FRIENDS WITH CO-BENEFITS: DEFENDING THE EPA'S CONSIDERATION OF CO-BENEFITS WHEN PROMULGATING CLEAN AIR ACT REGULATIONS.

• Date: 22 December 2023
• Author: Lindstrom, Casey E.
• Published date: 22 December 2023

CONTENTS
                INTRODUCTION
                I. STRUCTURE OF THE CLEAN AIR ACT AND COST-BENEFIT ANALYSES
                 A. Clean Air Act Basics
                 B. Cost Consideration
                 C. Conducting the Cost-Benefit Analyses
                 1. Cost Analysis
                 2. Benefit Analysis
                II. RECENT CHALLENGES TO THE EPA'S USE OF CO-BENEFITS
                III. THE CHEVRON DOCTRINE
                 A. Applying the Chevron Doctrine
                 B. The Fall of the Chevron Doctrine
                IV. MAJOR QUESTIONS DOCTRINE
                 A. Creation of the Major Questions Doctrine
                 B. What Makes a Question Major
                 C. Do Co-Benefits Resolve a Major Question
                V. ARBITRARY AND CAPRICIOUS "HARD LOOK" REVIEW
                VI. STARE DECISIS AND JUDICIAL SUPPORT OF CO-BENEFITS
                CONCLUSION
                

INTRODUCTION

The growing economic and climate crisis has made it difficult to pass successful clean energy and climate regulations. (1) Despite clean energy having the potential to produce "decades of cheap power," the high up-front costs provide an economic hurdle for countries to jump over. (2) For example, the Environmental Protection Agency (EPA) estimated that its 2015 Clean Power Plan for regulating greenhouse gas emissions (GHG) would annually cost "$5.5 billion by 2020 and $7.3 billion by 2030." (3)

In the United States, when the EPA promulgates regulations under the Clean Air Act (CAA), (4) "[m]ost statutory provisions require or allow [the EPA to take] some consideration of cost and benefits." (5) To outweigh the high up-front costs that often hinder environmental progress, the EPA includes various co-benefits when conducting its cost-benefit analyses under the CAA. These co-benefits are "win-win" situations. (6) They refer to "the positive effects that a policy ... aimed at one objective might have on other objectives." (7) A general example is a regulation aimed at reducing GHG emissions would also have the co-benefit of decreasing human health risks. (8) A specific example where co-benefits were important to a piece of legislation is when the Obama administration EPA passed the Mercury Air Toxic Standards (MATS) to decrease mercury emissions from coal- and oil-fired electric plants. (9) The EPA attributed most of the regulation's benefits not to the direct decrease of mercury emissions, but to the co-benefit of decreases in dangerous particulate matter emissions. (10) These simultaneous benefits occur because coal plants emit both mercury and particulate matter (along with other harmful substances). When the plants install control systems to comply with a regulation to limit one substance's emissions, emissions from other substances will also be caught by the installed technology causing a decrease in emissions of both. (11) Without the consideration of these co-benefits, the cost of complying with the MATS was approximately 2,000 times greater than the estimated direct benefits. (12)

It is important for the EPA to have the ability to look at the big-picture effects of potential regulations so it can ensure that it is drafting efficient and protective policies. (13) Co-benefits aid the EPA in its responsibility to propose regulations "with the greatest net benefits." (14) Ensuring clean air goes beyond the political debate surrounding climate change mitigation, for the pollutants listed under the CAA can have deadly impacts on human health if not regulated properly. (15)

To fully understand where the importance for EPA co-benefit use comes from, Part I sets the statutory foundation by summarizing the basic structure of the Clean Air Act. Part I then provides a general breakdown of when and how the EPA conducts cost-benefit analyses in the regulatory process. Part II discusses two recent challenges to this practice: one stemming from criticism the EPA received after promulgating a rule with a strong reliance on co-benefits, and one where the EPA itself changed its stance after an administration change on how much weight co-benefits should be given in its analyses. Despite the various criticisms to co-benefits, such as double counting and faulty data methods, perhaps the loudest outcry is that co-benefits give the EPA the ability to regulate pollutants that do not fall under its statutory authority--either in that specific provision or in the Act as a whole. The concern is that the direct benefit acts as the Trojan horse used to justify a regulation where the EPA's real focus is on achieving the co-benefit. (16)

The remaining Parts use administrative law principles to argue that the EPA is acting within its authority and expertise when it considers co-benefits in policy decisions. The defense starts with Part III applying the Chevron doctrine to find that the EPA has discretion to determine which factors are relevant to consider when devising CAA provisions. (17) However, with the Supreme Court's recent hesitancy to apply the Chevron doctrine, Part IV provides another defense. It outlines how co-benefits are not precluded under the major questions doctrine, so the plain language and purpose of the CAA controls in giving the EPA co-benefit authority. Part V applies the Administrative Procedure Act to showcase how policy decisions that consider co-benefits withstand the arbitrary and capricious "hard look" review. Lastly, Part VI applies the principle of stare decisis to the EPA's discretionary interpretation of the CAA to consider costs and benefits.

I. STRUCTURE OF THE CLEAN AIR ACT AND COST-BENEFIT ANALYSES

A. Clean Air Act Basics

The first step to regulate an air pollutant from a stationary source under the CAA is for a pollutant to be listed as either a criteria air pollutant or a hazardous air pollutant (HAP). (18) Criteria air pollutants are pollutants that "endanger public health or welfare." (19) The designation of a substance as one of these pollutants is based on criteria that the EPA Administrator establishes using the "latest scientific knowledge" to determine what factors and quantities of a substance affect "public health or welfare." (20) Examples of criteria air pollutants are particulate matter, carbon monoxide, sulfur oxide, and nitrogen dioxide. (21) While some levels of criteria pollutants in the atmosphere are safe, that is not the case for hazardous air pollutants. HAPs are pollutants that the Administrator finds to cause "or may reasonably be anticipated to cause death, injury, or serious adverse effects to human health or the environment." (22) Even in small concentrations, HAPs can cause cancer and other serious health risks. Examples of HAPs are benzene, mercury, and lead compounds. (23)

The Administrator then sets emission standards for each listed pollutant. When setting HAP standards, the Administrator must consider the " (A) ... adverse effects of such pollutants on public health and the environment; (B) the quantity and location of emissions ... and; (C) the efficiency of ... the processes or technologies used." (24) The standards must reflect the "maximum degree of [emission] reduction ... that the Administrator, taking into consideration the cost of achieving such ... reduction, ... determines is achievable for new or existing sources. (25)

Because the CAA strongly focuses on regulating criteria air pollutants, its standards are set through the National Ambient Air Quality Standards (NAAQS). (26) NAAQS must be set at a level that is "requisite to protect the public health" with an "adequate margin of safety." (27) New sources of pollution emissions are subjected to higher standards than existing sources. (28) Standards of performance for new sources must reflect the "best system of emission reduction" that the Administrator determines has been "adequately demonstrated." (29) In determining what the "best system of emission reduction" is, the Administrator must consider "the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements." (30)

B. Cost Consideration

In a review of sixty-seven major CAA sections, about half (thirty-four) were found to explicitly permit or require cost consideration, and eight more were found to imply cost consideration. (31) However, other sections of the Act make no mention of cost consideration, or explicitly prohibit it. In the 2001 decision Whitman v. American Trucking Associations, Inc., (32) the Supreme Court ruled that when setting NAAQS under CAA section 109, (33) the EPA cannot consider implementation costs. (34) The EPA is tasked with identifying the highest 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." (35) There is no consideration of costs in this initial calculation. (36) While challengers argued that economic concerns are a part of "public health," the Court pointed out that other sections of the CAA explicitly state that the EPA is required to take cost into consideration. (37) One place in the CAA where cost is explicitly required is section 111, where the Administrator is instructed to set standards for new sources at a level which reflects the "best system of emission reduction" considering the "cost of achieving such reduction." (38) Therefore, the lack of the word "cost" in section 109 makes the text and Congress's intent clear.

Thus, due to Congress's use of "cost" in other sections of the CAA, cost consideration still plays an important role in the EPA's CAA duties. In addition to section 111, the EPA must also consider costs under section 112, when promulgating HAP standards and regulations. (39) Moreover, in Michigan v. EPA, (40) the Supreme Court held that the EPA acted unreasonably when it failed to consider costs when determining whether it was "appropriate and necessary" to regulate power plant HAP emissions. (41) Even Justice Kagan's dissenting opinion admitted that "[c]ost is almost always a relevant--and usually, a highly important--factor in regulation. Unless Congress provides otherwise, an agency acts unreasonably in establishing 'a standard-setting process that ignore[s] economic considerations.'" (42)

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