Under the administrative law principle of Chevron deference, if the language of a statute is ambiguous, a court must defer to the agency’s interpretation of that language if the agency’s interpretation is reasonable. In Michigan v. Environmental Protection Agency, the U.S. Supreme Court evaluated an Environmental Protection Agency (EPA) decision to ignore costs when deciding whether regulation of power plants under the Clean Air Act (CAA) is “appropriate and necessary.” The majority opinion, written by Justice Scalia, held that EPA must consider cost, including the cost of compliance. Justice Kagan, writing for the dissent, argued that EPA acted reasonably in initially determining whether regulation was appropriate based on other factors such as potential harms and technological feasibility, because the agency necessarily evaluates cost during later phases of the regulatory process.
In Part I, this In Brief surveys the legal background for power plant regulation and for Chevron deference. Then, Part II analyzes the case history and the Court’s reasoning in interpreting the appropriate-and-necessary language. Finally, Part III explores the potential implications of the Court’s decision for future cases and agency decisions. The Court in Michigan leaves Chevron deference relatively intact, but the Court’s reasoning nevertheless may reduce judicial deference to agency interpretation by broadening the scope of what courts have historically deemed unreasonable.