Regulatory Reform

SCOTUS: EPA Must Consider Costs Before Imposing Regulation

The Supreme Court’s 2014 Term came to a close on Monday, but not before it issued a strong rebuke of the U.S. Environmental Protection Agency’s (EPA) handling of the 2012 Mercury and Air Toxics (MATS) rule and perhaps establishing a major precedent that could affect many federal regulatory agencies going forward.

In a 5-4 decision penned by Justice Antonin Scalia, the Court ruled that EPA violated a provision in the Clean Air Act requiring the agency to determine if regulations targeting “hazards to public health” were “appropriate and necessary.”

Twenty-one states (led by Michigan) as well as several industry trade groups argued that since EPA did not consider the associated compliance costs of the regulation, they failed to adequately demonstrate that the regulation was indeed “appropriate and necessary.” The Court did not toss the MATS rule, opting instead to remand the case back to a lower court to make that determination.

epa scotus ruling

More interestingly, however, is the fact that the ruling may have far broader consequences for the administrative state. In saying that “[n]o regulation is ‘appropriate’ if it does significantly more harm than good,” the Court suggests pretty clearly that agencies will likely have to develop cost-benefit analyses of some sort before imposing a regulation. Questions will almost certainly be raised, perhaps in the form of future litigation, about what exactly such analyses should look like.

Andrew Grossman at the Cato Institute writes that the ruling may spell doom for EPA’s forthcoming Clean Power Plan and submits that the Court will, in the future, probably want lower courts to stay billion-dollar regulations so that legal process can be allowed to take place. If nothing else, with EPA poised to soon finalize its Clean Power Plan, new national ambient air quality standards (NAAQS) for ozone, and an assortment of other regulations, the Court’s ruling serves as a reminder that EPA’s unprecedented regulatory onslaught may not entirely withstand legal challenges.

In Depth: Regulatory Reform

In his first inaugural address, Thomas Jefferson said that “the sum of good government” was one “which shall restrain men from injuring one another” and “shall leave them otherwise free to regulate their own pursuits of industry.” Sadly, governments – both federal and state – have ignored this axiom and…

+ Regulatory Reform In Depth