Michigan v. Envtl. Prot. Agency , 135 S. Ct. 2699 ( 2015 )

(Slip Opinion) OCTOBER TERM, 2014 1
Syllabus
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, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
MICHIGAN ET AL. v. ENVIRONMENTAL PROTECTION
AGENCY ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE DISTRICT OF COLUMBIA CIRCUIT*
No. 14–46. Argued March 25, 2015—Decided June 29, 2015
The Clean Air Act directs the Environmental Protection Agency to reg-
ulate 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 con-
cludes 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 “appropri-
ate” because the plants’ emissions pose risks to public health and the
environment and because controls capable of reducing these emis-
sions were available. It found regulation “necessary” because the im-
position 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
——————
*Together with No. 14–47, Utility Air Regulatory Group v. Environ-
mental Protection Agency et al., and No. 14–49, National Mining Assn.
v. Environmental Protection Agency et al., also on certiorari to the same
court.
2 MICHIGAN v. EPA
Syllabus
of the relevant factors.’ ” Motor Vehicle Mfrs. Assn. of United States,
Inc. v. State Farm Mut. Automobile Ins. Co., 463 U. S. 29, 43. 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 be-
yond 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 natu-
rally against the backdrop of established administrative law, this
phrase plainly encompasses cost. It is not rational, never mind “ap-
propriate,” 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 con-
duct 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 regu-
late sources other than power plants, the whole point of having a
separate provision for power plants was to treat power plants differ-
ently. 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.
Cite as: 576 U. S. ____ (2015) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
Nos. 14–46, 14–47, and 14–49
_________________
MICHIGAN, ET AL., PETITIONERS
14–46 v.
ENVIRONMENTAL PROTECTION AGENCY, ET AL.
UTILITY AIR REGULATORY GROUP, PETITIONER
14–47 v.
ENVIRONMENTAL PROTECTION AGENCY, ET AL.
NATIONAL MINING ASSOCIATION, PETITIONER
14–49 v.
ENVIRONMENTAL PROTECTION AGENCY, ET AL.
ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
[June 29, 2015]
JUSTICE SCALIA delivered the opinion of the Court.
The Clean Air Act directs the Environmental Protection
Agency to regulate emissions of hazardous air pollutants
from power plants if the Agency finds regulation “appro-
priate and necessary.” We must decide whether it was
reasonable for EPA to refuse to consider cost when making
this finding.
I
The Clean Air Act establishes a series of regulatory
2 MICHIGAN v. EPA
Opinion of the Court
programs to control air pollution from stationary sources
(such as refineries and factories) and moving sources (such
as cars and airplanes). 69 Stat. 322, as amended, 42
U. S. C. §§7401–7671q. One of these is the National
Emissions Standards for Hazardous Air Pollutants Pro-
gram—the hazardous-air-pollutants program, for short.
Established in its current form by the Clean Air Act
Amendments of 1990, 104 Stat. 2531, this program targets
for regulation stationary-source emissions of more than
180 specified “hazardous air pollutants.” §7412(b).
For stationary sources in general, the applicability of
the program depends in part on how much pollution the
source emits. A source that emits more than 10 tons of a
single pollutant or more than 25 tons of a combination of
pollutants per year is called a major source. §7412(a)(1).
EPA is required to regulate all major sources under the
program. §7412(c)(1)–(2). A source whose emissions do
not cross the just-mentioned thresholds is called an area
source. §7412(a)(2). The Agency is required to regulate an
area source under the program if it “presents a threat of
adverse effects to human health or the environment . . .
warranting regulation.” §7412(c)(3).
At the same time, Congress established a unique proce-
dure to determine the applicability of the program to
fossil-fuel-fired power plants. The Act refers to these
plants as electric utility steam generating units, but we
will simply call them power plants. Quite apart from the
hazardous-air-pollutants program, the Clean Air Act
Amendments of 1990 subjected power plants to various
regulatory requirements. The parties agree that these
requirements were expected to have the collateral effect of
reducing power plants’ emissions of hazardous air pollu-
tants, although the extent of the reduction was unclear.
Congress directed the Agency to “perform a study of the
hazards to public health reasonably anticipated to occur as
a result of emissions by [power plants] of [hazardous air
Cite as: 576 U. S. ____ (2015) 3
Opinion of the Court
pollutants] after imposition of the requirements of this
chapter.” §7412(n)(1)(A). If the Agency “finds . . . regula-
tion is appropriate and necessary after considering the
results of the study,” it “shall regulate [power plants]
under [§7412].” Ibid. EPA has interpreted the Act to
mean that power plants become subject to regulation on
the same terms as ordinary major and area sources, see 77
Fed. Reg. 9330 (2012), and we assume without deciding
that it was correct to do so.
And what are those terms? EPA must first divide
sources covered by the program into categories and sub-
categories in accordance with statutory criteria.
§7412(c)(1). For each category or subcategory, the Agency
must promulgate certain minimum emission regulations,
known as floor standards. §7412(d)(1), (3). The statute
generally calibrates the floor standards to reflect the
emissions limitations already achieved by the best-
performing 12% of sources within the category or subcate-
gory. §7412(d)(3). In some circumstances, the Agency
may also impose more stringent emission regulations,
known as beyond-the-floor standards. The statute ex-
pressly requires the Agency to consider cost (alongside
other specified factors) when imposing beyond-the-floor
standards. §7412(d)(2).
EPA completed the study required by §7412(n)(1)(A) in
1998, 65 Fed. Reg. 79826 (2000), and concluded that regu-
lation of coal- and oil-fired power plants was “appropriate
and necessary” in 2000, id., at 79830. In 2012, it reaf-
firmed the appropriate-and-necessary finding, divided
power plants into subcategories, and promulgated floor
standards. The Agency found regulation “appropriate”
because (1) power plants’ emissions of mercury and other
hazardous air pollutants posed risks to human health and
the environment and (2) controls were available to reduce
these emissions. 77 Fed. Reg. 9363. It found regulation
“necessary” because the imposition of the Act’s other
4 MICHIGAN v. EPA
Opinion of the Court
requirements did not eliminate these risks. Ibid. EPA
concluded that “costs should not be considered” when
deciding whether power plants should be regulated under
§7412. Id., at 9326.
In accordance with Executive Order, the Agency issued
a “Regulatory Impact Analysis” alongside its regulation.
This analysis estimated that the regulation would force
power plants to bear costs of $9.6 billion per year. Id., at
9306. The Agency could not fully quantify the benefits of
reducing power plants’ emissions of hazardous air pollu-
tants; to the extent it could, it estimated that these bene-
fits were worth $4 to $6 million per year. Ibid. The costs
to power plants were thus between 1,600 and 2,400 times
as great as the quantifiable benefits from reduced emis-
sions of hazardous air pollutants. The Agency continued
that its regulations would have ancillary benefits—
including cutting power plants’ emissions of particulate
matter and sulfur dioxide, substances that are not covered
by the hazardous-air-pollutants program. Although the
Agency’s appropriate-and-necessary finding did not rest on
these ancillary effects, id., at 9320, the regulatory impact
analysis took them into account, increasing the Agency’s
estimate of the quantifiable benefits of its regulation to
$37 to $90 billion per year, id., at 9306. EPA concedes
that the regulatory impact analysis “played no role” in its
appropriate-and-necessary finding. Brief for Federal
Respondents 14.
Petitioners (who include 23 States) sought review of
EPA’s rule in the Court of Appeals for the D. C. Circuit.
As relevant here, they challenged the Agency’s refusal to
consider cost when deciding whether to regulate power
plants. The Court of Appeals upheld the Agency’s decision
not to consider cost, with Judge Kavanaugh concurring in
part and dissenting in part. White Stallion Energy Center,
LLC v. EPA, 748 F. 3d 1222 (2014) (per curiam). We
granted certiorari. 574 U. S. ___ (2014).
Cite as: 576 U. S. ____ (2015) 5
Opinion of the Court
II
Federal administrative agencies are required to engage
in “reasoned decisionmaking.” Allentown Mack Sales &
Service, Inc. v. NLRB, 522 U. S. 359, 374 (1998) (internal
quotation marks omitted). “Not only must an agency’s
decreed result be within the scope of its lawful authority,
but the process by which it reaches that result must be
logical and rational.” Ibid. It follows that agency action is
lawful only if it rests “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, 43
(1983) (internal quotation marks omitted).
EPA’s decision to regulate power plants under §7412
allowed the Agency to reduce power plants’ emissions of
hazardous air pollutants and thus to improve public
health and the environment. But the decision also ulti-
mately cost power plants, according to the Agency’s own
estimate, nearly $10 billion a year. EPA refused to con-
sider whether the costs of its decision outweighed the
benefits. The Agency gave cost no thought at all, be-
cause it considered cost irrelevant to its initial decision to
regulate.
EPA’s disregard of cost rested on its interpretation of
§7412(n)(1)(A), which, to repeat, directs the Agency to
regulate power plants if it “finds such regulation is appro-
priate and necessary.” The Agency accepts that it could
have interpreted this provision to mean that cost is rele-
vant to the decision to add power plants to the program.
Tr. of Oral Arg. 44. But it chose to read the statute to
mean that cost makes no difference to the initial decision
to regulate. See 76 Fed. Reg. 24988 (2011) (“We further
interpret the term ‘appropriate’ to not allow for the con-
sideration of costs”); 77 Fed. Reg. 9327 (“Cost does not
have to be read into the definition of ‘appropriate’ ”).
We review this interpretation under the standard set
out in Chevron U. S. A. Inc. v. Natural Resources Defense
6 MICHIGAN v. EPA
Opinion of the Court
Council, Inc., 467 U. S. 837 (1984). Chevron directs courts
to accept an agency’s reasonable resolution of an ambigu-
ity in a statute that the agency administers. Id., at 842–
843. Even under this deferential standard, however,
“agencies must operate within the bounds of reasonable
interpretation. ” Utility Air Regulatory Group v. EPA, 573
U. S. ___, ___ (2014) (slip op., at 16) (internal quotation
marks omitted). EPA strayed far beyond those bounds
when it read §7412(n)(1) to mean that it could ignore cost
when deciding whether to regulate power plants.
A
The Clean Air Act treats power plants differently from
other sources for purposes of the hazardous-air-pollutants
program. Elsewhere in §7412, Congress established cab-
ined criteria for EPA to apply when deciding whether to
include sources in the program. It required the Agency to
regulate sources whose emissions exceed specified numeri-
cal thresholds (major sources). It also required the Agency
to regulate sources whose emissions fall short of these
thresholds (area sources) if they “presen[t] a threat of
adverse effects to human health or the environment . . .
warranting regulation.” §7412(c)(3). In stark contrast,
Congress instructed EPA to add power plants to the pro-
gram if (but only if) the Agency finds regulation “appro-
priate and necessary.” §7412(n)(1)(A). One does not need
to open up a dictionary in order to realize the capacious-
ness of this phrase. In particular, “appropriate” is “the
classic broad and all-encompassing term that naturally
and traditionally includes consideration of all the relevant
factors.” 748 F. 3d, at 1266 (opinion of Kavanaugh, J.).
Although this term leaves agencies with flexibility, an
agency may not “entirely fai[l] to consider an important
aspect of the problem” when deciding whether regulation
is appropriate. State Farm, supra, at 43.
Read naturally in the present context, the phrase “ap-
Cite as: 576 U. S. ____ (2015) 7
Opinion of the Court
propriate and necessary” requires at least some attention
to cost. One would not say that it is even rational, never
mind “appropriate,” to impose billions of dollars in eco-
nomic costs in return for a few dollars in health or envi-
ronmental benefits. In addition, “cost” includes more than
the expense of complying with regulations; any disad-
vantage could be termed a cost. EPA’s interpretation
precludes the Agency from considering any type of cost—
including, for instance, harms that regulation might do to
human health or the environment. The Government
concedes that if the Agency were to find that emissions
from power plants do damage to human health, but that
the technologies needed to eliminate these emissions do
even more damage to human health, it would still deem
regulation appropriate. See Tr. of Oral Arg. 70. No regu-
lation is “appropriate” if it does significantly more harm
than good.
There are undoubtedly settings in which the phrase
“appropriate and necessary” does not encompass cost. But
this is not one of them. Section 7412(n)(1)(A) directs EPA
to determine whether “regulation is appropriate and nec-
essary.” (Emphasis added.) Agencies have long treated
cost as a centrally relevant factor when deciding whether
to regulate. Consideration of cost reflects the understand-
ing that reasonable regulation ordinarily requires paying
attention to the advantages and the disadvantages of
agency decisions. It also reflects the reality that “too
much wasteful expenditure devoted to one problem may
well mean considerably fewer resources available to deal
effectively with other (perhaps more serious) problems.”
Entergy Corp. v. Riverkeeper, Inc., 556 U. S. 208, 233
(2009) (BREYER, J., concurring in part and dissenting in
part). Against the backdrop of this established adminis-
trative practice, it is unreasonable to read an instruction
to an administrative agency to determine whether “regula-
tion is appropriate and necessary” as an invitation to
8 MICHIGAN v. EPA
Opinion of the Court
ignore cost.
Statutory context reinforces the relevance of cost. The
procedures governing power plants that we consider today
appear in §7412(n)(1), which bears the caption “Electric
utility steam generating units.” In subparagraph (A), the
part of the law that has occupied our attention so far,
Congress required EPA to study the hazards to public
health posed by power plants and to determine whether
regulation is appropriate and necessary. But in subpara-
graphs (B) and (C), Congress called for two additional
studies. One of them, a study into mercury emissions
from power plants and other sources, must consider “the
health and environmental effects of such emissions, tech-
nologies which are available to control such emissions,
and the costs of such technologies.” §7412(n)(1)(B) (em-
phasis added). This directive to EPA to study cost is a
further indication of the relevance of cost to the decision to
regulate.
In an effort to minimize this express reference to cost,
EPA now argues that §7412(n)(1)(A) requires it to consider
only the study mandated by that provision, not the sepa-
rate mercury study, before deciding whether to regulate
power plants. But when adopting the regulations before
us, the Agency insisted that the provisions concerning all
three studies “provide a framework for [EPA’s] determina-
tion of whether to regulate [power plants].” 76 Fed. Reg.
24987. It therefore decided “to interpret the scope of the
appropriate and necessary finding in the context of all
three studies.” 77 Fed. Reg. 9325 (emphasis added). For
example:
 EPA considered environmental effects relevant to the
appropriate-and-necessary finding. It deemed the
mercury study’s reference to this factor “direct evi-
dence that Congress was concerned with environmen-
tal effects.” 76 Fed. Reg. 24987.
Cite as: 576 U. S. ____ (2015) 9
Opinion of the Court
 EPA considered availability of controls relevant to the
appropriate-and-necessary finding. It thought that
doing so was “consistent with” the mercury study’s
reference to availability of controls. Id., at 24989.
 EPA concluded that regulation of power plants would
be appropriate and necessary even if a single pollu-
tant emitted by them posed a hazard to health or the
environment. It believed that “Congress’ focus” on a
single pollutant in the mercury study “support[ed]”
this interpretation. Ibid.EPA has not explained why §7412(n)(1)(B)’s reference to
“environmental effects . . . and . . . costs” provides “direct
evidence that Congress was concerned with environmental
effects,” but not “direct evidence” that it was concerned
with cost. Chevron allows agencies to choose among com-
peting reasonable interpretations of a statute; it does not
license interpretive gerrymanders under which an agency
keeps parts of statutory context it likes while throwing
away parts it does not.
B
EPA identifies a handful of reasons to interpret
§7412(n)(1)(A) to mean that cost is irrelevant to the initial
decision to regulate. We find those reasons unpersuasive.
EPA points out that other parts of the Clean Air Act
expressly mention cost, while §7412(n)(1)(A) does not. But
this observation shows only that §7412(n)(1)(A)’s broad
reference to appropriateness encompasses multiple rele-
vant factors (which include but are not limited to cost);
other provisions’ specific references to cost encompass just
cost. It is unreasonable to infer that, by expressly making
cost relevant to other decisions, the Act implicitly makes
cost irrelevant to the appropriateness of regulating power
plants. (By way of analogy, the Fourth Amendment’s
Reasonableness Clause requires searches to be
10 MICHIGAN v. EPA
Opinion of the Court
“[r]easonable,” while its Warrant Clause requires war-
rants to be supported by “probable cause.” Nobody would
argue that, by expressly making level of suspicion relevant
to the validity of a warrant, the Fourth Amendment im-
plicitly makes level of suspicion categorically irrelevant to
the reasonableness of a search. To the contrary, all would
agree that the expansive word “reasonable” encompasses
degree of suspicion alongside other relevant circumstances.)
Other parts of the Clean Air Act also expressly men-
tion environmental effects, while §7412(n)(1)(A) does not.
Yet that did not stop EPA from deeming environmental
effects relevant to the appropriateness of regulating power
plants.
Along similar lines, EPA seeks support in this Court’s
decision in Whitman v. American Trucking Assns., Inc.,
531 U. S. 457 (2001). There, the Court addressed a provi-
sion of the Clean Air Act requiring EPA to set ambient air
quality standards at levels “requisite to protect the public
health” with an “adequate margin of safety.” 42 U. S. C.
§7409(b). Read naturally, that discrete criterion does not
encompass cost; it encompasses health and safety. The
Court refused to read that provision as carrying with it an
implicit authorization to consider cost, in part because
authority to consider cost had “elsewhere, and so often,
been expressly granted.” 531 U. S., at 467. American
Trucking thus establishes the modest principle that where
the Clean Air Act expressly directs EPA to regulate on the
basis of a factor that on its face does not include cost, the
Act normally should not be read as implicitly allowing the
Agency to consider cost anyway. That principle has no
application here. “Appropriate and necessary” is a far
more comprehensive criterion than “requisite to protect
the public health”; read fairly and in context, as we have
explained, the term plainly subsumes consideration of
cost.
Turning to the mechanics of the hazardous-air-
Cite as: 576 U. S. ____ (2015) 11
Opinion of the Court
pollutants program, EPA argues that it need not consider
cost when first deciding whether to regulate power plants
because it can consider cost later when deciding how much
to regulate them. The question before us, however, is the
meaning of the “appropriate and necessary” standard that
governs the initial decision to regulate. And as we have
discussed, context establishes that this expansive stand-
ard encompasses cost. Cost may become relevant again at
a later stage of the regulatory process, but that possibility
does not establish its irrelevance at this stage. In addi-
tion, once the Agency decides to regulate power plants, it
must promulgate certain minimum or floor standards no
matter the cost (here, nearly $10 billion a year); the
Agency may consider cost only when imposing regulations
beyond these minimum standards. By EPA’s logic, some-
one could decide whether it is “appropriate” to buy a Fer-
rari without thinking about cost, because he plans to think
about cost later when deciding whether to upgrade the
sound system.
EPA argues that the Clean Air Act makes cost irrele-
vant to the initial decision to regulate sources other than
power plants. The Agency claims that it is reasonable to
interpret §7412(n)(1)(A) in a way that “harmonizes” the
program’s treatment of power plants with its treatment of
other sources. This line of reasoning overlooks the whole
point of having a separate provision about power plants:
treating power plants differently from other stationary
sources. Congress crafted narrow standards for EPA to
apply when deciding whether to regulate other sources; in
general, these standards concern the volume of pollution
emitted by the source, §7412(c)(1), and the threat posed by
the source “to human health or the environment,”
§7412(c)(3). But Congress wrote the provision before us
more expansively, directing the Agency to regulate power
plants if “appropriate and necessary.” “That congressional
election settles this case. [The Agency’s] preference for
12 MICHIGAN v. EPA
Opinion of the Court
symmetry cannot trump an asymmetrical statute.” CSX
Transp., Inc. v. Alabama Dept. of Revenue, 562 U. S. 277,
296 (2011).
EPA persists that Congress treated power plants differ-
ently from other sources because of uncertainty about
whether regulation of power plants would still be needed
after the application of the rest of the Act’s requirements.
That is undoubtedly one of the reasons Congress treated
power plants differently; hence §7412(n)(1)(A)’s require-
ment to study hazards posed by power plants’ emissions
“after imposition of the requirements of [the rest of the
Act].” But if uncertainty about the need for regulation
were the only reason to treat power plants differently,
Congress would have required the Agency to decide only
whether regulation remains “necessary,” not whether
regulation is “appropriate and necessary.” In any event,
EPA stated when it adopted the rule that “Congress did
not limit [the] appropriate and necessary inquiry to [the
study mentioned in §7412(n)(1)(A)].” 77 Fed. Reg. 9325.
The Agency instead decided that the appropriate-and-
necessary finding should be understood in light of all three
studies required by §7412(n)(1), and as we have discussed,
one of those three studies reflects concern about cost.
C
The dissent does not embrace EPA’s far-reaching claim
that Congress made costs altogether irrelevant to the
decision to regulate power plants. Instead, it maintains
that EPA need not “explicitly analyze costs” before deem-
ing regulation appropriate, because other features of the
regulatory program will on their own ensure the cost-
effectiveness of regulation. Post, at 2 (opinion of KAGAN,
J.). This line of reasoning contradicts the foundational
principle of administrative law that a court may uphold
agency action only on the grounds that the agency invoked
when it took the action. SEC v. Chenery Corp., 318 U. S.
Cite as: 576 U. S. ____ (2015) 13
Opinion of the Court
80, 87 (1943). When it deemed regulation of power plants
appropriate, EPA said that cost was irrelevant to that
determination—not that cost-benefit analysis would be
deferred until later. Much less did it say (what the dissent
now concludes) that the consideration of cost at subse-
quent stages will ensure that the costs are not dispropor-
tionate to the benefits. What it said is that cost is irrele-
vant to the decision to regulate.
That is enough to decide these cases. But for what it is
worth, the dissent vastly overstates the influence of cost at
later stages of the regulatory process. For example, the
dissent claims that the floor standards—which the Act
calibrates to reflect emissions limitations already achieved
by the best-performing sources in the industry—reflect
cost considerations, because the best-performing power
plants “must have considered costs in arriving at their
emissions outputs.” Post, at 10. EPA did not rely on this
argument, and it is not obvious that it is correct. Because
power plants are regulated under other federal and state
laws, the best-performing power plants’ emissions limita-
tions might reflect cost-blind regulation rather than cost-
conscious decisions. Similarly, the dissent suggests that
EPA may consider cost when dividing sources into catego-
ries and subcategories. Post, at 11–12. Yet according to
EPA, “it is not appropriate to premise subcategorization on
costs.” 77 Fed. Reg. 9395 (emphasis added). That state-
ment presumably explains the dissent’s carefully worded
observation that EPA considered “technological, geographic,
and other factors” when drawing categories, post, at 13,
n. 4, which factors were in turn “related to costs” in some
way, post, at 11. Attenuated connections such as these
hardly support the assertion that EPA’s regulatory process
featured “exhaustive consideration of costs,” post, at 2.
All in all, the dissent has at most shown that some
elements of the regulatory scheme mitigate cost in limited
ways; it has not shown that these elements ensure cost-
14 MICHIGAN v. EPA
Opinion of the Court
effectiveness. If (to take a hypothetical example) regulat-
ing power plants would yield $5 million in benefits, the
prospect of mitigating cost from $11 billion to $10 billion
at later stages of the program would not by itself make
regulation appropriate. In all events, we need not pursue
these points, because EPA did not say that the parts of the
regulatory program mentioned by the dissent prevent the
imposition of costs far in excess of benefits. “[EPA’s]
action must be measured by what [it] did, not by what it
might have done.” Chenery, supra, at 93–94.
D
Our reasoning so far establishes that it was unreasona-
ble for EPA to read §7412(n)(1)(A) to mean that cost is
irrelevant to the initial decision to regulate power plants.
The Agency must consider cost—including, most im-
portantly, cost of compliance—before deciding whether
regulation is appropriate and necessary. We need not and
do not hold that the law unambiguously required the
Agency, when making this preliminary estimate, to con-
duct a formal cost-benefit analysis in which each ad-
vantage and disadvantage is assigned a monetary value.
It will be up to the Agency to decide (as always, within the
limits of reasonable interpretation) how to account for
cost.
Some of the respondents supporting EPA ask us to
uphold EPA’s action because the accompanying regulatory
impact analysis shows that, once the rule’s ancillary bene-
fits are considered, benefits plainly outweigh costs. The
dissent similarly relies on these ancillary benefits when
insisting that “the outcome here [was] a rule whose bene-
fits exceed its costs.” Post, at 16. As we have just ex-
plained, however, we may uphold agency action only upon
the grounds on which the agency acted. Even if the Agen-
cy could have considered ancillary benefits when deciding
whether regulation is appropriate and necessary—a point
Cite as: 576 U. S. ____ (2015) 15
Opinion of the Court
we need not address—it plainly did not do so here. In the
Agency’s own words, the administrative record “utterly
refutes [the] assertion that [ancillary benefits] form the
basis for the appropriate and necessary finding.” 77 Fed.
Reg. 9323. The Government concedes, moreover, that
“EPA did not rely on the [regulatory impact analysis]
when deciding to regulate power plants,” and that “[e]ven
if EPA had considered costs, it would not necessarily have
adopted . . . the approach set forth in [that analysis].”
Brief for Federal Respondents 53–54.
* * *
We hold that EPA interpreted §7412(n)(1)(A) unreason-
ably when it deemed cost irrelevant to the decision to
regulate power plants. We reverse the judgment of the
Court of Appeals for the D. C. Circuit and remand the
cases for further proceedings consistent with this opinion.
It is so ordered.
Cite as: 576 U. S. ____ (2015) 1
THOMAS, J., concurring
SUPREME COURT OF THE UNITED STATES
_________________
Nos. 14–46, 14–47, and 14–49
_________________
MICHIGAN, ET AL., PETITIONERS
14–46 v.
ENVIRONMENTAL PROTECTION AGENCY, ET AL.
UTILITY AIR REGULATORY GROUP, PETITIONER
14–47 v.
ENVIRONMENTAL PROTECTION AGENCY, ET AL.
NATIONAL MINING ASSOCIATION, PETITIONER
14–49 v.
ENVIRONMENTAL PROTECTION AGENCY, ET AL.
ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
[June 29, 2015]
JUSTICE THOMAS, concurring.
The Environmental Protection Agency (EPA) asks the
Court to defer to its interpretation of the phrase “appro-
priate and necessary” in §112(n)(1)(A) of the Clean Air
Act, 42 U. S. C. §7412. JUSTICE SCALIA’s opinion for the
Court demonstrates why EPA’s interpretation deserves no
deference under our precedents. I write separately to note
that its request for deference raises serious questions
about the constitutionality of our broader practice of de-
ferring to agency interpretations of federal statutes. See
Chevron U. S. A. Inc. v. Natural Resources Defense Coun-
cil, Inc., 467 U. S. 837 (1984).
Chevron deference is premised on “a presumption that
Congress, when it left ambiguity in a statute meant for
2 MICHIGAN v. EPA
THOMAS, J., concurring
implementation by an agency, understood that the ambi-
guity would be resolved, first and foremost, by the agency,
and desired the agency (rather than the courts) to possess
whatever degree of discretion the ambiguity allows.”
Smiley v. Citibank (South Dakota), N. A., 517 U. S. 735,
740–741 (1996). We most often describe Congress’ sup-
posed choice to leave matters to agency discretion as an
allocation of interpretive authority. See, e.g., National
Cable & Telecommunications Assn. v. Brand X Internet
Services, 545 U. S. 967, 983 (2005) (referring to the agency
as “the authoritative interpreter (within the limits of
reason) of [ambiguous] statutes”). But we sometimes treat
that discretion as though it were a form of legislative
power. See, e.g., United States v. Mead Corp., 533 U. S.
218, 229 (2001) (noting that the agency “speak[s] with the
force of law when it addresses ambiguity in the statute or
fills a space in the enacted law” even when “ ‘Congress did
not actually have an intent’ as to a particular result”).
Either way, Chevron deference raises serious separation-
of-powers questions.
As I have explained elsewhere, “[T]he judicial power, as
originally understood, requires a court to exercise its
independent judgment in interpreting and expounding
upon the laws.” Perez v. Mortgage Bankers Assn., 575
U. S. ___, ___ (2015) (opinion concurring in judgment) (slip
op., at 8). Interpreting federal statutes—including ambig-
uous ones administered by an agency—“calls for that
exercise of independent judgment.” Id., at ___ (slip op., at
12). Chevron deference precludes judges from exercising
that judgment, forcing them to abandon what they believe
is “the best reading of an ambiguous statute” in favor of an
agency’s construction. Brand X, supra, at 983. It thus
wrests from Courts the ultimate interpretative authority
to “say what the law is,” Marbury v. Madison, 1 Cranch
137, 177 (1803), and hands it over to the Executive. See
Brand X, supra, at 983 (noting that the judicial construc-
Cite as: 576 U. S. ____ (2015) 3
THOMAS, J., concurring
tion of an ambiguous statute is “not authoritative”). Such
a transfer is in tension with Article III’s Vesting Clause,
which vests the judicial power exclusively in Article III
courts, not administrative agencies. U. S. Const., Art. III,
§1.
In reality, as the Court illustrates in the course of dis-
mantling EPA’s interpretation of §112(n)(1)(A), agencies
“interpreting” ambiguous statutes typically are not en-
gaged in acts of interpretation at all. See, e.g., ante, at 9.
Instead, as Chevron itself acknowledged, they are engaged
in the “ ‘formulation of policy.’ ” 467 U. S., at 843. Statu-
tory ambiguity thus becomes an implicit delegation of rule-
making authority, and that authority is used not to find
the best meaning of the text, but to formulate legally
binding rules to fill in gaps based on policy judgments
made by the agency rather than Congress.
Although acknowledging this fact might allow us to
escape the jaws of Article III’s Vesting Clause, it runs
headlong into the teeth of Article I’s, which vests “[a]ll
legislative Powers herein granted” in Congress. U. S.
Const., Art I., §1. For if we give the “force of law” to agency
pronouncements on matters of private conduct as to
which “ ‘Congress did not actually have an intent,’ ” Mead,
supra, at 229, we permit a body other than Congress to
perform a function that requires an exercise of the legisla-
tive power. See Department of Transportation v. Associa-
tion of American Railroads, 575 U. S. ___, ___–___ (2015)
(THOMAS, J., concurring in judgment) (slip op., at 21–22).
These cases bring into bold relief the scope of the poten-
tially unconstitutional delegations we have come to coun-
tenance in the name of Chevron deference. What EPA
claims for itself here is not the power to make political
judgments in implementing Congress’ policies, nor even
the power to make tradeoffs between competing policy
goals set by Congress, American Railroads, supra, at ___–
___ (opinion of THOMAS, J.) (slip op., at 20–21) (collecting
4 MICHIGAN v. EPA
THOMAS, J., concurring
cases involving statutes that delegated this legislative
authority). It is the power to decide—without any particu-
lar fidelity to the text—which policy goals EPA wishes to
pursue. Should EPA wield its vast powers over electric
utilities to protect public health? A pristine environment?
Economic security? We are told that the breadth of the
word “appropriate” authorizes EPA to decide for itself how
to answer that question. Compare 77 Fed. Reg. 9327(2012) (“[N]othing about the definition [of “appropriate”]
compels a consideration of costs” (emphasis added)) with
Tr. of Oral Arg. 42 (“[T]he phrase appropriate and neces-
sary doesn’t, by its terms, preclude the EPA from consider-
ing cost” (emphasis added)).1
Perhaps there is some unique historical justification for
deferring to federal agencies, see Mead, supra, at 243(SCALIA, J., dissenting), but these cases reveal how paltry
an effort we have made to understand it or to confine
ourselves to its boundaries. Although we hold today that
EPA exceeded even the extremely permissive limits on
agency power set by our precedents, we should be alarmed
that it felt sufficiently emboldened by those precedents to
make the bid for deference that it did here.2 As in other
areas of our jurisprudence concerning administrative
agencies, see, e.g., B&B Hardware, Inc. v. Hargis Indus-
tries, Inc., 575 U. S. ___, ___–___ (2015) (THOMAS, J.,
dissenting) (slip op., at 10–14), we seem to be straying
——————
1I
can think of no name for such power other than “legislative power.”
Had we deferred to EPA’s interpretation in these cases, then, we might
have violated another constitutional command by abdicating our check
on the political branches—namely, our duty to enforce the rule of law
through an exercise of the judicial power. Perez v. Mortgage Bankers
Assn., 575 U. S. ___, ___–___ (2015) (THOMAS, J., concurring in judg-
ment) (slip op., at 14–16).
2 This is not the first time an agency has exploited our practice of
deferring to agency interpretations of statutes. See, e.g., Texas Dept. of
Housing and Community Affairs v. Inclusive Communities Project, Inc.,
ante, at 6–7 (THOMAS, J., dissenting).
Cite as: 576 U. S. ____ (2015) 5
THOMAS, J., concurring
further and further from the Constitution without so much
as pausing to ask why. We should stop to consider that
document before blithely giving the force of law to any
other agency “interpretations” of federal statutes.
Cite as: 576 U. S. ____ (2015) 1
KAGAN, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
Nos. 14–46, 14–47, and 14–49
_________________
MICHIGAN, ET AL., PETITIONERS
14–46 v.
ENVIRONMENTAL PROTECTION AGENCY, ET AL.
UTILITY AIR REGULATORY GROUP, PETITIONER
14–47 v.
ENVIRONMENTAL PROTECTION AGENCY, ET AL.
NATIONAL MINING ASSOCIATION, PETITIONER
14–49 v.
ENVIRONMENTAL PROTECTION AGENCY, ET AL.
ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
[June 29, 2015]
JUSTICE KAGAN, with whom JUSTICE GINSBURG,
JUSTICE BREYER, and JUSTICE SOTOMAYOR join,
dissenting.
The Environmental Protection Agency placed emissions
limits on coal and oil power plants following a lengthy
regulatory process during which the Agency carefully
considered costs. At the outset, EPA determined that
regulating plants’ emissions of hazardous air pollutants is
“appropriate and necessary” given the harm they cause,
and explained that it would take costs into account in
developing suitable emissions standards. Next, EPA
divided power plants into groups based on technological
and other characteristics bearing significantly on their
cost structures. It required plants in each group to match
2 MICHIGAN v. EPA
KAGAN, J., dissenting
the emissions levels already achieved by the best-
performing members of the same group—benchmarks
necessarily reflecting those plants’ own cost analyses.
EPA then adopted a host of measures designed to make
compliance with its proposed emissions limits less costly
for plants that needed to catch up with their cleaner peers.
And with only one narrow exception, EPA decided not to
impose any more stringent standards (beyond what some
plants had already achieved on their own) because it found
that doing so would not be cost-effective. After all that,
EPA conducted a formal cost-benefit study which found
that the quantifiable benefits of its regulation would
exceed the costs up to nine times over—by as much as $80
billion each year. Those benefits include as many as
11,000 fewer premature deaths annually, along with a far
greater number of avoided illnesses.
Despite that exhaustive consideration of costs, the Court
strikes down EPA’s rule on the ground that the Agency
“unreasonably . . . deemed cost irrelevant.” Ante, at 15.
On the majority’s theory, the rule is invalid because EPA
did not explicitly analyze costs at the very first stage of
the regulatory process, when making its “appropriate and
necessary” finding. And that is so even though EPA later
took costs into account again and again and . . . so on. The
majority thinks entirely immaterial, and so entirely ig-
nores, all the subsequent times and ways EPA considered
costs in deciding what any regulation would look like.
That is a peculiarly blinkered way for a court to assess
the lawfulness of an agency’s rulemaking. I agree with
the majority—let there be no doubt about this—that EPA’s
power plant regulation would be unreasonable if “[t]he
Agency gave cost no thought at all.” Ante, at 5 (emphasis
in original). But that is just not what happened here.
Over more than a decade, EPA took costs into account at
multiple stages and through multiple means as it set
emissions limits for power plants. And when making its
Cite as: 576 U. S. ____ (2015) 3
KAGAN, J., dissenting
initial “appropriate and necessary” finding, EPA knew it
would do exactly that—knew it would thoroughly consider
the cost-effectiveness of emissions standards later on.
That context matters. The Agency acted well within its
authority in declining to consider costs at the opening bell
of the regulatory process given that it would do so in every
round thereafter—and given that the emissions limits
finally issued would depend crucially on those ac-
countings. Indeed, EPA could not have measured costs at
the process’s initial stage with any accuracy. And the
regulatory path EPA chose parallels the one it has trod in
setting emissions limits, at Congress’s explicit direction,
for every other source of hazardous air pollutants over two
decades. The majority’s decision that EPA cannot take the
same approach here—its micromanagement of EPA’s
rulemaking, based on little more than the word “appropri-
ate”—runs counter to Congress’s allocation of authority
between the Agency and the courts. Because EPA reason-
ably found that it was “appropriate” to decline to analyze
costs at a single stage of a regulatory proceeding otherwise
imbued with cost concerns, I respectfully dissent.
I
A
The Clean Air Act Amendments of 1990, as the majority
describes, obligate EPA to regulate emissions of mercury
and other hazardous air pollutants from stationary
sources discharging those substances in large quantities.
See ante, at 2. For most industries, the statute prescribes
the same multi-step regulatory process. At the initial
stage, EPA must decide whether to regulate a source,
based solely on the quantity of pollutants it emits and
their health and environmental effects. See 42 U. S. C.
§§7412(a)(1), (a)(2), (c)(1), (c)(3); ante, at 2. Costs enter the
equation after that, affecting the emissions limits that the
eventual regulation will require. Under the statute, EPA
4 MICHIGAN v. EPA
KAGAN, J., dissenting
must divide sources into categories and subcategories and
then set “floor standards” that reflect the average emis-
sions level already achieved by the best-performing 12% of
sources within each group. See §7412(d)(3); ante, at 3.
Every 12% floor has cost concerns built right into it be-
cause the top sources, as successful actors in a market
economy, have had to consider costs in choosing their own
emissions levels. Moreover, in establishing categories and
subcategories at this first stage, EPA can (significantly)
raise or lower the costs of regulation for each source,
because different classification schemes will alter the
group—and so the emissions level—that the source has to
match.1 Once the floor is set, EPA has to decide whether
to impose any stricter (“beyond-the-floor”) standards,
“taking into consideration,” among other things, “the cost
of achieving such emissions reduction.” §7412(d)(2); see
ante, at 3. Finally, by virtue of a longstanding Executive
Order applying to significant rules issued under the Clean
Air Act (as well as other statutes), the Agency must sys-
tematically assess the regulation’s costs and benefits. See
Exec. Order No. 12866, 58 Fed. Reg. 51735, 51738, 51741
(1993) (applying to all rules with an annual economic
effect of at least $100 million).
Congress modified that regulatory scheme for power
plants. It did so because the 1990 amendments estab-
lished a separate program to control power plant emis-
sions contributing to acid rain, and many thought that
just by complying with those requirements, plants might
——————
1 Considerit this way: Floor standards equal the top 12% of some-
thing, but until you know the something, you can’t know what it will
take to attain that level. To take a prosaic example, the strongest 12%
of NFL players can lift a lot more weight than the strongest 12% of
human beings generally. To match the former, you will have to spend
many more hours in the gym than to match the latter—and you will
probably still come up short. So everything depends on the comparison
group.
Cite as: 576 U. S. ____ (2015) 5
KAGAN, J., dissenting
reduce their emissions of hazardous air pollutants to
acceptable levels. See ante, at 2. That prospect counseled
a “wait and see” approach, under which EPA would give
the Act’s acid rain provisions a chance to achieve that side
benefit before imposing any further regulation. Accord-
ingly, Congress instructed EPA to “perform a study of the
hazards to public health reasonably anticipated” to result
from power plants’ emissions after the 1990 amendments
had taken effect. §7412(n)(1)(A). And Congress provided
that EPA “shall regulate” those emissions only if the
Agency “finds such regulation is appropriate and neces-
sary after considering the results of the [public health]
study.” Ibid. Upon making such a finding, however, EPA
is to regulate power plants as it does every other station-
ary source: first, by categorizing plants and setting floor
standards for the different groups; then by deciding
whether to regulate beyond the floors; and finally, by
conducting the cost-benefit analysis required by Executive
Order.
EPA completed the mandated health study in 1998, and
the results gave much cause for concern. The Agency
concluded that implementation of the acid rain provisions
had failed to curb power plants’ emissions of hazardous air
pollutants. Indeed, EPA found, coal plants were on track
to increase those emissions by as much as 30% over the
next decade. See 1 EPA, Study of Hazardous Air Pollu-
tant Emissions from Electric Utility Steam Generating
Units—Final Report to Congress, p. ES–25 (1998). And
EPA determined, focusing especially on mercury, that the
substances released from power plants cause substantial
health harms. Noting that those plants are “the largest
[non-natural] source of mercury emissions,” id., §1.2.5.1,
at 1–7, EPA found that children of mothers exposed to
high doses of mercury during pregnancy “have exhibited a
variety of developmental neurological abnormalities,”
including delayed walking and talking, altered muscles,
6 MICHIGAN v. EPA
KAGAN, J., dissenting
and cerebral palsy. Id., §7.2.2, at 7–17 to 7–18; see also 7
EPA, Mercury Study Report to Congress, p. 6–31 (1997)
(Mercury Study) (estimating that 7% of women of
childbearing age are exposed to mercury in amounts ex-
ceeding a safe level).
Informed by its public health study and additional data,
EPA found in 2000 that it is “appropriate and necessary”
to regulate power plants’ emissions of mercury and other
hazardous air pollutants. 65 Fed. Reg. 79830.2 Pulling
apart those two adjectives, the Agency first stated that
such regulation is “appropriate” because those pollutants
“present[ ] significant hazards to public health and the
environment” and because “a number of control options”
can “effectively reduce” their emission. Ibid. EPA then
determined that regulation is “necessary” because other
parts of the 1990 amendments—most notably, the acid
rain provisions—“will not adequately address” those haz-
ards. Ibid. In less bureaucratic terms, EPA decided that
it made sense to kick off the regulatory process given that
power plants’ emissions pose a serious health problem,
that solutions to the problem are available, and that the
problem will remain unless action is taken.
B
If the regulatory process ended as well as started there,
I would agree with the majority’s conclusion that EPA
failed to adequately consider costs. Cost is almost always
a relevant—and usually, a highly important—factor in
regulation. Unless Congress provides otherwise, an agency
acts unreasonably in establishing “a standard-setting proc-
ess that ignore[s] economic considerations.” Industrial
——————
2 EPA reaffirmed its “appropriate and necessary” finding in 2011 and
2012 when it issued a proposed rule and a final rule. See 76 Fed. Reg.
24980 (2011) (“The Agency’s appropriate and necessary finding was
correct in 2000, and it remains correct today”); accord, 77 Fed. Reg.
9310–9311 (2012).
Cite as: 576 U. S. ____ (2015) 7
KAGAN, J., dissenting
Union Dept., AFL–CIO v. American Petroleum Institute,
448 U. S. 607, 670 (1980) (Powell, J., concurring in part
and concurring in judgment). At a minimum, that is
because such a process would “threaten[ ] to impose mas-
sive costs far in excess of any benefit.” Entergy Corp. v.
Riverkeeper, Inc., 556 U. S. 208, 234 (2009) (BREYER, J.,
concurring in part and dissenting in part). And account-
ing for costs is particularly important “in an age of limited
resources available to deal with grave environmental
problems, where too much wasteful expenditure devoted to
one problem may well mean considerably fewer resources
available to deal effectively with other (perhaps more
serious) problems.” Id., at 233; see ante, at 7. As the
Court notes, that does not require an agency to conduct a
formal cost-benefit analysis of every administrative action.
See ante, at 14. But (absent contrary indication from
Congress) an agency must take costs into account in some
manner before imposing significant regulatory burdens.
That proposition, however, does not decide the issue
before us because the “appropriate and necessary” finding
was only the beginning. At that stage, EPA knew that a
lengthy rulemaking process lay ahead of it; the determina-
tion of emissions limits was still years away. And the
Agency, in making its kick-off finding, explicitly noted that
consideration of costs would follow: “As a part of develop-
ing a regulation” that would impose those limits, “the
effectiveness and costs of controls will be examined.” 65
Fed. Reg. 79830. Likewise, EPA explained that, in the
course of writing its regulation, it would explore regula-
tory approaches “allowing for least-cost solutions.” Id., at
79830–79831. That means the Agency, when making its
“appropriate and necessary” finding, did not decline to
consider costs as part of the regulatory process. Rather, it
declined to consider costs at a single stage of that process,
knowing that they would come in later on.
The only issue in these cases, then, is whether EPA
8 MICHIGAN v. EPA
KAGAN, J., dissenting
acted reasonably in structuring its regulatory process in
that way—in making its “appropriate and necessary find-
ing” based on pollution’s harmful effects and channeling
cost considerations to phases of the rulemaking in which
emission levels are actually set. Said otherwise, the ques-
tion is not whether EPA can reasonably find it “appropri-
ate” to regulate without thinking about costs, full stop. It
cannot, and it did not. Rather, the question is whether
EPA can reasonably find it “appropriate” to trigger the
regulatory process based on harms (and technological
feasibility) alone, given that costs will come into play, in
multiple ways and at multiple stages, before any emission
limit goes into effect.
In considering that question, the very nature of the
word “appropriate” matters. “[T]he word ‘appropriate,’ ”
this Court has recognized, “is inherently context-
dependent”: Giving it content requires paying attention to
the surrounding circumstances. Sossamon v. Texas, 563
U. S. 277, ___ (2011) (slip op., at 7). (That is true, too, of
the word “necessary,” although the majority spends less
time on it. See Armour & Co. v. Wantock, 323 U. S. 126,
129–130 (1944) (“[T]he word ‘necessary’ . . . has always
been recognized as a word to be harmonized with its con-
text”).) And here that means considering the place of the
“appropriate and necessary” finding in the broader regula-
tory scheme—as a triggering mechanism that gets a com-
plex rulemaking going. The interpretive task is thus at
odds with the majority’s insistence on staring fixedly “at
this stage.” Ante, at 11 (emphasis in original). The task
instead demands taking account of the entire regulatory
process in thinking about what is “appropriate” in its first
phase. The statutory language, in other words, is a di-
rective to remove one’s blinders and view things whole—to
consider what it is fitting to do at the threshold stage
given what will happen at every other.
And that instruction is primarily given to EPA, not to
Cite as: 576 U. S. ____ (2015) 9
KAGAN, J., dissenting
courts: Judges may interfere only if the Agency’s way of
ordering its regulatory process is unreasonable—i.e.,
something Congress would never have allowed. The ques-
tion here, as in our seminal case directing courts to defer
to agency interpretations of their own statutes, arises “not
in a sterile textual vacuum, but in the context of imple-
menting policy decisions in a technical and complex arena.”
Chevron U. S. A. Inc. v. Natural Resources Defense
Council, Inc., 467 U. S. 837, 863 (1984). EPA’s experience
and expertise in that arena—and courts’ lack of those
attributes—demand that judicial review proceed with
caution and care. The majority actually phrases this
principle well, though honors it only in the breach: Within
wide bounds, it is “up to the Agency to decide . . . how to
account for cost.” Ante, at 14. That judges might have
made different regulatory choices—might have considered
costs in different ways at different times—will not suffice
to overturn EPA’s action where Congress, as here, chose
not to speak directly to those matters, but to leave them to
the Agency to decide.
All of that means our decision here properly rests on
something the majority thinks irrelevant: an understand-
ing of the full regulatory process relating to power plants
and of EPA’s reasons for considering costs only after mak-
ing its initial “appropriate and necessary” finding. I there-
fore turn to those issues, to demonstrate the simple point
that should resolve these cases: that EPA, in regulating
power plants’ emissions of hazardous air pollutants, ac-
counted for costs in a reasonable way.
II
A
In the years after its “appropriate and necessary” find-
ing, EPA made good on its promise to account for costs
“[a]s a part of developing a regulation.” 65 Fed. Reg.
79830; see supra, at 7. For more than a decade, as EPA
10 MICHIGAN v. EPA
KAGAN, J., dissenting
deliberated on and then set emissions limits, costs came
into the calculus at nearly every turn. Reflecting that
consideration, EPA’s final rule noted that steps taken
during the regulatory process had focused on “flexib[ility]
and cost-effective[ness]” and had succeeded in making “the
rule less costly and compliance more readily manageable.”
77 Fed. Reg. 9306, 9376. And the regulation concluded
that “the benefits of th[e] rule” to public health and the
environment “far outweigh the costs.” Id., at 9306.
Consistent with the statutory framework, EPA initially
calculated floor standards: emissions levels of the best-
performing 12% of power plants in a given category or
subcategory. The majority misperceives this part of the
rulemaking process. It insists that EPA “must promulgate
certain . . . floor standards no matter the cost.” Ante, at
11. But that ignores two crucial features of the top-12%
limits: first, the way in which any such standard intrinsi-
cally accounts for costs, and second, the way in which the
Agency’s categorization decisions yield different standards
for plants with different cost structures.
The initial point is a fact of life in a market economy:
Costs necessarily play a role in any standard that uses
power plants’ existing emissions levels as a benchmark.
After all, the best-performing 12% of power plants must
have considered costs in arriving at their emissions out-
puts; that is how profit-seeking enterprises make deci-
sions. And in doing so, they must have selected achievable
levels; else, they would have gone out of business. (The
same would be true even if other regulations influenced
some of those choices, as the majority casually speculates.
See ante, at 13.) Indeed, this automatic accounting for
costs is why Congress adopted a market-leader-based
standard. As the Senate Report accompanying the 1990
amendments explained: “Cost considerations are reflected
in the selection of emissions limitations which have been
achieved in practice (rather than those which are merely
Cite as: 576 U. S. ____ (2015) 11
KAGAN, J., dissenting
theoretical) by sources of a similar type or character.”
S. Rep. No. 101–228, pp. 168–169 (1989). Of course, such
a standard remains technology-forcing: It requires lag-
gards in the industry to catch up with frontrunners, some-
times at significant expense. But the benchmark is, by
definition, one that some power plants have achieved
economically. And when EPA made its “appropriate and
necessary” finding, it knew that fact—knew that the con-
sequence of doing so was to generate floor standards with
cost considerations baked right in.
Still more, EPA recognized that in making categoriza-
tion decisions, it could take account of multiple factors
related to costs of compliance—and so avoid impracticable
regulatory burdens. Suppose, to use a simple example,
that curbing emissions is more technologically difficult—
and therefore more costly—for plants burning coal than
for plants burning oil. EPA can then place those two types
of plants in different categories, so that coal plants need
only match other coal plants rather than having to incur
the added costs of meeting the top oil plants’ levels. Now
multiply and complexify that example many times over.
As the Agency noted when making its “appropriate and
necessary” finding, EPA “build[s] flexibility” into the
regulatory regime by “bas[ing] subcategorization on . . .
the size of a facility; the type of fuel used at the facility;
and the plant type,” and also “may consider other relevant
factors such as geographic conditions.” 65 Fed. Reg.
79830; see S. Rep. No. 101–228, at 166 (listing similar
factors and noting that “[t]he proper definition of catego-
ries . . . will assure maximum protection of public health
and the environment while minimizing costs imposed on
the regulated community”). Using that classification tool,
EPA can ensure that plants have to attain only the emis-
sions levels previously achieved by peers facing compara-
ble cost constraints, so as to further protect plants from
unrealistic floor standards.
12 MICHIGAN v. EPA
KAGAN, J., dissenting
And that is exactly what EPA did over the course of its
rulemaking process, insisting on apples-to-apples compar-
isons that bring floor standards within reach of diverse
kinds of power plants. Even in making its “appropriate
and necessary” finding, the Agency announced it would
divide plants into the two categories mentioned above:
“coal-fired” and “oil-fired.” 65 Fed. Reg. 79830.3 Then, as
the rulemaking progressed, EPA went further. Noting
that different technologies significantly affect the ease of
attaining a given emissions level, the Agency’s proposed
rule subdivided those two classes into five: plants designed
to burn high-rank coal; plants designed to burn low-rank
virgin coal; plants that run on a technology termed inte-
grated gasification combined cycle; liquid oil units; and
solid oil units. See 76 Fed. Reg. 25036–25037. EPA ex-
plained that by subcategorizing in that way, it had spared
many plants the need to “retrofit[ ],” “redesign[ ],” or make
other “extensive changes” to their facilities. Id., at 25036.
And in its final rule, EPA further refined its groupings in
ways that eased compliance. Most notably, the Agency
established a separate subcategory, and attendant (less
stringent) floor, for plants in Hawaii, Puerto Rico, Guam,
and the Virgin Islands on the ground that plants in those
places have “minimal control over the quality of available
fuel[ ] and disproportionately high operational and
maintenance costs.” 77 Fed. Reg. 9401.4
——————
3 EPA also determined at that stage that it is “not appropriate or
necessary” to regulate natural gas plants’ emissions of hazardous air
pollutants because they have only “negligible” impacts. 65 Fed. Reg.
79831. That decision meant that other plants would not have to match
their cleaner natural gas counterparts, thus making the floor standards
EPA established that much less costly to achieve.
4 The majority insists on disregarding how EPA’s categorization deci-
sions made floor standards less costly for various power plants to
achieve, citing the Agency’s statement that “it is not appropriate to
premise subcategorization on costs.” 77 Fed. Reg. 9395 (quoted ante, at
13). But that misunderstands EPA’s point. It is quite true that EPA
Cite as: 576 U. S. ____ (2015) 13
KAGAN, J., dissenting
Even after establishing multiple floor standards that
factored in costs, EPA adopted additional “compliance
options” to “minimize costs” associated with attaining a
given floor—just as its “appropriate and necessary” find-
ing explicitly contemplated. Id., at 9306; 76 Fed. Reg.
25057; see 65 Fed. Reg. 79830. For example, the Agency
calculated each floor as both an “input-based” standard
(based on emissions per unit of energy used) and an
“output-based” standard (based on emissions per unit of use-
ful energy produced), and allowed plants to choose which
standard they would meet. That option, EPA explained,
can “result in . . . reduced compliance costs.” 76 Fed. Reg.
25063. Similarly, EPA allowed plants to meet a given 12%
floor by averaging emissions across all units at the same
site, instead of having to meet the floor at each unit. Some
plants, EPA understood, would find such averaging a “less
costly alternative.” 77 Fed. Reg. 9385. Yet again: EPA
permitted “limited use” plants—those primarily burning
——————
did not consider costs separate and apart from all other factors in
crafting categories and subcategories. See S. Rep. No. 101–128, p. 166
(1989) (noting that EPA may not make classifications decisions “based
wholly on economic grounds”); 77 Fed. Reg. 9395 (citing Senate Report).
That approach could have subverted the statutory scheme: To use an
extreme example, it would have allowed EPA, citing costs of compli-
ance, to place the top few plants in one category, the next few in another
category, the third in a third, and all the way down the line, thereby
insulating every plant from having to make an appreciable effort to
catch up with cleaner facilities. But in setting up categories and
subcategories, EPA did consider technological, geographic, and other
factors directly relevant to the costs that diverse power plants would
bear in trying to attain a given emissions level. (For some reason, the
majority calls this a “carefully worded observation,” ante, at 13, but it is
nothing other than the fact of the matter.) The Agency’s categorization
decisions (among several other measures, see supra, at 10–11; infra
this page and 14) thus refute the majority’s suggestion, see ante, at 11,
that the “appropriate and necessary” finding automatically generates
floor standards with no relation to cost. To the contrary, the Agency
used its categorization authority to establish different floor standards
for different types of plants with different cost structures.
14 MICHIGAN v. EPA
KAGAN, J., dissenting
natural gas but sometimes switching to oil—to comply
with the final rule by meeting qualitative “work practice
standards” rather than numeric emissions limits. Id., at
9400–9401. EPA explained that it would be “economically
impracticable” for those plants to demonstrate compliance
through emissions testing, and that an alternative stand-
ard, focused on their adoption of pollution control tech-
niques, would allow them to both reduce emissions and
avoid “extra cost.” Id., at 9401. And the list goes on. See,
e.g., id., at 9409–9410 (allowing extra year for plants to
comply with emissions limits where “source-specific con-
struction, permitting, or labor, procurement or resource
challenges” arise); id., at 9417 (describing additional
“compliance options”).
With all that cost-consideration under its belt, EPA next
assessed whether to set beyond-the-floor standards, and
here too, as it knew it would, the Agency took costs into
account. For the vast majority of coal and oil plants, EPA
decided that beyond-the-floor standards would not be
“reasonable after considering costs.” Id., at 9331. The
Agency set such a standard for only a single kind of plant,
and only after determining that the technology needed to
meet the more lenient limit would also achieve the more
stringent one. See id., at 9393; 76 Fed. Reg. 25046–25047.
Otherwise, EPA determined, the market-leader-based
standards were enough.
Finally, as required by Executive Order and as antici-
pated at the time of the “appropriate and necessary” find-
ing, EPA conducted a formal cost-benefit analysis of its
new emissions standards and incorporated those findings
into its proposed and final rules. See id., at 25072–25078;
77 Fed. Reg. 9305–9306, 9424–9432. That analysis esti-
mated that the regulation’s yearly costs would come in at
under $10 billion, while its annual measureable benefits
would total many times more—between $37 and $90
billion. See id., at 9305–9306; ante, at 4. On the costs
Cite as: 576 U. S. ____ (2015) 15
KAGAN, J., dissenting
side, EPA acknowledged that plants’ compliance with the
rule would likely cause electricity prices to rise by about
3%, but projected that those prices would remain lower
than they had been as recently as 2010. See 77 Fed. Reg.
9413–9414. EPA also thought the rule’s impact on jobs
would be about a wash, with jobs lost at some high-
emitting plants but gained both at cleaner plants and in
the pollution control industry. See ibid. On the benefits
side, EPA noted that it could not quantify many of the
health gains that would result from reduced mercury
exposure. See id., at 9306. But even putting those aside,
the rule’s annual benefits would include between 4,200
and 11,000 fewer premature deaths from respiratory and
cardiovascular causes, 3,100 fewer emergency room visits
for asthmatic children, 4,700 fewer non-fatal heart at-
tacks, and 540,000 fewer days of lost work. See id., at
9429.
Those concrete findings matter to these cases—which,
after all, turn on whether EPA reasonably took costs into
account in regulating plants’ emissions of hazardous air
pollutants. The majority insists that it may ignore EPA’s
cost-benefit analysis because “EPA did not rely on” it
when issuing the initial “appropriate and necessary”
finding. Ante, at 15 (quoting Solicitor General); see also
SEC v. Chenery Corp., 318 U. S. 80, 87, 93–94 (1943). At
one level, that description is true—indeed, a simple func-
tion of chronology: The kick-off finding preceded the cost-
benefit analysis by years and so could not have taken its
conclusions into account. But more fundamentally, the
majority’s account is off, because EPA knew when it made
that finding that it would consider costs at every subse-
quent stage, culminating in a formal cost-benefit study.
And EPA knew that, absent unusual circumstances, the
rule would need to pass that cost-benefit review in order to
issue. See Exec. Order No. 12866, 58 Fed. Reg. 51736(“Each agency shall . . . adopt a regulation only upon a
16 MICHIGAN v. EPA
KAGAN, J., dissenting
reasoned determination that the benefits of the intended
regulation justify its costs”). The reasonableness of the
Agency’s decision to consider only the harms of emissions
at the threshold stage must be evaluated in that broader
context. And in thinking about that issue, it is well to
remember the outcome here: a rule whose benefits exceed
its costs by three to nine times. In making its “appropri-
ate and necessary” finding, EPA had committed to as-
sessing and mitigating costs throughout the rest of its
rulemaking; if nothing else, the findings of the Agency’s
cost-benefit analysis—making clear that the final emis-
sions standards were cost-effective—show that EPA did
just that.
B
Suppose you were in charge of designing a regulatory
process. The subject matter—an industry’s emissions of
hazardous material—was highly complex, involving mul-
tivarious factors demanding years of study. Would you
necessarily try to do everything at once? Or might you try
to break down this lengthy and complicated process into
discrete stages? And might you consider different factors,
in different ways, at each of those junctures? I think you
might. You know that everything must get done in the
end—every relevant factor considered. But you tend to
think that “in the end” does not mean “in the beginning.”
And you structure your rulemaking process accordingly,
starting with a threshold determination that does not
mirror your end-stage analysis. Would that be at least
(which is all it must be) a “reasonable policy choice”?
Chevron, 467 U. S., at 845.
That is the question presented here, and it nearly an-
swers itself. Setting emissions levels for hazardous air
pollutants is necessarily a lengthy and complicated pro-
cess, demanding analysis of many considerations over
many years. Costs are a key factor in that process: As I
Cite as: 576 U. S. ____ (2015) 17
KAGAN, J., dissenting
have said, sensible regulation requires careful scrutiny of
the burdens that potential rules impose. See supra, at 6–
7. But in ordering its regulatory process, EPA knew it
would have the opportunity to consider costs in one after
another of that rulemaking’s stages—in setting the level of
floor standards, in providing a range of options for plants
to meet them, in deciding whether or where to require
limits beyond the floor, and in finally completing a formal
cost-benefit analysis. See 65 Fed. Reg. 79830–79831;
supra, at 9–15. Given that context, EPA reasonably de-
cided that it was “appropriate”—once again, the only
statutory requirement relevant here—to trigger the regu-
latory process based on the twin findings that the emis-
sions in question cause profound health and environmen-
tal harms and that available pollution control technologies
can reduce those emissions. By making that decision,
EPA did no more than commit itself to developing a realis-
tic and cost-effective regulation—a rule that would take
account of every relevant factor, costs and benefits alike.
And indeed, particular features of the statutory scheme
here indicate that EPA’s policy choice was not just a min-
imally reasonable option but an eminently reasonable one.
To start, that decision brought EPA’s regulation of
power plants into sync with its regulation of every other
significant source of hazardous pollutants under the Clean
Air Act. For all those types of sources (totaling over 100),
the Act instructs EPA to make the threshold decision to
regulate based solely on the quantity and effects of pollu-
tants discharged; costs enter the picture afterward, when
the Agency takes up the task of actually establishing
emissions limits. See supra, at 3–4. Industry after indus-
try, year after year, EPA has followed that approach to
standard-setting, just as Congress contemplated. See, e.g.,
58 Fed. Reg. 49354 (1993) (dry cleaning facilities); 59 Fed.
Reg. 64303 (1994) (gasoline distributors); 60 Fed. Reg.
45948 (1995) (aerospace manufacturers). And apparently
18 MICHIGAN v. EPA
KAGAN, J., dissenting
with considerable success. At any rate, neither those
challenging this rule nor the Court remotely suggests that
these regulatory regimes have done “significantly more
harm than good.” Ante, at 7. So when making its “appro-
priate and necessary” finding for power plants, EPA had
good reason to continue in the same vein. See, e.g., Entergy,
556 U. S., at 236 (opinion of BREYER, J.) (noting that the
reasonableness of an agency’s approach to considering
costs rests in part on whether that tack has met “with
apparent success in the past”). And that is exactly how
EPA explained its choice. Stating that it would consider
the “costs of controls” when “developing a regulation,” the
Agency noted that such an “approach has helped build
flexibility in meeting environmental objectives in the
past,” thereby preventing the imposition of disproportion-
ate costs. 65 Fed. Reg. 79830. Indeed, as EPA further
commented in issuing its rule, it would seem “inequitable
to impose a regulatory regime on every industry in Amer-
ica and then to exempt one category” after finding it repre-
sented “a significant part of the air toxics problem.” 77
Fed. Reg. 9322 (quoting 136 Cong. Rec. 36062 (1990)
(statement of Sen. Durenberger)).
The majority’s attempt to answer this point founders on
even its own statement of facts. The majority objects that
“the whole point of having a separate provision about
power plants” is to “treat[ ] power plants differently from
other stationary sources.” Ante, at 11 (emphasis in origi-
nal). But turn back about 10 pages, and read what the
majority says about why Congress treated power plants
differently: because, as all parties agree, separate regula-
tory requirements involving acid rain “were expected to
have the collateral effect of reducing power plants’ emis-
sions of hazardous air pollutants, although the extent of
the reduction was unclear.” Ante, at 2; see supra, at 4–5.
For that reason alone (the majority does not offer any
other), Congress diverted EPA from its usual regulatory
Cite as: 576 U. S. ____ (2015) 19
KAGAN, J., dissenting
path, instructing the Agency, as a preliminary matter, to
complete and consider a study about the residual harms to
public health arising from those emissions. See ante, at 2–
3; supra, at 5. But once EPA found in its study that the
acid rain provisions would not significantly affect power
plants’ emissions of hazardous pollutants, any rationale
for treating power plants differently from other sources
discharging the same substances went up in smoke. See
65 Fed. Reg. 79830. At that point, the Agency would have
had far more explaining to do if, rather than following a
well-tested model, it had devised a new scheme of regula-
tion for power plants only.
Still more, EPA could not have accurately assessed costs
at the time of its “appropriate and necessary” finding. See
8 Mercury Study, at 6–2 (noting the “many uncertainties”
in any early-stage analysis of pollution control costs).
Under the statutory scheme, that finding comes before—
years before—the Agency designs emissions standards.
And until EPA knows what standards it will establish, it
cannot know what costs they will impose. Nor can those
standards even be reasonably guesstimated at such an
early stage. Consider what it takes to set floor standards
alone. First, EPA must divide power plants into catego-
ries and subcategories; as explained earlier, those classifi-
cation decisions significantly affect what floors are estab-
lished. See supra, at 4, and n. 1, 11–12. And then, EPA
must figure out the average emissions level already
achieved by the top 12% in each class so as to set the new
standards. None of that can realistically be accomplished
in advance of the Agency’s regulatory process: Indeed,
those steps are the very stuff of the rulemaking. Simi-
larly, until EPA knows what “compliance options” it will
develop, it cannot know how they will mitigate the costs
plants must incur to meet the floor standards. See supra,
at 13–14. And again, deciding on those options takes
substantial time. So there is good reason for different
20 MICHIGAN v. EPA
KAGAN, J., dissenting
considerations to go into the threshold finding than into
the final rule. Simply put, calculating costs before start-
ing to write a regulation would put the cart before the
horse.
III
The central flaw of the majority opinion is that it ig-
nores everything but one thing EPA did. It forgets that
EPA’s “appropriate and necessary” finding was only a first
step which got the rest of the regulatory process rolling. It
narrows its field of vision to that finding in isolation, with
barely a glance at all the ways in which EPA later took
costs into account. See supra, at 10–11 (in establishing
floor standards); supra, at 13–14 (in adopting compliance
options); supra, at 14 (in deciding whether to regulate
beyond the floor); supra, at 14–15 (in conducting a formal
cost-benefit analysis as a final check). In sum, the major-
ity disregards how consideration of costs infused the regu-
latory process, resulting not only in EPA’s adoption of
mitigation measures, ante, at 13–14, but also in EPA’s
crafting of emissions standards that succeed in producing
benefits many times their price.
That mistake accounts for the majority’s primary argu-
ment that the word “appropriate,” as used in
§7412(n)(1)(A), demands consideration of costs. See ante,
at 6–7. As I have noted, that would be true if the “appro-
priate and necessary” finding were the only step before
imposing regulations on power plants. See supra, at 6–7.
But, as should be more than clear by now, it was just the
first of many: Under the Clean Air Act, a long road lay
ahead in which the Agency would have more—and far
better—opportunities to evaluate the costs of diverse
emissions standards on power plants, just as it did on all
other sources. See supra, at 4, 7, 9–15. EPA well under-
stood that fact: “We evaluate the terms ‘appropriate’ and
‘necessary,’ ” it explained, in light of their “statutory con-
Cite as: 576 U. S. ____ (2015) 21
KAGAN, J., dissenting
text.” 76 Fed. Reg. 24986. And EPA structured its regula-
tory process accordingly, with consideration of costs com-
ing (multiple times) after the threshold finding. The only
way the majority can cast that choice as unreasonable,
given the deference this Court owes to such agency deci-
sions, is to blind itself to the broader rulemaking scheme.
The same fault inheres in the majority’s secondary
argument that EPA engaged in an “interpretive gerry-
mander[ ]” by considering environmental effects but not
costs in making its “appropriate and necessary” finding.
Ante, at 8–9. The majority notes—quite rightly—that
Congress called for EPA to examine both subjects in a
study of mercury emissions from all sources (separate
from the study relating to power plants’ emissions alone).
See ante, at 8. And the majority states—again, rightly—
that Congress’s demand for that study “provides direct
evidence that Congress was concerned with [both] envi-
ronmental effects [and] cost.” Ante, at 9 (internal quota-
tion marks omitted). But nothing follows from that fact,
because EPA too was concerned with both. True enough,
EPA assessed the two at different times: environmental
harms (along with health harms) at the threshold, costs
afterward. But that was for the very reasons earlier de-
scribed: because EPA wanted to treat power plants like
other sources and because it thought harms, but not costs,
could be accurately measured at that early stage. See
supra, at 17–20. Congress’s simple request for a study of
mercury emissions in no way conflicts with that choice of
when and how to consider both harms and costs. Once
more, the majority perceives a conflict only because it
takes so partial a view of the regulatory process.
And the identical blind spot causes the majority’s
sports-car metaphor to run off the road. The majority
likens EPA to a hypothetical driver who decides that “it is
‘appropriate’ to buy a Ferrari without thinking about cost,
because he plans to think about cost later when deciding
22 MICHIGAN v. EPA
KAGAN, J., dissenting
whether to upgrade the sound system.” Ante, at 11. The
comparison is witty but wholly inapt. To begin with,
emissions limits are not a luxury good: They are a safety
measure, designed to curtail the significant health and
environmental harms caused by power plants spewing
hazardous pollutants. And more: EPA knows from past
experience and expertise alike that it will have the oppor-
tunity to purchase that good in a cost-effective way. A
better analogy might be to a car owner who decides with-
out first checking prices that it is “appropriate and neces-
sary” to replace her worn-out brake-pads, aware from
prior experience that she has ample time to comparison-
shop and bring that purchase within her budget. Faced
with a serious hazard and an available remedy, EPA
moved forward like that sensible car owner, with a prom-
ise that it would, and well-grounded confidence that it
could, take costs into account down the line.
That about does it for the majority’s opinion, save for its
final appeal to Chenery—and Chenery cannot save its
holding. See ante, at 14. Of course a court may not up-
hold agency action on grounds different from those the
agency gave. See Chenery, 318 U. S., at 87. But equally, a
court may not strike down agency action without consider-
ing the reasons the agency gave. Id., at 95. And that is
what the majority does. Indeed, it is difficult to know
what agency document the majority is reading. It denies
that “EPA said . . . that cost-benefit analysis would be
deferred until later.” Ante, at 13. But EPA said exactly
that: The “costs of controls,” the Agency promised, “will be
examined” as “a part of developing a regulation.” 65 Fed.
Reg. 79830. Tellingly, these words appear nowhere in the
majority’s opinion. But what are they other than a state-
ment that cost concerns, contra the majority, are not
“irrelevant,” ante, at 13 (without citation)—that they are
simply going to come in later?
And for good measure, EPA added still extra explana-
Cite as: 576 U. S. ____ (2015) 23
KAGAN, J., dissenting
tion. In its “appropriate and necessary” finding, the Agency
committed to exploring “least-cost solutions” in “devel-
oping a standard for utilities.” 65 Fed. Reg. 79830. The
Agency explained that such an approach—particularly
mentioning the use of averaging and subcategorization—
had offered “opportunit[ies] for lower cost solutions” and
“helped build flexibility in meeting environmental objec-
tives in the past.” Ibid.; see supra, at 7, 18. Then, in
issuing its proposed and final rules, EPA affirmed that it
had done just what it said. EPA recognized that standard-
setting must “allow the industry to make practical in-
vestment decisions that minimize costs.” 76 Fed. Reg.
25057. Accordingly, the Agency said, it had “provid[ed]
flexibility and compliance options” so as to make the rule
“less costly” for regulated parties. 77 Fed. Reg. 9306.
EPA added that it had rejected beyond-the-floor standards
for almost all power plants because they would not be
“reasonable after considering costs.” Id., at 9331. And it
showed the results of a formal analysis finding that the
rule’s costs paled in comparison to its benefits. In sum,
EPA concluded, it had made the final standards “cost-
efficient.” Id., at 9434. What more would the majority
have EPA say?
IV
Costs matter in regulation. But when Congress does not
say how to take costs into account, agencies have broad
discretion to make that judgment. Accord, ante, at 14
(noting that it is “up to the Agency to decide (as always,
within the limits of reasonable interpretation) how to
account for cost”). Far more than courts, agencies have
the expertise and experience necessary to design regula-
tory processes suited to “a technical and complex arena.”
Chevron, 467 U. S., at 863. And in any event, Congress
has entrusted such matters to them, not to us.
EPA exercised that authority reasonably and responsi-
24 MICHIGAN v. EPA
KAGAN, J., dissenting
bly in setting emissions standards for power plants. The
Agency treated those plants just as it had more than 100
other industrial sources of hazardous air pollutants, at
Congress’s direction and with significant success. It made
a threshold finding that regulation was “appropriate and
necessary” based on the harm caused by power plants’
emissions and the availability of technology to reduce
them. In making that finding, EPA knew that when it
decided what a regulation would look like—what emis-
sions standards the rule would actually set—the Agency
would consider costs. Indeed, EPA expressly promised to
do so. And it fulfilled that promise. The Agency took
account of costs in setting floor standards as well as in
thinking about beyond-the-floor standards. It used its full
kit of tools to minimize the expense of complying with its
proposed emissions limits. It capped the regulatory proc-
ess with a formal analysis demonstrating that the bene-
fits of its rule would exceed the costs many times over. In
sum, EPA considered costs all over the regulatory process,
except in making its threshold finding—when it could not
have measured them accurately anyway. That approach
is wholly consonant with the statutory scheme. Its adop-
tion was “up to the Agency to decide.” Ante, at 14.
The majority arrives at a different conclusion only by
disregarding most of EPA’s regulatory process. It insists
that EPA must consider costs—when EPA did just that,
over and over and over again. It concedes the importance
of “context” in determining what the “appropriate and
necessary” standard means, see ante, at 7, 10—and then
ignores every aspect of the rulemaking context in which
that standard plays a part. The result is a decision that
deprives the Agency of the latitude Congress gave it to
design an emissions-setting process sensibly accounting
for costs and benefits alike. And the result is a decision
that deprives the American public of the pollution control
measures that the responsible Agency, acting well within
Cite as: 576 U. S. ____ (2015) 25
KAGAN, J., dissenting
its delegated authority, found would save many, many
lives. I respectfully dissent.