Will the Supreme Court Clear the Air?

Policy Matters Working Paper No. 00-17

Posted: 16 Jul 2001

See all articles by Randall Lutter

Randall Lutter

American Enterprise Institute (AEI); AEI-Brookings Joint Center for Regulatory Studies

Date Written: November 2000

Abstract

The clamor of the election campaign has diverted attention from a momentous Supreme Court case about perhaps the most important regulation of the Clinton Administration. On election day the Court will hear arguments about the Environmental Protection Agency's monumental 1997 air quality standards, which established stringent new maximum levels for ozone and fine particles in outdoor air. The Court's decision could rein in administrative agencies' authority and reestablish the principle that regulators should consider all anticipated effects of their decisions.

According to EPA, in 2010 alone these national ambient air quality standards would prevent 15,000 deaths and cost $50 billion - big numbers even in Washington.

Echoing a recent appeals court finding, lawyers representing trucking and other industries will argue that EPA's standards are unconstitutional. They will claim that EPA, by choosing standards without an intelligible principle derived from the Clean Air Act, violated the Constitutional clause giving "all legislative powers" to Congress. Since balancing costs and benefits could provide the missing intelligible principle, the lawyers will also ask the Court to reverse a 1980 lower court decision that keeps EPA from considering costs in any form.

In response, government lawyers will claim EPA is simply following a Congressional directive to set air quality standards "requisite to protect public health", a directive that they think implicitly means irrespective of cost or feasibility. They will add that this directive makes sense because EPA will consider cost in subsequent "implementation" decisions.

EPA's customary method of setting standards without regard to cost has become distressingly, if not completely, arbitrary in light of recent scientific insights. The method made some sense when scientists thought that pollution damages disappeared below identifiable pollutant concentrations. In that context, EPA had only to find that threshold concentration and then to set a standard somewhat lower.

But before EPA issued its 1997 standards, its science advisers cautioned that damages from ozone were likely to vary in proportion to pollution even at very low concentrations. For the other pollutant in question, fine particles, EPA assumed a similar relationship, because scientists had no evidence to the contrary. Such a relationship means that any standard (other than a utopian standard of zero pollution) would allow some risk, so the choice of a standard irrespective of costs or feasibility boils down to a subjective judgment of how much risk is too much.

EPA's standard-setting process has a second and largely overlooked flaw in addition to its disturbing arbitrariness. EPA's pledge to consider costs when reviewing states' plans to meet the standards rings hollow if the standards require impossibly low emissions. And that is likely to be the case for EPA's ozone standard. The agency's data indicate that in five cities the emissions reductions needed to meet that standard are at least seven times greater than the emissions cuts achievable from known control measures. Eliminating all motor vehicles emissions would not be enough to meet the standards in Los Angeles and San Francisco, according to EPA data. A plain reading of EPA's data suggests that meeting the ozone standard is simply out of reach.

EPA dodged this conclusion by constructing flawed cost estimates. It estimated costs by simply assuming necessary emission reductions would be available at an arbitrary cost of $10,000 per ton. Independent cost estimates that avoid EPA's arbitrary assumption range from much higher to astronomical.

New scientific research published in Environmental Science & Technology shows that emissions cuts of 95 percent in southern California would not bring ozone levels anywhere close to EPA's standard.

The infeasibility of EPA's air standards should be no surprise. EPA admits it sets standards without considering feasibility. And although ozone levels have fallen dramatically, ninety million people still live in areas that violate the ozone standard issued in 1979.

Infeasible standards are nonetheless bad government. The costs of the last emissions reductions needed to (almost) meet infeasible standards swamp the associated benefits. Such standards give enforcement officials too much authority to decide whose emissions to cut. Infeasible standards based on health effects are intrinsically hypocritical because the health benefits used to justify the standards are not attainable.

Moreover, regulations that are infeasible and binding demean both the integrity of law and the social covenant to be law-abiding.

Considering costs in setting standards would promote respect for the law by deterring federal agencies from issuing infeasible regulations that ask people to accept the impossible as binding. Formal consideration of costs, which are the best measure of the extent of feasibility, would also improve public debate about alternative standards and promote cost-effective regulations. The Supreme Court should encourage EPA to consider costs in setting air quality standards.

Suggested Citation

Lutter, Randall, Will the Supreme Court Clear the Air? (November 2000). Policy Matters Working Paper No. 00-17, Available at SSRN: https://ssrn.com/abstract=259789

Randall Lutter (Contact Author)

American Enterprise Institute (AEI) ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States
202-862-7177 (Phone)

AEI-Brookings Joint Center for Regulatory Studies

1150 17th Street, N.W.
Washington, DC 20036
United States

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