R Street praises Supreme Court for affirming cost-benefit analysis in rulemaking
WASHINGTON (June 29, 2015) – The R Street Institute welcomed today’s U.S. Supreme Court decision affirming the requirement that federal agencies consider costs before determining whether a rule is worthwhile.
In Michigan v. EPA, the court ruled that the Environmental Protection Agency unreasonably interpreted the Clean Air Act when it decided to set limits on power plants’ toxic pollutant emissions without first considering the costs to industry.
“We are pleased the Supreme Court clearly believes agencies are responsible for determining how a rule would impact the economy before determining that the rule is worthwhile,” said Catrina Rorke, director of energy policy and senior fellow of the R Street Institute. “In a situation like this, markets matter, too. If the costs are exorbitant and the benefits small, we should clearly consider whether a course of action is appropriate.”
The court found the EPA did not weigh the likely costs in its initial determination of whether to move forward with the rule. Only after the rule was crafted did the EPA examine costs, which amounted to $9.6 billion annually for coal-power generators.
Previous data compiled by the American Action Forum showed that utilities planned to close at least 24 coal-fired power plants as a result of the rule, amounting to 12.6 gigawatts of generation capacity and nearly 2,000 lost jobs. The Supreme Court ruled that it was neither rational nor appropriate to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.