Court Monitor

Regulatory State Loses on Last Day

In a decision held until the last day of its Term, the U.S. Supreme Court delivered a stunning setback to environmentalists by requiring the Environmental Protection Agency (EPA) to consider the costs of new regulations before imposing them on the public. This decision sets a good precedent extending far beyond the facts of the case. For example, the Court's ruling can help block dubious new regulations imposed by the Obama Administration in the name of climate change or global warming.

This decision was rendered by the Supreme Court on June 29th, in a challenge brought against the EPA by a group that included Michigan and 22 other states. Michigan v. EPA. The 5-4 Court held that it was unreasonable, and thus invalid, for the EPA to ignore the costs of a new regulation that it imposed to limit the emission of air pollution from power plants. Congress passed a law requiring that new regulations be "appropriate and necessary," and this decision interpreted that phrase to mean that the EPA must consider the costs of new regulations before imposing them. For many environmental regulations, including some based on the theory of global warming, the EPA ignores the immense costs of its regulations.

Justice Scalia wrote for the majority, and he was joined by Chief Justice Roberts and Justices Kennedy, Thomas and Alito. "Read naturally in the present context, the phrase 'appropriate and necessary' requires at least some attention to cost. One would not say that it is even rational, never mind 'appropriate,' to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits," the Court ruled. Justice Scalia's opinion for the Court added that "[n]o regulation is 'appropriate' if it does significantly more harm than good."

The Obama Administration made a concession at oral argument in this case which contributed to its downfall. The Administration conceded that "if the Agency were to find that emissions from power plants do damage to human health, but that the technologies needed to eliminate these emissions do even more damage to human health, it would still deem regulation appropriate." Astounded by this admission of irrationality by the Obama Administration in imposing regulations, the Court sensibly rejected Obama's view and thereby rejected the authority of the EPA to impose costly, unjustified new regulations.

Justice Thomas went further in a separate concurrence, writing that it was time to rein in the overall power of the regulatory state. He noted that in other decisions "we seem to be straying further and further from the Constitution without so much as pausing to ask why" agencies typically have so much authority today. "We should stop to consider that document before blithely giving the force of law to any other agency 'interpretations' of federal statutes" in other cases, he wrote. Unfortunately, the other conservative Justices did not join his concurrence.

The dissenting liberal Justices were not happy campers. Led by Justice Kagan, they insisted that the EPA did consider costs, and that the regulations would save "many, many lives." But even they conceded that "[c]osts matter in regulation," and the EPA will need to be more diligent in addressing the costs of regulations before imposing them.