EPA must consider cost of regulations on businesses

By David Tanner, senior editor

The U.S. Supreme Court ruled that the Environmental Protection Agency must consider the cost of its regulatory actions before the agency can move forward. While the landmark ruling specifically affects stationary facilities and power plants, stakeholders in trucking wonder why EPA is not held to that standard in their industry.

The case at hand is Michigan v. EPA. A 5-4 majority opinion rendered on June 29 was written by Justice Antonin Scalia, upholding a decision by the Court of Appeals for the D.C. Circuit that says the EPA “unreasonably” interpreted the Clean Air Act when it did not consider the full cost of compliance to a power plant when it imposed a rule to reduce mercury emissions.

“EPA strayed well beyond the bounds of reasonable interpretation in concluding that cost is not a factor relevant to the appropriateness of regulating power plants,” Scalia wrote.

“EPA must consider cost – including cost of compliance – before deciding whether regulation is appropriate and necessary,” Scalia wrote. “It will be up to the Agency to decide (as always, within the limits of reasonable interpretation) how to account for cost.”

The ruling is specific to power plants, Scalia clarified. He cited a previous case, Whitman v. American Trucking Associations Inc., which in 2001 dealt with whether the EPA was within its bounds to avoid including the cost of compliance in rules about ambient air quality for trucks. In Whitman, the Supreme Court held that the Clean Air Act, created in 1990, properly gave the EPA the power to regulate emissions and did not require EPA to consider the cost of implementation.

Truckers have skin in the game and also have cause for concern with the latest decision.

EPA along with the National Highway Traffic Safety Administration, NHTSA, recently unveiled a proposed new phase of emission controls and fuel economy standards for the manufacturers of trucks, trailers and diesel engines.

While the proposal, known as Greenhouse Gas Phase 2, or GHG Phase 2, is directed at the equipment manufacturers, it is the end users – the buyers of that equipment – who will feel its effects. According to the proposal, GHG Phase 2 will add $10,000 to $12,000 to the cost of new trucks during the compliance period slated for 2021 through 2027.

Phase 1, which is a final rule for the first ever fuel economy and emissions standards affecting model years 2014 through 2018, is estimated to add $6,000 to the cost of a new vehicle.

Before that, research by the American Truck Dealers, part of the National Automobile Dealers Association, found that EPA mandates from 2004 through 2010 added $23,000 to the cost of a new truck.

OOIDA believes that EPA should take the costs to the end user – especially the small-business trucker – into account in any regulatory process that leads to an increase in the cost of equipment.

“While not directly impacting regulations regarding tractors, trailers, or diesel engines, the decision in Michigan v. EPA reinforces the long-standing call by small-business truckers to ensure that costs to end users are considered as EPA develops new regulations,” OOIDA Director of Government Affairs Ryan Bowley said.

There may be other takeaways from Michigan v. EPA, he said. The fact that the Supreme Court has ruled against a powerful federal agency could be one.

The Michigan v. EPA decision said the costs to power plants outweighed the benefits in environmental savings.

“One would not say that it is even rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits,” Scalia wrote.

The Supreme Court decision cites another case, Allentown Mack Sales & Service Inc. v. the National Labor Relations Board, in quoting the following: “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.” LL