Clean Air Is the Sky the Limit Heather L Ross Society 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 the Clean Air Act that costs should not be considered in setting air quality standards How disproportionate a burden are we willing to bear to keep this appealing and expensive faith O n February 27 2001 the U S Supreme Court ruled in Whitman v American Trucking Associations ATA that only health factors can be considered in setting national ambient air quality standards NAAQS Media accounts called the opinion which upheld an interpretation of the Clean Air Act CAA that had been in place for decades the dog that didn t bark Was this a nonevent When the Supreme Court ruled against cost benefit analysis for NAAQS did society dodge a bullet or take one This article will argue that as a matter of law reasonable people can differ with the two different opinions filed on this point and as a matter of policy society now faces greater risks to its well being from keeping the no cost rule than it would have from overturning it Taken at its word the Supreme Court ruling requires the U S Environmental Protection Agency EPA to set air quality standards that are by definition too pristine to be in the public interest and it requires the courts to make sure that they do How did we get here The Clean Air Act The costs and benefits of CAA are both enormous but they are moving in opposite directions As the air gets cleaner over time the benefits of further improvement in 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 gross national product losses Under the strengthened CAA Amendments of 1990 EPA estimates that society will spend 45 8 billion on compliance costs alone in 2010 a 140 increase from such costs in 1990 EPA s separate estimate of the additional costs of its 1997 ozone and particulate standards the rulemaking action that set in motion the Supreme Court s recent decision comes to 48 billion per year Is this money well spent This is a challenging question since both the benefits and the costs are hard to measure Challenges include the difficulty of assessing ever smaller health risks valuing improvements in human health that have no direct market price and anticipating the cost and performance of as yet unidentified mitigation technologies But we know that the rising marginal costs of cleaner air will eventually exceed the declining marginal benefits and that society will be worse off once they do Weighing costs and benefits is essential to finding a stopping point before we pursue a degree of purity that lowers the quality of human life in favor of advancing the quality of air Did Congress really intend to make this illegal FA L L 2 0 0 1 I S S U E 1 4 3 R E S O U R C E S 1 3 RESOURCES FOR THE FUTURE The Court Case The Supreme Court Ruling Four years ago in July 1997 EPA published new NAAQS for ozone and small particulate matter In the case of ozone the new standard replaces a previous one established in 1979 That standard is well overdue in its originally scheduled achievement one fifth 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 The new tighter standard will require additional emissions reductions that in the case of Los Angeles exceed total current motor vehicle emissions Reductions of this magnitude will require unprecedented technological change of a nature we can t currently 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 three midwestern states filed suit against EPA s regulation in the U S Court of Appeals for the District of Columbia which ruled on their petition in May 1999 The Appeals Court found that EPA s regulation effected an unconstitutional delegation of authority that went beyond the discretion that Congress could grant the agency The remedy imposed by the court was not that the law should be changed but that EPA should enunciate an intelligible principle to explain how it was going to limit its own discretion by determining how much protection was enough There is only one way to make this determination properly and that is by weighing costs and benefits By definition protection that costs us more than we think it is worth is too much However back in 1980 this same Appeals Court affirming a position advanced by EPA had declared this cost benefit decision rule unlawful The Court was now facing up to the fact that its no cost rule coupled with advancing science capable of detecting or inferring health benefits down to zero concentrations had delegated to EPA essentially unlimited power over human activity The Appeals Court solved the problem of having attributed to Congress an open ended decision rule by declaring that rule as exercised by EPA unconstitutional This solution was arguably a bigger reach legally and definitely more significant in policy potential than reversing the no cost rule would have been EPA appealed to the Supreme Court which took the case and then also accepted a cross filing from the opposite side seeking further review of the no cost rule For both advocates and opponents of cost benefit analysis the stage was set for an historic decision In two separate opinions the Supreme Court unanimously reaffirmed the Appeals Court ruling that costs could not be considered in setting air quality standards In the majority opinion Justice Antonin Scalia argues that costs are too important to be read into NAAQS Because of their significance costs must be expressly mentioned in the NAAQS language or they are unambiguously barred Only Justice Stephen Breyer eschews this ominous silence is prohibition argument In a separate opinion concurring with the judgement of the majority he says 14 RESOURCES SPRING 2001 ISSUE 143 In order to better achieve regulatory goals for example to allocate resources so that they save more lives or produce a cleaner environment regulators must often take account of all of a proposed regulation s adverse effects at least where those adverse effects clearly threaten serious and disproportionate