Page:Michigan v. EPA.pdf/7

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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 ultimately cost power plants, according to the Agency’s own estimate, nearly $10 billion a year. EPA refused to consider whether the costs of its decision outweighed the benefits. The Agency gave cost no thought at all, because 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 appropriate and necessary.” The Agency accepts that it could have interpreted this provision to mean that cost is relevant 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 consideration 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