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Law School Case Brief

Michigan v. EPA - 135 S. Ct. 2699 (2015)

Rule:

Federal administrative agencies are required to engage in “reasoned decision-making.” 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. It follows that agency action is lawful only if it rests on a consideration of the relevant factors.

Facts:

The Clean Air Act directed the Environmental Protection Agency to regulate emissions of hazardous air pollutants from certain stationary sources such as refineries and factories. The EPA may regulate power plants under this program only if there was a conclusion that regulation was appropriate and necessary after studying hazards to public health posed by power-plant emissions. In the case at bar, EPA found power-plant regulation “appropriate” because the plants' emissions posed risks to public health and the environment and because controls capable of reducing these emissions were available. It further found regulation “necessary” because the imposition of other Clean Air Act requirements did not eliminate those risks. The EPA refused to consider cost when making its decision. It estimated, however, that the cost of its regulations to power plants would be $9.6 billion a year, but the quantifiable benefits from the resulting reduction in hazardous-air-pollutant emissions would only be $4 to $6 million a year. Petitioners (including 23 States) sought review of EPA's rule in the D. C. Circuit, which upheld its refusal to consider costs in its decision to regulate.

Issue:

Did the Environmental Protection Agency err in not considering cost when making its decision to regulate power plants?

Answer:

Yes.

Conclusion:

On a writ of certiorari, the Supreme Court of the United States held that the Environmental Protection Agency (EPA) interpreted the Clean Air Act unreasonably when it deemed cost irrelevant to the decision to regulate power plants because the statutory directive of determining whether power plant regulation was "appropriate and necessary" required at least some attention to cost, which included more than the expense of complying with regulations. According to the Court, it was unreasonable to infer that, by expressly making cost relevant to other decisions, the Act implicitly made cost irrelevant to the appropriateness of regulating power plants. The Court reversed the judgment.

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