Clean Air–Is the Sky the Limit?Heather L. RossSociety is inclined to see clean air as a priceless amenity, and the U.S.Supreme Court recently ruled that Congress held that view when it wrote theClean Air Act—that costs should not be considered in setting air quality standards. How disproportionate a burden are we willing to bear to keep thisappealing, and expensive, faith? On February 27, 2001, the U. S. Supreme Court ruledin Whitman v. American Trucking Associations (ATA)that only health factors can be considered in settingnational ambient air quality standards (NAAQS). Mediaaccounts called the opinion, which upheld an interpre-tation of the Clean Air Act (CAA) that had been in placefor decades, “the dog that didn’t bark.” Was this a nonevent? When the Supreme Court ruledagainst cost-benefit analysis for NAAQS, did societydodge a bullet or take one? This article will argue that:as a matter of law, reasonable people can differ with thetwo different opinions filed on this point, and as a mat-ter of policy, society now faces greater risks to itswell-being from keeping the no-cost rule than it wouldhave from overturning it. Taken at its word, the Supreme Court ruling requiresthe U.S. Environmental Protection Agency (EPA) to setair quality standards that are by definition too pristine tobe in the public interest, and it requires the courts to makesure that they do. How did we get here?The Clean Air ActThe costs and benefits of CAA are both enormous, butthey are moving in opposite directions. As the air getscleaner over time, the benefits of further improvementin air quality decline while the costs increase. EPA esti-mates that from 1970 to 1990, the first 20 years of CAA,society devoted $1.6 trillion to reducing air pollution,about 40% in compliance costs borne by businesses,consumers, and governments and 60% in aggregate grossnational product losses. Under the strengthened CAAAmendments of 1990, EPA estimates that society willspend $45.8 billion on compliance costs alone in 2010,a 140% increase from such costs in 1990. EPA’s separateestimate of the additional costs of its 1997 ozone andparticulate standards, the rulemaking action that set inmotion the Supreme Court’s recent decision, comes to$48 billion per year. Is this money well spent? This is a challenging ques-tion since both the benefits and the costs are hard tomeasure. Challenges include the difficulty of assessingever-smaller health risks, valuing improvements inhuman health that have no direct market price, and antic-ipating the cost and performance of as-yet-unidentifiedmitigation technologies. But we know that the rising mar-ginal costs of cleaner air will eventually exceed thedeclining marginal benefits, and that society will be worseoff once they do. Weighing costs and benefits is essen-tial to finding a stopping point before we pursue a degreeof purity that lowers the quality of human life in favor ofadvancing the quality of air. Did Congress really intendto make this illegal?FALL 2001 / ISSUE 143 RESOURCES 13RESOURCES FOR THE FUTURE14 RESOURCES SPRING 2001 / ISSUE 143The Court CaseFour years ago, in July 1997, EPA published new NAAQS forozone and small particulate matter. In the case of ozone, the newstandard replaces a previous one established in 1979. That stan-dard is well overdue in its originally scheduled achievement—onefifth of the U.S. population still lives in nonattainment counties.But it has produced a significant improvement in air quality—urban ozone concentrations have fallen 25% since 1980. Thenew tighter standard will require additional emissions reductionsthat, in the case of Los Angeles, exceed total current motor vehi-cle emissions. Reductions of this magnitude will requireunprecedented technological change of a nature we can't cur-rently identify and at a sustained pace we have never experienced. A large group of plaintiffs—consisting of manufacturing,electric utility and transportation companies along with threemidwestern states—filed suit against EPA’s regulation in the U.S.Court of Appeals for the District of Columbia, which ruled ontheir petition in May 1999. The Appeals Court found that EPA’sregulation “effected an unconstitutional delegation of authority”that went beyond the discretion that Congress could grant theagency. The remedy imposed by the court was not that the lawshould be changed, but that EPA should enunciate an “intelli-gible principle” to explain how it was going to limit its owndiscretion by determining how much protection was enough.There is only one way to make this determination properly, andthat is by weighing costs and benefits. By definition, protectionthat costs us more than we think it is worth is too much. However back in 1980, this same Appeals Court, affirminga position advanced by EPA, had declared this cost-benefit deci-sion rule unlawful. The Court was now facing up to the fact thatits no-cost rule—coupled with advancing science capable ofdetecting or inferring health benefits down to zero concentra-tions—had delegated to EPA essentially unlimited power overhuman activity. The Appeals Court solved the problem of hav-ing attributed to Congress an open-ended decision rule bydeclaring that rule as exercised by EPA unconstitutional. Thissolution was arguably a bigger reach legally, and definitely moresignificant in policy potential, than reversing the no-cost rulewould have been. EPA appealed to the Supreme Court, which took the case,and then also accepted a cross-filing from the opposite side seek-ing further review of the no-cost rule. For both advocates andopponents of cost-benefit analysis, the stage was set for an his-toric decision.The Supreme Court RulingIn two separate opinions, the Supreme Court unanimously reaf-firmed the Appeals Court ruling that costs could not beconsidered in setting air quality standards. In the majority opin-ion, Justice Antonin Scalia argues that costs are too importantto be read into NAAQS. Because of their significance, costs mustbe “expressly mentioned” in the NAAQS language or they are“unambiguously” barred. Only Justice Stephen Breyer eschewsthis ominous “silence is prohibition” argument. In a separateopinion concurring with the judgement of the majority he says:In order to better achieve regulatory goals—for example,to allocate resources so that they save more lives or pro-duce a cleaner environment—regulators must often takeaccount of all of a proposed regulation’s