Does Political Underhandedness of EPA’s “Appropriate” Determination for Utility MACT Undercut Agency’s Chevron Defense?

Judicial review of EPA’s Mercury and Air Toxics Standards (a.k.a., the absurd “Utility MACT”) has run a course all the way to the Supreme Court. The case is Michigan v. EPA; briefs and a transcript of oral arguments may be found here at the invaluable SCOTUSblog.

The issue at hand is: “Whether the Environmental Protection Agency unreasonably refused to consider costs in determining whether it is appropriate to regulate hazardous air pollutants emitted by electric utilities.”

Below, I’ve posted the briefest of recaps (ignore the following paragraph if you are already up to speed):

In 1990, Congress amended the Clean Air Act. The centerpiece of the Amendments was Title IV, a massive new regulatory regime to control sulfur dioxide emissions from existing power plants, in the name of fighting so-called “acid rain.” However, the Amendments also beefed-up §112 of the Clean Air Act, which controls hazardous air pollutants from existing sources by imposing ultra-stringent standards. Because power plants were the singular subject of Title IV’s sulfur dioxide program, Congress was reluctant to also subject existing power plants to the onerous provisions of §112, out of fear of redundant regulation.  As such, Members of Congress ordered EPA to investigate whether power plants warranted regulation under §112, in light of their also being subject to Title IV. Pursuant to the terms established by Congress, EPA was to regulate power plants under §112 only if the agency determined that doing so is “Appropriate and Necessary,” after considering other regulations and the threats posed by hazardous air pollutants from power plants. EPA made this determination in December 2000. This decision triggered mandatory §112 regulation, which was promulgated by EPA in February 2012—the Mercury and Air Toxics Standards.

Petitioners allege that it was unreasonable for EPA to ignore costs when it decided that it was “appropriate” to subject power plants to §112. In fact, the direct benefits of the rule are estimated by the agency to be $6 million, against direct costs of $10 billion annually. Petitioners claim that EPA impermissibly failed to take these lopsided costs vs. benefits into account when it locked itself into a course of regulation. (For a more detailed discussion of the rule’s costs and “benefits,” see this excellent Forbes op-ed by Brian Potts). 

EPA, on the other hand, argues that “appropriate” is a capacious term, of the sort that agencies have broad discretion to interpret under the deference regime for Article III Courts established by the seminal ruling in Chevron v. NRDC, 467 U.S. 837 (1984). Chevron established that an agency’s interpretations of ambiguous terms in its enabling statute should be upheld by courts unless the interpretation is plainly unreasonable. 

The Chevron ruling lends a number of justifications in support of the deference regime it creates. The first is the fact that Congress delegates an element of its Article I authority to agencies via enabling acts; inherent to this delegation is the authority to “fill gaps” in the statute—either explicit or implicit (i.e., ambiguities).

While a congressional delegation is essential to Chevron deference, the ruling also set forth policy justifications. For starters, the court explained that agencies possess expertise within their subject matters that makes them better informed to parse imprecise terms in their enabling statutes, relative to the courts (at 865). The court’s other policy justification for Chevron deference is the fact that agencies are politically accountable in a way that Article III Courts are not:

While agencies are not directly accountable to the people, the Chief Executive is, and it is entirely appropriate for this political branch of the Government to make such policy choices — resolving the competing interests which Congress itself either inadvertently did not resolve, or intentionally left to be resolved by the agency charged with the administration of the statute in light of everyday realities.(at 865-6)

Therefore, there exists a political accountability component to Chevron deference.

This brings me to the point of this post: The utter absence of Article II political accountability of EPA’s “Appropriate” determination. This decision, which triggered the Mercury and Air Toxics Standards, was rendered in December 2000—during President Clinton’s lame-duck session! Thus, this hugely consequential decision (it locked in §112 regulations for power plants) was made at the nadir of presidential political accountability.

So—Chevron deference is the basis of EPA’s defense of the Mercury and Air Toxics Standards before the Supreme Court. However, the rulemaking’s history demonstrates that the agency’s “appropriate” determination lacks Article II political accountability, which is one of three justifications for Chevron deference. This casts doubt on whether the agency merits such deference.