Chalk this one up to old dogs and new tricks.
In a previous post, I discussed the politics of environmental law and the fact that, as a general matter, the Republican philosophy of environmental law is to consider costs versus benefits while the Democratic approach places considerably more emphasis on protecting the environment and much less on the cost of doing so. In many ways, this is at the heart of the differences between the parties when it comes to environmental regulation.
Since 1995, however, this difference hasn’t been very heavily debated because Republicans controlled Congress and, for the last eight years, the White House. During that time, EPA’s use of cost-benefit analysis has been fairly consistent. Not surprisingly, with a new sheriff in town (Democratic President and Democratic Congress), it has quickly become apparent that there will be significant changes in all aspects of environmental regulation. But given EPA’s historical use of cost-benefit analysis, how can it go about changing its tune? Let me ask it another way: If the President and this Congress want to make a change in environmental enforcement so that cost-benefit analysis plays a significantly reduced role, will it be like turning a barge or a speedboat? In light of the Entergy Corp. case, my guess is the latter.
In Entergy Corp. v. Riverkeeper, Inc., the United States Supreme Court addressed the issue of cost-benefit analysis in environmental regulation. Those who work in the area of the Clean Water Act are well aware of the five statutory standards found throughout the Act which are applicable to various situations. Those five standards are: 1) BTA (Best Technology Available); 2) BPT (Best Practicable Technology); 3) BATEA (Best Available Technology Economically Achievable); 4) BADT (Best Available Demonstrated Technology); 5) BCT (Best Control Technology). (I’ve always been consoled by the fact that each and every one of these standards is the “best”). If you did not have all of these committed to memory, don’t be embarrassed. The Court actually found it necessary to add an appendix to its opinion which set out the definition of the terms.
In the case, the Court was confronted with the question of whether the use of the BTA standard should include a balancing of costs against benefits. After conducting an analysis of the statutory language, the Court finally found that the choice is up to EPA. The Court could not identify any prohibition against EPA including a cost-benefit analysis in setting health and safety standards under BTA if it chose to do so. In the words of the Court:
[I]t was well within the bounds of reasonable interpretation for the EPA to conclude that cost-benefit analysis is not categorically forbidden.
The Court then went on to look at what the EPA’s BTA standard actually was and determined that, historically, EPA had employed the standard that technology would not be required if the cost was “wholly disproportionate to the environmental benefit to be gained.” However, the standard employed in the case at bar was that the changes would not be required if the costs of compliance were “significantly greater than” the benefits of complying with the applicable performance standards. In discussing the change in terminology by EPA between these two standards, the Court said:
While the EPA’s prior “wholly disproportionate” standard may be somewhat different from its current “significantly greater than” standard, there is nothing in the statute that would indicate that the former is a permissible interpretation while the latter is not.
Maybe it’s been a slow month, but I find these statements very interesting. First, the Court found that use of the cost-benefit analysis is permitted because it isn’t “categorically forbidden.” Then the Court recognized that EPA has changed its standard, but approved the use of either one.
The partial concurrence and dissent by Justice Breyer took the Court to task. He agreed that the EPA could include a cost-benefit component but he felt that if EPA was employing a new and different test, it was incumbent on EPA to adequately explain why it had changed its standard. Since it had not done so, Justice Breyer would have ordered a remand to EPA so that EPA could either apply the traditional “wholly disproportionate” standard or provide an adequately reasoned explanation for the change.
It seems to me that Justice Breyer has a point. If EPA is going to change its standards (which could be change that would be either looser or tighter) from what it has been using for the past 5 or 10 years, maybe it should be required to explain itself. Maybe applying a particular standard on a business is tough enough without the possibility of that standard changing each time there is a change in the administration and/or the head of EPA. Maybe there is something to be said for consistent application of the environmental laws so that business can at least plan and prepare. Naaah...said the United States Supreme Court.
In my mind, the significant holding of the Entergy Corporation case is that on something as fundamental as the use and proper application of cost-benefit analysis, EPA has discretion to employ that analysis (unless categorically prohibited) and EPA (read that to be each new EPA administrator) can modify that standard with impunity and without notice. While the decision certainly allows an agency, in this case EPA, to quickly adjust to new political realities, it wreaks havoc with business planning.
I started this post by referencing the old-dog-new-tricks maxim. However, I would like it understood that I am certainly not calling EPA an old dog. All I'm trying to say is that EPA’s ability to change its standards without notice does seem to be a new trick . . . and that it’s a shame that the majority of the Court didn’t require EPA to notice up and justify the change before it bit someone with it.
