Earlier this month, the U.S. Environmental Protection Agency (EPA) finalized a new rule revising its emissions standards for nitrogen oxides (NOx) from new gas-fired power plants and other stationary turbines. Although the new regulations are significantly more lenient than those proposed during the Biden Administration, the final rule is especially significant because it signals that EPA will no longer quantify the health benefits from reducing air pollution in certain clean air rules.

While the EPA’s final rule only contains a truncated discussion of its decision, the agency’s official justification for the sudden shift in policy appears in the Economic Impact Analysis accompanying the final rule. In a section titled “Benefits of Emissions Reductions,” the EPA explains that the change was made “to ensure the public is not misled regarding the level of scientific understanding.” According to the agency, its analytical practices have historically “provided the public with a false sense of precision and more confidence regarding the monetized impacts of fine particulate matter . . . and ozone than the underlying science could fully support[.]” On this basis, the EPA concludes that the health benefits from reducing ozone (smog) and fine particulate matter (soot) pollution are too “uncertain” to quantify.

At this point, it is important to clarify what the EPA’s new cost-benefit analysis does and does not do. Under the new policy, the EPA will continue to quantify emissions reductions. In this case, for example, the agency estimates that the updated regulations will reduce NOx emissions by up to 296 tons per year by 2032. What the EPA will no longer do is monetize the health benefits associated with these reductions in emissions. This is a profound shift in policy. By retreating to this higher level of abstraction and refusing to monetize these benefits, the EPA is effectively stripping away from its analysis the value of avoiding premature deaths and reducing medical costs. The EPA’s new policy therefore has far-reaching implications for cost-benefit analysis under the Clean Air Act. Moreover, because the health benefits from reducing ozone and fine particulate matter pollution are among the most studied and easiest to quantify, the EPA’s new policy suggests that the EPA may also abandon monetizing the benefits of emissions reductions for other common air pollutants in the future.

Nonetheless, there are plenty of reasons to be skeptical about the EPA’s new methodology. In Michigan v. EPA, the Supreme Court confronted a similar legal issue and rejected the EPA’s cost-benefit analysis because it failed to quantify the costs of regulation. Although Michigan v. EPA involved the National Emissions Standards for Hazardous Air Pollutants Program—which employs slightly different statutory language directing the agency to regulate hazardous air pollutants emitted by power plants only as “appropriate and necessary” and after studying hazards to public health—its logic is also applicable here. In this case, Section 111(b)(1) of the Clean Air Act directs the EPA to regulate emissions from new stationary sources of pollution, such as factories and power plants, and requires the agency to “at least every 8 years review and, if appropriate, revise” applicable New Source Performance Standards.

In Michigan v. EPA, the Supreme Court explained that the term “appropriate” has a “capacious” meaning and “naturally and traditionally includes consideration of all the relevant factors.” Writing for the Court, Justice Scalia therefore concluded that a full consideration of the “cost” of regulation must “include[] more than the expense of complying with regulations; any disadvantage could be termed a cost.” This includes, for example, “harms that regulation might do to human health or the environment.”

While Michigan v. EPA focused on the agency’s obligation to analyze the costs of regulation, its reasoning necessarily supports the proposition that the EPA must also fully analyze the benefits of regulation. As Justice Scalia observed, non-arbitrary cost-benefit analysis “ordinarily requires paying attention to the advantages and the disadvantages of agency decisions.” Thus, although the EPA retains some discretion and is not required to conduct a formal cost-benefit analysis for every regulatory action, the agency may not employ a one-sided or biased methodology. Otherwise, the EPA runs afoul of State Farm’s arbitrary and capricious standard of review under the Administrative Procedure Act (APA).

Here, the facts surrounding the EPA’s abrupt shift in policy suggest the agency’s decision may violate the APA for at least four reasons. First, by refusing to quantify the health benefits of regulation while simultaneously insisting that the agency exhaustively catalogue its costs, the EPA appears to have impermissibly placed its thumb on the scale to better justify its deregulatory agenda. According to Michigan v. EPA, this is not permitted. At the very least, the framework the EPA uses to conduct cost-benefit analyses must be based on neutral standards—that is, the benefits of regulation must be quantified to the same extent and with the same degree of specificity as the costs. Second, the sudden speed of EPA’s shift in policy also warrants skepticism. Since President Reagan issued Executive Order 12291 more than forty years ago, it has become standard practice for the EPA to monetize the benefits of reducing air pollution in regulatory analyses using value of mortality risk calculations. However, the EPA’s Economic Impact Analysis devoted only four pages of surface-level discussion to justification of this about-face. Third, among common air pollutants, the public health benefits associated with reducing ozone and fine particulate matter emissions are generally viewed as among the easiest to quantify. Finally, as Cass Sunstein has already noted, the EPA’s failure to monetize the health benefits of clean air rules may violate the 2003 version of OMB Circular A-4, which President Trump sought to restore by Executive Order shortly after taking office.[1]

Of course, many environmentalists have long questioned the utility of cost-benefit analyses. President Biden and then-Office of Information and Regulatory Affairs (OIRA) Administrator Richard Revesz sought to address these concerns by implementing a variety of initiatives to reduce the discount rates, guide analysis of distributive effects, and incorporate qualitative analysis where quantitative metrics are unavailable. However, President Trump rescinded these policies when he took office in January 2025. The EPA therefore remains bound by existing statute, case law, and guidance to undertake regulatory analysis evenhandedly. To the extent the agency wishes to engage in detailed cost-benefit analysis for regulations under the Clean Air Act, it must call balls and strikes.

Justin McCarthy is an Honors Attorney at the New Mexico Department of Justice. The views and opinions expressed in this article are those of the author and do not necessarily reflect the views or positions of the New Mexico Department of Justice.

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[1] Under the Regulatory Right-to-Know Act, any updates to Circular A-4 require peer review. It is therefore unclear whether President Trump’s reinstatement of the 2003 version of OMB Circular A-4 has any legal effect.