• Supreme Court Upholds Broad Delegation of Power to EPA, and Rejects Consideration of Costs in Setting Health Standards
  • May 16, 2003
  • Law Firm: Reed Smith LLP - Pittsburgh Office
  • In a rare unanimous opinion, written by Justice Scalia, the United States Supreme Court in Whitman v. American Trucking Assns., Inc. made decisive rulings against industry on the role of costs in setting health standards, and on legislative grants of power to agencies to exercise broad decision-making authority.

    The Court affirmed the holding of the United States Court of Appeals for the District of Columbia Circuit ("Circuit Court") that costs of implementing National Ambient Air Quality Standards ("NAAQS") are not to be considered in the standard-setting process under the federal Clean Air Act, 42 U.S.C. ยง 7401 et seq. ("Act"). The Court also rejected the Circuit Court's surprising ruling that the Act's provision granting the U.S. Environmental Protection Agency ("EPA") the power to set public health standards was an unconstitutional delegation of legislative power. Finally, the Court ruled that EPA's policy for implementation of the revised ozone NAAQS was unlawful, and remanded the policy to the Agency. As a result, industry has two important opportunities to influence the revised NAAQS implementation process: first, during development of a new implementation policy for the revised ozone NAAQS, and second, during development of state plans for implementing the revised NAAQS regulations.

    Costs of Implementation

    The case was brought by various private parties including the American Trucking Associations, the National Chamber of Commerce and the states of Michigan, Ohio and West Virginia to challenge EPA's promulgation of more stringent revised NAAQS for particulate matter and ozone, a precursor to smog formation. Industry respondents argued that Section 109 of the Act does not expressly forbid consideration of costs, and that the language used by Congress is susceptible to an interpretation permitting consideration of costs.

    The Supreme Court affirmed an unbroken string of rulings by the Circuit Court that costs are not relevant to the promulgation of ambient air quality standards which are to be set at levels "the attainment and maintenance of which...are requisite to protect the public health" with "an adequate margin of safety" under Section 109 of the Act.

    The Supreme Court emphasized that the standard-setting process is the "engine that drives nearly all of Title I [of the Act]," which addresses air quality and emissions limitations. Therefore, the Court required respondents to show a clear "textual commitment" of authority to consider cost. It then noted that Congress knew how to direct EPA to consider costs under the Act, citing, e.g., setting new source performance standards under Section 111(a)(1) which are to "reflec[t] the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction) [EPA] determines has been adequately demonstrated." The Court then rejected the respondents' efforts to find support in the Act for their interpretation, stating it was "implausible" that Congress would give EPA the power to moderate or cancel NAAQS by ambiguous language.

    The Court was not troubled by the argument that compliance costs could injure the public health by "closing down whole industries and thereby impoverishing the workers...," since it believes Section 110(f)(1) of the Act allows EPA to waive compliance deadlines where sufficient controls are unavailable, and the sources are "essential...to the public health or welfare."

    Legislative Delegation

    The Supreme Court next ruled against industry on the delegation issue. The Circuit Court had held that EPA's interpretation of Section 109 lacked an "intelligible principle" for exercise of its authority. The language of Section 109 directs EPA to set "standards the attainment and maintenance of which...and allowing an adequate margin of safety, are requisite to protect the public health." The Circuit Court concluded that EPA was unable to articulate any criteria for drawing lines: "[EPA] has failed to state intelligibly how much is too much." (175 F.3d at 1034).

    Noting that only twice before had it found the requisite "intelligible principle" lacking (one of which provided literally no guidance for the exercise of discretion), the Supreme Court adopted the Solicitor General's analysis that "requisite" means "sufficient, but not more than necessary." The Court also noted that the Section 109 criteria resemble those approved in its 1980 decision upholding the grant of authority to the federal Occupational Safety and Health Administration to set occupational safety and health standards. (Industrial Union Dept. AFL-CIO v. American Petroleum Institute, 448 U.S. 607, 646 (1980)).

    Interpreting Section 109 as requiring EPA to set air quality standards at the level that is "requisite"- not higher or lower than necessary - to protect public health, "fits comfortably within the scope of discretion permitted by our precedent," the Court stated.

    EPA Ozone Implementation Policy

    After holding EPA's policy for implementing the revised ozone standard in non-attainment areas (areas where ozone levels currently exceed permitted maximum levels) was final-agency-action ripe for review, the Court found it unlawful. EPA's policy ignored a specific ozone non-attainment statutory provision in favor of a more general non-attainment provision giving EPA broader discretion in establishing area classifications and extending attainment dates. Applying the Chevron test (where a statute is silent or ambiguous, courts must defer to an agency's "reasonable interpretation"), the Court concluded that the Act's implementation scheme was ambiguous. It then held EPA's policy was "over the edge of reasonable interpretation" and "astonishing," stating: "[t]he EPA may not construe the [Act] in a way that completely nullifies textually applicable provisions meant to limit its discretion." Accordingly, EPA's policy was remanded to the Circuit Court.

    Conclusion

    Although the Supreme Court's decision significantly strengthens EPA's position in future rulemakings generally, the remand of EPA's policy does provide an opportunity for industry to influence EPA's implementation of the revised ozone NAAQS. A major issue for industry will be the schedule by which certain elements of ozone non-attainment programs are to be implemented in specific non-attainment areas.

    Also, even though this decision rejects consideration of costs in the standard-setting process, the Court emphasized that: "[t]he most important forum for consideration of claims of economic and technological infeasibility is before the state agency formulating the implementation plan." Consequently, important opportunities still exist for industry to participate in the implementation process, and to raise economic issues.