Clean Air Act Standards Upheld in Industry Challenge

Clean Air Act Standards Upheld in Industry Challenge

In one of the most important environmental decisions in years, a unanimous United States Supreme Court recently handed the United States Environmental Protection Agency ("EPA") a major victory by upholding its method of establishing air quality standards, squarely rejecting industry's argument that EPA must consider the costs of reducing harmful air emissions when setting standards. The Court also ruled that the Clean Air Act does not unconstitutionally delegate legislative power to the EPA, because the Act places limits on EPA's discretion. In one setback for the agency, the Court found that EPA's policy for implementing new ozone rules was unlawful, and thus instructed EPA to develop a reasonable interpretation of the Clean Air Act's implementation provisions.

The Clean Air Act, enacted in 1970, requires the EPA to establish air quality standards that are protective of "public health" with "an adequate margin of safety." Pursuant to the Clean Air Act, EPA must promulgate National Ambient Air Quality Standards ("NAAQS") for each air pollutant for which air quality criteria have been issued, and must review the NAAQS every five years in order to make any appropriate revisions. In 1997, EPA revised the NAAQS for particulate matter ("PM") and ozone.

The American Trucking Association, the U.S. Chamber of Commerce, other businesses and several states challenged the 1997 NAAQS on grounds that the Clean Air Act requires EPA to consider implementation costs when setting air quality standards. The industry group contended that Congress' use of the phrase "public health" contemplated use of a cost-benefit analysis, because establishment of standards without consideration of economic factors could result in too-stringent criteria. Enforcement of those criteria would negatively affect the national economy, workers and consumers would be impoverished, and thus the health of the public would be harmed.

The Court declined to follow that reasoning, finding that the term "public health" as used in the Clean Air Act took its natural and primary meaning - the health of the community. Furthermore, the Court reasoned that since many other sections of the Clean Air Act explicitly permit or require EPA to consider economic costs when implementing air quality standards, Congress clearly did not intend to do so in such an oblique fashion in the NAAQS provisions. The Court therefore refused to read into the NAAQS sections of the Clean Air Act an authorization to consider costs that was expressly granted in many other sections of the Act, and held that EPA was barred from considering economic costs when setting clean air standards.

The challengers were similarly unsuccessful in their argument that, while the criteria used to establish air quality standards must be based on public health effects, they need not be based solely on those effects. The Court stated that even if it conceded that EPA was not limited to examination of the factors enumerated in the Clean Air Act, it would not conclude that EPA was required, or even permitted, to consider the economic costs of implementation. The Court held that the cost factor is "so indirectly related to public health and so full of potential for canceling the conclusions drawn from direct health effects" that Congress would have mentioned costs if it intended costs to be considered.

The Court did note that EPA assists the states in implementing the NAAQS, and that state environmental agencies consider technical and economic feasibility in developing State Implementation Plans, or SIPs. The clear message is that interested businesses should work more closely with state agencies during development of the SIPs, where cost considerations are appropriate.

The industry groups also failed to convince the Court that the section of the Clean Air Act requiring EPA to promulgate NAAQS unconstitutionally delegates legislative powers to EPA by failing to specify how much of a regulated harm - in this case, how much PM or ozone - is too much. To the contrary, the Court found that the statute both provides EPA with an intelligible principle to which EPA must conform and establishes adequate limits on the agency's discretion. (The Court noted that on only two occasions in its history has it found that a statute lacked the necessary "intelligible principle" to guide the agency's discretion.) The Clean Air Act requires EPA to establish air quality standards at the level which is requisite, defined by the Court as neither higher nor lower than is necessary, to protect public health. Therefore, the Clean Air Act provides the "intelligible principle" required by the nondelegation doctrine as set forth in prior Court decisions.

In the industry groups' one victory in this case, the Court found that the policy EPA developed to implement the revised ozone NAAQS is unlawful. The Clean Air Act itself is ambiguous with respect to how revised ozone NAAQS are to be implemented, but EPA's interpretation of how to resolve the ambiguity is unreasonable, because it would completely nullify a portion of the statute that clearly was intended to have effect. The Court remanded the case to the Court of Appeals with an instruction for EPA to develop a reasonable interpretation of the implementation provisions for ozone nonattainment areas.

The industry groups that challenged the EPA's standards said the rules would cost businesses almost $50 billion a year. Industry representatives indicated that they plan to challenge the ozone and PM standards in the lower courts under traditional legal principles. EPA counters that the improved air quality resulting from the more stringent standards will save thousands of lives and billions in health care costs. Environmental groups and EPA Administrator Christine Todd Whitman praised the Court's decision as protective of health.

The decision is a setback for the involved industry groups, and a major victory for EPA and other federal regulators, on two levels. First, the Court flatly rejected any contention that EPA should, or even may, consider costs in setting standards for control of pollution. Second, the broader impact of this decision is that the Court appears opposed to attempts to limit federal regulation via application of the nondelegation doctrine, which would have affected regulations issued by many federal agencies.

While the Court's decision does not break new ground, since it maintains the current standard, it is important to EPA and environmental groups because it comes at a time when a Republican president and Congress may well attempt to curtail environmental regulations under pressure from business groups. In addition, the decision comes from a squarely conservative Court, which might well have been expected to find in favor of industry. Nonetheless, if industry turns its attention to State Implementation Plan development, it may yet succeed in building cost considerations into implementation of the Clean Air Act.

Whitman v. American Trucking Associations, Inc., et als., No. 99-1257 (February 27, 2001).