appropriate and necessary" under §7412(n)(1)(A) | EPA must consider costs in the initial appropriateness/necessity finding because "appropriate" naturally includes weighing benefits and costs | The statutory phrase does not require consideration of costs at the threshold; costs can be and are considered later when setting standards and beyond-the-floor limits | Court: EPA unreasonably interpreted §7412(n)(1)(A); EPA must consider costs (including compliance costs) before deciding regulation is appropriate and necessary |
| Whether Chevron deference permits EPA’s interpretation | Petitioners: Even under Chevron, the agency’s reading is unreasonable because context and settled administrative practice show costs are relevant | EPA: Its interpretation of an ambiguous term merits deference under Chevron as a reasonable agency construction | Court applied Chevron and found EPA’s interpretation unreasonable and therefore not entitled to deference |
| Whether the agency may rely on later-stage consideration (floors, subcategorization, beyond‑floor analysis, RIA ancillary benefits) to justify ignoring costs at the threshold | Petitioners: Relying on later-stage cost controls cannot excuse an initial categorical refusal to consider cost; agency must consider all relevant factors when making the threshold decision | EPA & dissent: EPA reasonably deferred cost consideration to later stages (floors, subcategories, compliance options, and formal cost-benefit analysis); overall rule considered costs repeatedly and is cost‑effective | Court: Chenery requires courts to judge EPA by the reasons it gave; EPA said cost was irrelevant at the threshold, so later-stage analysis cannot salvage the initial failure to consider cost; remand required |
Key Cases Cited
- Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (framework for judicial deference to reasonable agency interpretations of ambiguous statutes)
- Motor Vehicle Mfrs. Assn. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29 (1983) (agency must consider relevant factors and provide reasoned explanation)
- Allentown Mack Sales & Service, Inc. v. NLRB, 522 U.S. 359 (1998) (agencies must engage in reasoned decisionmaking)
- SEC v. Chenery Corp., 318 U.S. 80 (1943) (courts may uphold agency action only on the grounds the agency relied upon)
- Whitman v. American Trucking Assns., Inc., 531 U.S. 457 (2001) (refusal to read an implicit cost consideration into a statutory command where Congress specified other criteria)
- Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208 (2009) (costs and benefits must be considered in certain regulatory decisions; caution about imposing massive costs disproportionate to benefits)