Let them hate on Justice Antonin Scalia'smischaracterization of the Environmental Protection Agency's position in a 13-year-old case for which he wrote the opinion. Our Nino is a playa, not a hater.
Despite the error, Scalia was right about how the court's opinion on Tuesday in EPA v. EME Homer City Generation created tension with precedent. And that, in turn, may reveal something pretty fascinating about the culture of environmental regulation.
The background is the important case of Whitman v. American Trucking Association of 2001. One of the key questions was whether the EPA was even allowed to consider the cost of implementation in setting the all-important national ambient air quality standards. (The agency's position at the time was what Scalia got wrong on Tuesday.) A unanimous court held that the statute didn't allow any consideration of cost. The reasoning, according to Scalia's opinion, was that the statute called on the EPA "to identify the maximum airborne concentration of a pollutant that the public health can tolerate, decrease the concentration to provide an 'adequate' margin of safety, and set the standard at that level." Because Congress never mentioned costs, the court held, costs could not be considered: "Nowhere are the costs of achieving such a standard made part of [the] initial calculation."
Fast-forward to EME Homer. The so-called good neighbor provision at issue in the case also doesn't mention computation of costs. It authorizes the EPA to require the states to eliminate such "amounts" of pollution as "contribute significantly to nonattainment" of the air-quality standards in downwind states.
The majority opinion, written by Justice Ruth Bader Ginsburg, concluded this language was ambiguous as to whether costs should be weighed against benefits. The EPA thought they should be. Under a well-known principle of deference to reasonable agency interpretations of ambiguous language, the court upheld the EPA's interpretation of the statute. Considering costs "makes good sense," the court said, and the EPA solution was "efficient and equitable."
But what, exactly, was the difference between the statutes in the two cases? The explanation gets fairly deep into the weeds, but stick with me.
Ginsburg insisted the difference was that the statute in the 2001 case provided "express criteria" to the standards, including "adequate margin of safety," whereas the good neighbor provision simply told the EPA to eliminate "amounts" while remaining "silent" on what particular amounts should be eliminated. Scalia dismissed that distinction, insisting the language of the good neighbor provision is just as absolute and categorical as that in the 2001 case.
The truth is that the provisions are in fact comparably absolute or comparably ambiguous -- take your pick. To me, they are both ambiguous: Who knows what counts as an "adequate margin of safety"? And who can say what amounts "contribute significantly" to a level of pollution?
The real difference between the two cases is that, in 2001, the EPA didn't try to compute costs, and the court let the EPA rely on its own statutory interpretation. The court didn't say it was deferring to the agency's reasonable interpretation -- it said instead that the statute was unambiguous -- but in the end, the court was letting the agency do what it wanted.
In 2014, the EPA did want to consider costs -- and the court again upheld the EPA's decision. There may not be a true doctrinal contradiction between the cases, since ambiguity is always in the eye of the (judicial) beholder. But there is certainly a tension, and Scalia was right to point it out.
A final note: Why did the EPA not want to consider costs in setting the air-quality standards back in 2001, but want to consider them in setting the good neighbor rule? The answer to the first question is straightforward. It likes clean air. The EPA worries that, if you do a cost-benefit analysis, you might end up undervaluing the benefits of clean air or overstating the costs, and hence set the basic standards for air pollution too low. Across Republican and Democratic administrations, the tendency of the career EPA bureaucracy is to favor a cleaner environment and care less about overall costs. This may be good or bad, but it is the natural result of the bureaucratic preferences of an agency created to protect the environment.
The answer to why the EPA wanted to weigh costs in setting the good neighbor rule is more complicated. In her opinion, Justice Ginsburg explained the EPA was primarily concerned with allocating costs fairly among different states that might have in the past spent different amounts on reducing pollution. Considering cost was therefore a solution to what she called an "allocation problem." Equity, not efficiency, was driving the bus. Because the EPA didn't think of itself as setting standards to protect the environment directly, just as distributing costs among different actors, it didn't mind weighing costs and benefits in this case.
There's a lesson here for how the environmental community thinks about cost-benefit analysis: not as a mechanism for identifying the right amount of environmental protection, but as a tool for handing out the burdens fairly. To Scalia, this might well be a distinction without a difference; but to the EPA, it's what separates clean air from the question of who pays for it.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author on this story:
Noah Feldman at email@example.com
To contact the editor on this story:
Toby Harshaw at firstname.lastname@example.org