NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .
SUPREME COURT OF THE UNITED STATES
MICHIGAN et al. v. ENVIRONMENTAL PROTECTION AGENCY et al.
certiorari to the united states court of appeals for the district of columbia circuit1
No. 14–46. Argued March 25, 2015—Decided June 29, 2015
The Clean Air Act directs the Environmental Protection Agency to regulate emissions of hazardous air pollutants from certain stationary sources (such as refineries and factories). 42 U. S. C. §7412. The Agency may regulate power plants under this program only if it concludes that “regulation is appropriate and necessary” after studying hazards to public health posed by power-plant emissions. §7412(n)(1)(A). Here, EPA found power-plant regulation “appropriate” because the plants’ emissions pose risks to public health and the environment and because controls capable of reducing these emissions were available. It found regulation “necessary” because the imposition of other Clean Air Act requirements did not eliminate those risks. The Agency refused to consider cost when making its decision. It estimated, however, that the cost of its regulations to power plants would be $9.6 billion a year, but the quantifiable benefits from the resulting reduction in hazardous-air-pollutant emissions would be $4 to $6 million a year. Petitioners (including 23 States) sought review of EPA’s rule in the D. C. Circuit, which upheld the Agency’s refusal to consider costs in its decision to regulate.
Held: EPA interpreted §7412(n)(1)(A) unreasonably when it deemed cost irrelevant to the decision to regulate power plants. Pp. 5–15.
(a) Agency action is unlawful if it does not rest “ ‘on a consideration of the relevant factors.’ ” Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U. S. 29 . Even under the deferential standard of Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 , which directs courts to accept an agency’s reasonable resolution of an ambiguity in a statute that the agency administers, id., at 842–843, EPA strayed well beyond the bounds of reasonable interpretation in concluding that cost is not a factor relevant to the appropriateness of regulating power plants. Pp. 5–6.
(b) “Appropriate and necessary” is a capacious phrase. Read naturally against the backdrop of established administrative law, this phrase plainly encompasses cost. It is not rational, never mind “appropriate,” to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits. Statutory context supports this reading. Section 7412(n)(1) required the EPA to conduct three studies, including one that reflects concern about cost, see §7412(n)(1)(B); and the Agency agrees that the term “appropriate and necessary” must be interpreted in light of all three studies. Pp. 6–9.
(c) EPA’s counterarguments are unpersuasive. That other Clean Air Act provisions expressly mention cost only shows that §7412(n)(1)(A)’s broad reference to appropriateness encompasses multiple relevant factors, one of which is cost. Similarly, the modest principle of Whitman v. American Trucking Assns., Inc., 531 U. S. 457 —when the Clean Air Act expressly directs EPA to regulate on the basis of a discrete factor that does not include cost, the Act should not be read as implicitly allowing consideration of cost anyway—has no bearing on this case. Furthermore, the possibility of considering cost at a later stage, when deciding how much to regulate power plants, does not establish its irrelevance at this stage. And although the Clean Air Act makes cost irrelevant to the initial decision to regulate sources other than power plants, the whole point of having a separate provision for power plants was to treat power plants differently. Pp. 9–12.
(d) EPA must consider cost—including cost of compliance—before deciding whether regulation is appropriate and necessary. It will be up to the Agency to decide (as always, within the limits of reasonable interpretation) how to account for cost. Pp. 12–15.
748 F. 3d 1222, reversed and remanded.
Scalia, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Thomas, and Alito, JJ., joined. Thomas, J., filed a concurring opinion. Kagan, J., filed a dissenting opinion, in which Ginsburg, Breyer, and Sotomayor, JJ., joined.