Clearing the Air on Regulatory Excess


The Clinton EPAs biggest regulatory victory was turned into its biggest legal defeat last Friday, as the U.S. Court of Appeals for the District of Columbia invalidated the agency’s 1997 rules tightening the air quality standards for ozone and particulate matter. Beyond throwing out these costly and unnecessary rules, arguably the most objectionable ever enacted by the agency under the Clean Air Act, the court’s decision in American Trucking Associations et al., vs. EPA could have broader implications for the future of the federal regulatory state.

EPA’s attempt to simultaneously revise the already strict existing ambient air quality standards for ozone and particulate matter (smog and soot), represented a number of firsts in the 30-year history of the Clean Air Act. It was the first time the agency ignored its own Clean Air Scientific Advisory Committee, which generally concluded that the new standards would not substantially improve public health and did not endorse them. In the case of the ozone standard, it was the first time the agency went ahead with a rule that, according to its economic analysis, would impose annual costs in excess of benefits — by as much as $8 billion dollars under one set of assumptions. The new rules were also a first in terms of the breadth and degree of opposition they engendered. Not just the usual big industry suspects, but representatives of small businesses, state and local governments, and interests as diverse as the National Conference of Black Mayors and the American Farm Bureau Federation came out strongly against these measures and the titanic costs they would impose.

In Congress, EPA’s actions drew a level of bipartisan opposition unprecedented for clean air rules, including vehement resistance from John Dingell, Michigan Democrat, one of the architects of the 1970 Clean Air Act amendments under which EPA claimed its authority to regulate. Nonetheless, in a sign of the Republican majority’s timidity on environmental matters, both the House and Senate bills to repeal the new rules never came to a vote. Republican leaders, though they likely had a majority in support of repeal, withdrew the bills because of uncertainty that they could muster enough votes to override a presidential veto.

With no other recourse, nearly 40 of the entities opposed to the new rules filed suit in September 1997. The D.C. Circuit’s decision, released last Friday, vindicated many of their concerns, and sent shock waves throughout the regulatory community.

Most significantly, the court held that EPA construed the Clean Air Act’s provisions “so loosely as to render them unconstitutional delegations of legislative power.” In other words, the agency’s new rules are so unbounded that they constitute legislation, not regulation. However, there is a crucial distinction between these two. Legislation is the function of Congress, not agencies. Congress can, if it chooses, empower an agency to carry out some well-defined duties, but it cannot empower unelected bureaucrats to simply enact whatever laws they think best.

Under the relevant section of the Clean Air Act, EPA must set air quality standards that, by “an adequate margin of safety, are requisite to protect the public health.” EPA expansively interpreted this provision as meaning it could simply tighten existing standards to any new level it chose. However, the court took exception to the lack of any “intelligible principle by which to identify a stopping point.” Indeed, the court concluded that the agency never adequately explained why even stricter new standards should not be adopted, or, for that matter, what was wrong with the existing ones.

In this regard, EPA’s actions are not unlike any of a number of other environmental, public health, or other congressionally created goals that federal regulators are chasing by mindlessly cranking out successively tighter rules. Thus, the implications of this case could be far-reaching.

Rather than strike down the Clean Air Act, the court is going to give EPA the chance to fix the constitutional infirmity in its rules by coming up with the necessary “determinate, binding standards for itself.” If it tries to do so, however, EPA would probably have to admit what its critics inside and outside the agency have said all along that its new rules are pursuing vanishingly small marginal returns.

Other parts of the opinion indicate the court took a hard look at EPA’s new rules in light of its statutory obligations, rather than simply deferring to agency expertise. In many instances, it found the agency’s reasoning wanting. Fox example, despite the clear language in the Clean Air Act obligating EPA to consider “all identifiable effects on public health or welfare” when setting ambient air quality standards, the agency tried to ignore the adverse health effects that would be caused by the new ozone rule.

Atmospheric ozone has both detrimental and beneficial health impacts — on the one hand, it contributes to smog in the lower atmosphere, but on the other it acts as a filter against excessive ultraviolet B radiation (UVB) reaching ground level. Ironically, EPA did not take into account the health implications of the latter in setting its supposedly health-based standard. The court threw out as “bizarre” EPA’s attempt to get away with considering only “one half of a substance’s health effects in determining the maximum level for that substance.”

The EPA has indicated -that it will file an appeal. Even if unsuccessful, the agency can start over and try to promulgate new ozone and particulate matter rules that avoid the problems pointed out by the court. Thus, the battle is far from over. Nonetheless, the D.C. Circuit has struck a very important blow for regulatory accountability, and given a warning to overzealous regulators that business as usual may be coming to an end.