IN THE 

6XSUHPH&RXUWRIWKH8QLWHG6WDWHV 

———— 

AMERICAN TRUCKING ASSN’S, INC. et al., 

Cross-Petitioners, 

v. 

BROWNER, EPA ADMIN., 

Respondent. 
———— 

On Writ of Certiorari to the 
United States Court of Appeals 
for the District of Columbia Circuit 

———— 

BRIEF OF AMICUS CURIAE MERCATUS CENTER 
IN SUPPORT OF CROSS-PETITIONER 

———— 

INTEREST OF AMICUS CURIAE 

The Mercatus Center at George Mason University is a 
nonprofit research and educational institution, as defined by 
the Code of the Internal Revenue Service, 26 U.S.C. 
§ 501(c)(3).1 Its Regulatory Studies Program (“RSP”) is 

1 The statements in this brief do not represent an official position of 
George Mason University. The parties’ written consents to the filing of 
this brief have been filed with the Clerk of Court. Pursuant to Rule 37.6, 
amicus curiae states that no counsel for a party authored this brief in 
whole or in part, and no persons other than the amicus curiae, its 
members, or its counsel, have made a monetary contribution to its 
preparation or submission. Counsel acknowledge the contribution of 
Susan E. Dudley, Senior Research Fellow at the Mercatus Center, to the 
writing of this brief. 

2 

dedicated to advancing knowledge of administrative 
regulations and their effects on society. Through its Public 
Interest Comment project, RSP submits independent analyses 
of proposed rules in agency rulemaking proceedings. It filed 
two such analyses with EPA on the proposed national 
ambient air quality standards for ozone and particulate matter 
during the comment period. Those comments focused on the 
inadequacy of the scientific and economic foundation of the 
proposed standards, the failure of EPA to consider offsetting 
health risks and the disproportionate costs that would be 
incurred in implementing the standards. Each is central to the 
issue of the petition herein. 

ARGUMENT 

I. INTRODUCTION AND BACKGROUND 

The issue in this case is whether the EPA and the lower 
court correctly construed the Clean Air Act (“CAA”) when 
they relied upon Lead Industries Ass’n, Inc. v. EPA, 647 F.2d 
1130 (D.C. Cir.), cert. denied, 449 U.S. 1042 (1980), to 
exclude indirect health effects, implementation costs, and 
related risk considerations in setting National Ambient Air 
Quality Standards (“NAAQS”). Section 109(b) of the CAA 
directs EPA to set NAAQS at levels “requisite to protect the 
public health” with an “adequate margin of safety.” 42 
U.S.C. § 7409(b)(1). In Lead Industries, the D.C. Circuit 
held that § 109 prohibited EPA from considering “economic 
or technological feasibility in setting ambient air quality 
standards.” 647 F.2d at 1148. It specifically rejected 
arguments that cost considerations were relevant in 
establishing “margins of safety” under § 109 or that EPA had 
to show “clear” health effects before approving standards for 
protecting “public health.” Id. at 1154-1155; see id. at 1148. 
Later decisions by the D.C. Circuit confirmed that EPA was 
precluded from considering all factors of “ ‘economic and 
technological feasibility,’ ” American Petroleum Inst. v. 

3 

Costle, 665 F.2d 1176, 1185 (D.C. Cir. 1981), cert. denied 
sub nom. American Petroleum Inst. v. Gorsuch, 455 U.S. 
1034 (1982), including indirect health effects such as “costs 
associated with alleged health risks from unemployment.” 
NRDC v. EPA, 902 F.2d 962, 973 (D.C. Cir. 1990), vacated 
in part, 921 F.2d 326 (D.C. Cir.), cert. dismissed sub nom. 
Alabama Power Co. v. NRDC, 498 U.S. 1075 (1991). 

This unduly narrow reading of § 109 is not supported by 
the CAA’s text, purpose, context, structure or legislative 
history—or by common sense. It is, moreover, inconsistent 
with the D.C. Circuit’s reading of a significant part of 
§112(b)(1)(B) of the CAA, 42 U.S.C. § 7412(b)(1)(B), which 
established the boundaries for hazardous pollutants “at the 
level which in the [Administrator’s] judgment provides an 
ample margin of safety to protect the public health.” In 
NRDC v. EPA, 824 F.2d 1146 (D.C. Cir. 1987) (en banc) 
(“Vinyl Chloride”), the D.C. Circuit read § 112 as requiring 
an EPA finding of “significant risk,” id. at 1153, and as 
permitting consideration of non-health as well as compliance 
costs and related matters in setting the emissions standards. 
Id. at 1158, 1163-66. Thus, had the open-ended measure of 
standard setting approved in Vinyl Chloride been adopted by 
EPA and the D.C. Circuit in the instant case (rather than the 
health restricted test of Lead Industries), it is unlikely that 
this case or its companion, Docket No. 99-1257, would be 
before the Court. That is, under that test, EPA’s discretion 
would not have been largely unconfined, the requirements of 
the nondelegation doctrine could have been satisfied, and a 
NAAQS standard that properly took into account all relevant 
factors, including implementation costs, could have been 
adopted.2 

2 The difference in the language of the two sections – “adequate” in 
§ 109 and “ample” in § 112 – would have seemingly no impact on 
whether cost and other factors were appropriate considerations in setting 
pollutant levels. At most, these differences measure the quantum but not 

4 

These issues of statutory construction under § 109 are 
persuasively addressed in Cross-Petitioners’ brief and we 
endorse but do not repeat that analysis here.3 Our focus 
instead is on the effect of EPA’s misguided reading of the 
clause in § 109—that NAAQS levels for ozone and 
particulate matter must “protect the public health” with an 
“adequate margin of safety.” Because EPA’s reading 
excludes consideration of important countervailing health and 
welfare considerations (e.g., implementation costs as well as 
direct and indirect health and welfare effects), the revised 
NAAQS are unlikely to improve public health and welfare. 
We examine the public health and welfare effects of different 
decision rules that could be applied if EPA were not 
constrained by Lead Industries, and show that these 
alternative decision rules would better meet the statutory 
directive of protecting public health with an adequate margin 
of safety. 

the kind of analytical support required for these EPA rules. See Merriam- 
Webster’s Collegiate Dictionary 61 (Deluxe ed. 1998) (“ample” is 
something “more than adequate”). 

3 Amicus also is filing a brief in the companion “nondelegation” case 
(Docket No. 99-1257) on the proper application of that doctrine in 
interpreting § 109 of the CAA. Nonetheless, we believe that the issue 
there is interconnected with the “substantive Lead Industries” case here 
(Docket No. 99-1426) because a proper reading of § 109, requiring EPA 
to consider cost, indirect health and related effects, will moot the 
nondelegation issues in Docket No. 99-1257. On the other hand, 
affirmance of the court of appeals in the nondelegation case (Docket No. 
99-1257) will not resolve the substantive Lead Industries issues herein 
because rejection of EPA’s interpretation of § 109 does not itself answer 
the question of Congressional intent on the meaning of that section. That 
question should be answered either by the Court (under Chevron step 1) 
or by a reasonable interpretation by the agency (under Chevron step 2), 
depending on whether Congress directly addressed the precise issues of 
cost consideration. See pp. 23-4 infra. 

5 

The revised NAAQS rules at issue here represent a major 
departure by EPA. Its prior standard for PM regulated all 
particles larger than 10 microns; the revised standard expands 
that regulatory scope by including fine particles of soot down 
to 2.5 microns, which “are so small that several thousand of 
them could fit on the type-written period of the end of a 
sentence.” Statement of EPA Administrator Carol M. 
Browner before Senate Subcommittee on Clean Air, 
Wetlands, Private Property & Nuclear Safety of the Comm. 
on Environment & Public Works, 105th Cong., 1st Sess. 280 
(Feb. 12, 1997). The new rule generally retains the 1987 
standards for particulate matter larger than 10 microns (PM10) 
but creates a new standard for fine particles larger than 2.5 
microns (PM2.5). The PM2.5 standard specifies a maximum 
annual average concentration of 15 and a daily maximum of 
65 micrograms per cubic meter, summarized as 15/65 

JP3. The previous ozone standard applied to concentrations 
of .12 parts per million (ppm) averaged over one hour; the 
new rule sets it at .08 ppm averaged over eight hours which 
constitutes roughly a 10 percent reduction.4 While 
implementation cost estimates are necessarily imprecise, 
responsible reviewers put total annual compliance costs for 
the two standards between $46.3 billion (EPA’s estimate) and 
$210 billion (Reason Public Policy Institute upper bound 
estimate); the Mercatus Center estimated implementation 
costs to be at least $100 billion annually. See discussion pp. 
19 n.14, 20 & 22 n.16 infra. 

EPA acknowledged that its selection of ozone and PM 
levels—at .08 ppm for ozone and 15/65 JP3 for PM2.5— 
was not based on scientific evidence establishing a safe 
threshold for ozone or PM health effects. Indeed, the 
announced standards start from the assumption that there is 

4 The rule notes that an eight-hour standard of .09 ppm “generally 
represents the continuation of the present level of protection.” NAAQS 
Ozone Rule, 62 Fed. Reg. 38,856, 38,858 (July 18, 1997)(“Ozone Rule”). 

6 

no safe threshold below which ozone and PM would not pose 
adverse health effects.5 EPA therefore relied upon a “linear, 
nonthreshold dose-response model” to evaluate the benefits 
of each further reduction in ozone and PM.6 However, under 
this model, each further reduction in ozone and PM will be 
found to improve public health (i.e., provide life-saving 
benefits) no matter how “clean” the air already may be. 
Thus, there is no standard above zero that could be said to be 
“safe” or said not to cause adverse health effects. 

Nonetheless, EPA did not set either standard at zero. It 
understood, at least implicitly, that zero concentration levels 
were technically infeasible, and that even if achievable, such 
standards would impose severe economic and other costs that 
dwarfed all possible benefits. American Trucking Ass’ns, Inc. 

v. EPA, 175 F.3d 1027, 1038 & n.4 (D.C. Cir. 1999). 
Fettered by Lead Industries, however, EPA could not assert 
that the costs of setting the standards at zero would outweigh 
their benefits.7 EPA did not explain how or why it selected 

5 For PM, EPA suggests that a threshold may exist, but “the level or 
even existence of population thresholds below which no effects occur 
cannot be reliably determined by an examination of the results from the 
available studies.” NAAQS PM Rule, 62 Fed. Reg. 38,652, 38,670 (July 
18, 1997)(“PM Rule”). 

6 The linear, nonthreshold dose-response model that EPA used to 
support its analysis relates the predicted change in health effects to a 
change in the concentration of PM or ozone. Unlike other chemicals 
regulated by EPA under this section of the CAA, EPA has no scientific 
evidence of a threshold concentration below which PM or ozone will not 
have health effects. This is the nonthreshold aspect of the model. The 
linear aspect of the model assumes that regardless of the overall 
concentration of ozone or PM to which an individual is exposed, a one 
unit change in that concentration will have the same marginal effect on 
public health. 

7 We use the terms “costs” and “benefits” here in their broadest senses 
and include among them “risk” and “cost-benefit” analyses as well as 
“wealth-health” and “health-health” effects (discussed pp. 12-23 infra). 

7 

the .08 ppm (ozonH RU  JP3 (PM2.5) levels as 
compared with any other levels, and thus it did not identify a 
principled basis for determining what concentrations of ozone 
and PM in the atmosphere are adequate to protect public 
health. This narrowly constrained decision structure, which 
did not consider trade-offs between different health effects, 
the cost of implementing a standard, or the health effects of 
large compliance costs, conflicts with CAA § 101(b). That 
section expressly identifies “promot[ing] the public health 
and welfare and the productive capacity of its population” as 
one of the primary purposes of the Clean Air Act. 42 U.S.C. 
§ 7401(b)(1). 

Confined by Lead Industries, EPA was forced to produce 
an alternative, non-cost basis for the new ozone and PM 
levels. As that alternative, it chose unbridled and essentially 
unreviewable administrative discretion, asserting that 
selecting the “adequate margin of safety” was “a policy 
choice left specifically to the Administrator’s judgment.” 
Ozone Rule, 62 Fed Reg. at 38,857; see also PM Rule, 62 
Fed. Reg. at 38,653. Thus, according to EPA, it is free under 
CAA § 109 to select any point along a dose-response 
continuum and claim that this point provides an adequate 
margin of safety without regard to whether that margin could 
be satisfied at a less stringent level or whether a more 
stringent level was necessary. 

II. THE OZONE AND PARTICULATE MATTER 
RULES ARE BASED ON UNCERTAIN 
EVIDENCE THAT DOES NOT JUSTIFY THE 
SELECTED NAAQS LEVELS 

EPA’s own science advisors questioned whether its ozone 
and PM standards would achieve EPA’s claimed public 
health benefits. This uncertainty, when coupled with large 
implementation costs, caused both outside experts and other 
agencies within the government to question whether the air 

8 

quality concentration levels established by the standards were 
justified. See, e.g., Letter from Frank E. Kruesi, Assistant 
Secretary for Transportation Policy, to Sally Katzen, Office 
of Information and Regulatory Affairs, Office of 
Management and Budget (Nov. 20, 1996)(“It appears 
incomprehensible that the Administration would commit to a 
new set of standards and new efforts to meet such standards 
without much greater understanding of the problem and its 
solutions.”). 

A. EPA Failed to Develop Comparative Justi- 
fications for the New NAAQS Levels 

The indeterminate nature of EPA’s supporting evidence for 
its new standards was fostered by the narrowness of Lead 
Industries’ direct health test. That is, forced to consider only 
direct health measures (e.g., lung function) and prohibited 
from considering indirect health effects (e.g., protection 
against ultraviolet radiation) or compliance costs (e.g., cost- 
benefit comparisons), the EPA failed to develop any 
justification for the specific levels selected in its NAAQS 
standards. In particular, EPA was unable to explain why the 
levels it selected, for example, of PM2.5 at 15/65 JP3, were 
appropriate as compared with any alternative such as a PM2.5 
level of 20/75 JP3. 

1. Ozone 

The human clinical, epidemiological, and animal evidence 
relied upon by EPA to support its more stringent ozone 
standard does not explain why the level was set at .08 ppm 
and not .07 or .09, or indeed at any point between the current 
level and zero. The clinical studies of individuals running on 
a treadmill detected changes in the force of exhalation of 
persons exposed to ozone only at levels down to .08 ppm. 
Ozone Rule, 62 Fed. Reg. at 38,859 & 38,863. Not only were 
these measured responses “typically small or mild in nature,” 

9 

id. at 38,864, but also the effects were temporary and 
reversible. More importantly, these studies did not examine 
effects at levels lower than the proposed new standard of .08 
ppm, and EPA did not distinguish between lung function 
effects at .08 ppm and higher levels. Id. at 38,863-64. 

Nor were these gaps filled by epidemiological studies. In 
evaluating the effects of ozone, EPA reviewed studies 
correlating high ozone concentrations and above normal 
hospital admissions. Id. at 38,864. But as EPA admits, these 
ozone hospital admissions only “represent a small fraction of 
the total respiratory-related hospital admissions for 
asthmatics” and provide no support for the particular ozone 
standards of .08 because the studies report “no discernable 
threshold at or below this level.” Id. Long-term laboratory 
animal studies referenced by EPA did not fill this gap. While 
subsequent dissection revealed changes in the biochemistry 
and structure of the lungs, the animal studies showed no 
change in behavior or function of the lungs at exposures 
significantly higher than .08 ppm (.5 ppm to 1.0 ppm). 61 
Fed. Reg. 65,715, 65,721 (Dec. 13, 1996). Indeed, at the 
lowest exposure level examined of .12 ppm, animal studies 
showed no effects at all. Id. 

The issue here is not whether there is scientific evidence to 
support restrictions on ozone, but rather the absence of any 
evidence showing why the .08 ppm standard is a correct or 
reasonable level, or why a lower or higher level is not 
better. Because of Lead Industries, EPA was not forced to 
provide comparative evidence or consider other health or cost 
effects that reduced the identified benefits from the new 
standard or that offered a basis for a selected stopping point. 
This unfocused state of the supporting evidence is even more 
significant because EPA’s highly regarded Clean Air 

10 

Scientific Advisory Committee (“CASAC”)8 did not endorse 
the .08 ppm ozone standard. In giving advice to the EPA 
Administrator, the CASAC explained that “there is no ‘bright 
line’ which distinguishes any of the proposed standards 
(either the level or the number of allowable exceedances) as 
being significantly more protective of public health” than the 
existing standard. CASAC Letter to Carol Browner re: 
Ozone (November 30, 1995) in Ozone JA 238.9 

2. PM 

The support for the PM2.5 standard similarly fails to 
identify why the new standard of 15/65 JP3 rather than 
20/75 (or 12.5/20) was selected. Here there was a broad 
consensus among CASAC members that available studies 
supported the establishment of a standard for PM2.5; but there 
was “no consensus on the level, averaging time or form of a 
PM2.5 NAAQS.” CASAC Letter to Carol Browner re: 
Particulate Matter (June 13, 1996) (“CASAC Letter”) in PM 
JA 3164. In other words, EPA’s science advisors agreed that 
fine particles warrant concern but the threat they present at 
this time is too poorly understood to justify selection of any 
particular level, or at least not a level of 15/65 JP3. Thus, 
in his testimony before the Subcommittee on Clean Air, 
Wetlands, Private Property & Nuclear Safety of the Senate 
Committee on Environment & Public Works, 105th Cong., 
1st Sess. 18 (Feb. 5, 1997), the chairman of CASAC, Dr. 
George T. Wolff, emphasized the “many unanswered 

8 CASAC is a legislatively established body of independent experts 
that provides advice to EPA on scientific and engineering issues. See 42 
U.S.C. § 7409(d)(2)(A). 

9 CASAC concurred (unanimously) that a measure of ozone that 
focused on concentrations over an 8-hour period would be more 
appropriate than the prior standard which measured concentrations over a 
1-hour period. EPA states that the prior standard of .12 ppm measured 
over 1 hour is equivalent to a standard of .09 ppm measured over 8 hours. 

11 

questions and uncertainties” left open by EPA’s supporting 
evidence—e.g., which fine particles are hazardous, how to 
interpret observed correlations between health effects and 
PM—and concluded that it was impossible to rely upon 
health effects as the sole basis for selecting any standard. 

EPA was unable to identify the sources of particulates 
which would need to be controlled if its regulations are to 
have any beneficial effects on public health. The prepared 
statement of CASAC Chair Dr. Wolff explained the problem: 

PM10 and PM2.5 . . . are composed of four or five major 
constituents and hundreds of trace constituents . . . . The 

causative agent [of adverse public health effects] could 
be some constituent of the PM rather than the total PM 
or total PM2.5 which would require a control strategy 
targeted at the causative constituent rather than at PM10 
or PM2.5 in general. . . . There is no biologically 

plausible mechanism that could explain the apparent 
relationship between acute mortality and PM at 
concentrations that are a fraction of the present PM10 
NAAQS. (Id. at 92-93.) 

In brief, EPA’s official science advisors concluded with near 
unanimity that the agency had not obtained critical missing 
support for the level of its PM2.5 rule. See CASAC Letter, PM 
JA at 3165 (“[t]he Panel is unanimous . . . in its desire to 
avoid being in a similar situation [of too little data with too 
little time to evaluate and integrate it] when the next PM 
NAAQS review cycle is under way by a future CASAC 
Panel”). 

B. The Consideration of Other Factors Such as 

Comparative Costs and Benefits is Necessary 
for Developing Reliable and Specific Standards 

Forced to rely only upon direct evidence of adverse public 
health effects in setting specific standards, EPA was left in a 

12 

quandary as to how to develop and support particular levels 
without being forced to select a zero standard. EPA clearly 
considered tradeoffs when it chose to set a non-zero standard, 
but it was not allowed to consider those trade-offs openly or 
to use all the tools required for rational decision making. If a 
reduction in ozone has harmful side effects (e.g., reducing the 
protection from ultraviolet rays, see pp.15-17 infra), that 
information is critical in deciding whether and where to set 
the standard. If the cost of reducing ozone and small particles 
includes an increase in the number of asthma cases and more 
deaths than lives saved, particularly among vulnerable groups 
such as the urban poor, see pp. 17-19 infra, that information 
should encourage setting the standard at a level that can be 
achieved at more reasonable cost. How EPA’s decision is 
made—and, in particular, what information can be considered 
and relied upon—is critical to whether the CAA’s objective 
of both improving public health and increasing productive 
capacity will be achieved. 42 U.S.C. § 7401(b)(1). 

III. BECAUSE OF LEAD INDUSTRIES, EPA 
DECISION-MAKING IGNORED HEALTH AND 
WEALTH TRADE-OFFS AND FAILED TO 
EXAMINE COST CONSEQUENCES 

In directing EPA to develop ambient air standards under 
CAA § 109, Congress intended that when setting NAAQS 
levels the agency should take account of all factors that could 
impinge on public health. See Cross-Pet. Br. Part II (ex- 
amining language, structure, context, purpose and legislative 
history of § 109). The ruling in Lead Industries, that cost- 
benefit analysis was not permissible and that only direct 
health effects of the pollutant being regulated could be 
considered, has thwarted the Congressional purpose. The 
D.C. Circuit’s undue narrowing of EPA’s decision process 
has meant that cost, feasibility, indirect health and wealth 
effects—all of which are integral parts of public health policy 

13 

analysis—were not included. See generally Susan E. Dudley 
& Wendy L. Gramm, EPA’s Proposed Ozone Standard May 
Harm Public Health and Welfare, 17 Int’l J. Risk Analysis 
403 (1997); Edward W. Warren & Gary E. Marchant, “More 
Good Than Harm”: A First Principle for Environmental 
Agencies and Reviewing Courts, 20 Ecol. L. Q. 379 (1993); 
cf. Presidential/Congressional Commission on Risk 
Assessment and Risk Management, Framework for 
Environmental Health Risk Management, vol. I at 38 (1997). 

As the lower court demonstrated, EPA could have relied 
upon a determinate decision rule that would eradicate “any 
hint of direct health risk” by setting NAAQS levels at zero for 
ozone and PM. 

10 Cert. Pet. App. (Docket No. 99-1257) at 
15a. But such a rule requiring “deindustrialization” was 
rejected out of hand by EPA. As a consequence, EPA was 
left with no guiding decision standard other than the 
Administrator’s subjective “policy judgment.” 62 Fed. Reg. 
at 38,869 (ozone rule); id. at 38,691 (PM rule); see also 
Testimony of George T. Wolff, supra at 17. This, the lower 
court said, would violate the constitutional requirement that 
the NAAQS standards set by EPA be based on some 
determinate decision rule. Cert. Pet. App. (Docket No. 99- 
1257) at 6a. The court further noted that “[e]veryday life 
compels us all to make decisions balancing remote but severe 
harms against a probability distribution of benefits,” id. at 
16a, and suggested that EPA could develop a “generic unit of 
harm” and determine how many such units are permissible 
under the CAA in setting NAAQS standards. Id. 

By definition, the balancing decisions made in everyday 
life involve weighing the positive consequences of an action 
against the negative consequences. Applied here, such a 

10 An application of the “direct health effects” test in Lead Industries 
would not have had the same consequences because lead was believed to 
have a non-zero threshold—i.e., there were concentrations below which 
no adverse health effects were found. 

14 

balancing would require that all factors be considered, not 
just the negative health effects of pollutants in the air. To 
guide that judgment the CAA should be read as permitting 
cost-benefit analysis. Cost-benefit is merely a “regulatory 
method that calls for regulators to identify, and make relevant 
for purposes of decision, the good effects and the bad effects 
of regulation, and to quantify those as much as possible in 
terms of both dollar equivalents and life-years saved, hos- 
pital admissions prevented, workdays gained, and so forth.” 
Cass R. Sunstein, Cognition and Cost-Benefit Analysis p. 9, 
Univ. Chi. Law & Economics Working Paper No. 85 (2d. 
Series) (October 1999) (forthcoming J. Legal Studies) 
<http://www.law.uchicago.edu/Publications/Working/index/h 
tml>. 

11 Indeed, former EPA officials acknowledge that the 
use of benefit-cost analysis at the beginning of the regulatory 
process has led to significantly increased benefits and reduced 
costs in the affected regulations. See Richard D. Morgen- 
stern, Economic Analyses at EPA: Assessing Regulatory 
Impact 2-3, 473-74 (Resources for the Future 1997) (former 
Associate Assistant Administrator, EPA Office of Policy 
Analysis). 

Only by balancing the positive benefits of reducing ozone 
and PM against offsetting negative consequences of 
achieving those reductions can EPA find an “intelligible 
principle” on which to base its standards. This section offers 
several balancing criteria applicable in that process. It begins 
with health criteria and goes on to examine increasingly 
broad decision rules to conclude that the statutory goals 

11 See also C. Boyden Gray, The Clean Air Act Under Regulatory 
Reform, 11 Tul. Env. L. J. 235, 260 (1998): “Making open and 
accountable use of economic incentives and the law of diminishing 
returns, as well as demanding that there be benefits to the public from a 
rule net of any offsetting side-effects or dis-benefits, would . . . produce 
more expansive air quality benefits, because costs saved in 
implementation can be redirected to providing benefits.” 

15 

protecting public health and welfare are best promoted with 
an open balancing of benefits and costs. 

A. Health-Health Effects 

EPA constrained its public health policy judgments to 
preclude not only costs but many other factors that affect 
public health, including other health effects. This single- 
focus analysis violated basic risk management principles. 
“Considering a risk in isolation cannot provide decision- 
makers or the public with any sense of how important the risk 
is, compared with other risks, or of the impact that reducing 
or eliminating it might have on overall human and ecosystem 
health.” Presidential/Congressional Commission on Risk 
Assessment and Risk Management, supra at 38. 

Had EPA engaged in a more complete analysis, it seems 
clear that it would have been obliged to set the ozone 
standard at a different level. 

12 In estimating the effects and 
deciding the appropriate levels of permissible ozone 
concentrations, EPA explicitly disregarded its own evidence 
as well as evidence presented by other agencies that reducing 
ground-level ozone to the EPA levels could reduce ozone’s 
screening effect on harmful ultraviolet-B (“UV-B”) radiation 
and lead to thousands of additional skin cancer and cataract 
cases per year. See EPA, Calculations of the Impact of 
Tropospheric Ozone Changes on UV-B Flux and Potential 
Skin Cancers (Draft)(September 1994)(Cupitt, Larry T.) in 
Ozone JA 3089-3104; Randall Lutter & Christopher Wolz, 

12 The lower court unanimously reversed EPA’s explicit disregard of 
potential beneficial health effects of tropospheric (ground-level) ozone, 
finding it a “bizarre” reading of the CAA to force EPA to “look[] at only 
one half of a substance’s health effects in determining the maximum level 
for that substance.” Cert. Pet. App. (Docket No. 99-1257) at 47a. EPA 
did not seek certiorari on this issue and, as a consequence, must go 
through notice-and-comment rulemaking to address the evidence that 
lowering the ozone NAAQS may have a negative net health effect. 

16 

UV-B Screening by Tropospheric Ozone: Implications for the 
National Ambient Air Quality Standard, Environmental 
Science & Technology, Vol. 31, No. 3 (1997). For example, 
evidence in the record submitted by the Department of 
Energy projected that a .01 ppm reduction in ozone 
concentrations, as required by EPA’s ozone rule, would result 
in 25 to 50 additional melanoma-caused fatalities, 130-260 
additional incidences of cutaneous melanoma, 2,000-11,000 
additional cases of non-melanoma skin cancer, and 13,000- 
28,000 additional incidences of cataracts each year. 
Statement of Marvin Frazier, DOE Office of Health & 
Environmental Research, Before CASAC (March 21, 1995) 
in Ozone JA 258-59. Critically, these negative results from 
lowered ozone concentrations dwarfed EPA’s projected 
positive health effects. Since none of the evidence reviewed 
by EPA’s science advisors suggested that implementation of 
EPA’s stricter ozone rule would reduce human fatalities, the 
loss of protective health benefits from current ozone levels 
under the new rules would outweigh any health benefits that 
could be gained from reduced ozone levels. See Susan E. 
Dudley & Wendy L. Gramm, supra at 404: 

[The Department of Energy’s analysis] suggests the rule 
will induce 25-50 more fatalities each year (since EPA’s 
best estimate of the health benefits of the new standard 
do not include any reduced fatalities). To compare the 
morbidity effects, we used EPA approaches to convert 
health effects to dollars. We estimate that the negative 
health impacts from this rule will exceed EPA’s best 
estimate of the positive health effects by over $300 
million per year. 

Particulate matter also serves a beneficial screening 
function against harmful UV-B radiation, although these 
benefits, by themselves, do not outweigh the positive health 
effects resulting from reductions in PM. Nonetheless, it is 
unsound public policy and contrary to the CAA’s 
requirements to ignore the positive health effects of PM in 

17 

setting a standard designed to protect public health with an 
adequate margin of safety. But that appears to be how EPA 
proceeded here because of Lead Industries. 

In its Advance Notice of Proposed Rulemaking for the 
Ozone and PM standards 61 Fed. Reg. 65,764, 65,768 (Dec. 
13, 1996), EPA described another unwelcome side effect of 
reducing PM. It cautioned that “a reduction of a fine particle 
precursor possibly can increase ozone or increase a different 
fine particle component (e.g., SOx reductions leading to 
increased ammonium nitrate or NOx reductions increasing 
sulfate formation).” In other words, EPA recognized that the 
reduction of fine particles as required by its PM2.5 NAAQS 
standard could increase emissions of other pollutants that may 
have harmful health effects. 

While consideration of health-health tradeoffs increases the 
likelihood that public health will, on balance, be protected, 
this methodology does not identify any specific standard (or 
“intelligible principle”). For example, if the dose-response 
function for both the beneficial UV-B effects and the 
detrimental ozone or PM health effects are linear, and do not 
exhibit a threshold, then a health-health decision rule will 
drive the standard to zero in order to minimize levels of the 
pollutant if the detrimental effects dominate (as may be the 
case for PM) or lead EPA not to regulate the pollutant at all if 
the beneficial effects dominate (as may be the case for 
ozone). Nonetheless, considering offsetting direct health 
costs associated with a rule is essential if EPA is to optimize 
public health. 

B. Wealth-Health Effects 

Just as both harmful and beneficial health affects should be 
considered in determining whether a NAAQS standard 
satisfies the public health standard in § 109, similar 
consideration should be given to the costs of implementing 

18 

EPA rules and of their effect on disposable family income. A 
body of research indicates that serious health problems arise 
when family living standards decline. See Stephen J. Breyer, 
Breaking the Vicious Circle: Toward Effective Risk 
Regulation 23 (1993) (“deprivation of real income itself has 
adverse health effects, in the form of poorer diet, more heart 
attacks, more suicides”). 

13 

The “wealth-health” decision rule translates such costs into 
statistical deaths and counsels against imposing regulations 
that are projected to cause a greater number of deaths 
(through lower income) than they prevent. See Randall 
Lutter & John F. Morrall, Health-Health Analysis: A New 
Way to Evaluate Health and Safety Regulation, 8 J. Risk & 
Uncertainty 43-66 (1994); Ralph L. Keeney, Estimating 
Fatalities Induced by the Economic Costs of Regulations, 14 
J. Risk & Uncertainty 5 (1997). Recent studies linking 
income and mortality find that every $15 million decline in 
net income induces one statistical death. See Randall Lutter, 
John F. Morrall, III, & W. Kip Viscusi, The Cost-Per-Life- 
Saved Cutoff for Safety-Enhancing Regulations, 37 Economic 
Inquiry 599-608 (October 1999). The total number of 
additional deaths attributable to the adverse wealth effects of 
the ozone and PM rules ranges from 665 to 4,050 for the 
ozone rule and 2,447 to 10,000 for the PM rule. Against 
these numbers, EPA estimates that the ozone rule will prevent 
350 fatalities and the PM rule another 3,300 to 16,000. In 
other words, 315 to 3,700 additional deaths will occur under 

13 Recent studies also suggest that poverty may be a more important 
risk factor for asthma (which is the main health focus of the ozone and 
PM rules) than air quality, so the extraordinary cost of these rules may 
increase poverty—and thereby increase the very disease they are targeted 
to diminish. See American Thoracic Society, Asthma on the Rise in 
Urban Areas, 1996 International Conference Articles (1996) 
<http://www.thoracic.org/ic/ic96/mon4.html> (“Poverty may be the num- 
ber one risk factor for asthma.”). 

19 

the ozone rule, while more lives will be saved than lost under 
the PM rule. 

14 

This analysis emphasizes the problems inherent in 
narrowly constricting the factors that EPA can rely upon in 
shaping and approving rules under the CAA. The NAAQS 
regulations cannot be accurately assayed without including 
the positive health benefits from ozone and PM as well as the 
consequences of reducing consumer wealth and therefore of 
increasing mortality. 

C. Cost-Benefit Analysis 

Proper application of health-health and wealth-health 
effects are important in the design of rational NAAQS rules. 
They nonetheless are limited tools. A full analysis of the 
public health consequences of a major environmental rule 
seeking to improve air quality must assess all the costs as 

14 Estimates of the annual cost of EPA’s new ozone and PM rules range 
widely. EPA estimated that the total will be $46.3 billion per year ($9.6 
billion for ozone and $36.7 billion for PM). See EPA, Regulatory Impact 
Analyses for the Particulate Matter and Ozone National Ambient Air 
Quality Standards and Proposed Regional Hazard Rule 9-7 (July 
16, 1997) <http://www.epa.gov/ttn/oarpg/naaqsfin/ria.html> (“RIA”). The 
1997 Mercatus Center analysis estimated that the full costs could exceed 
$100 billion per year. Mercatus Center, Comments on NAAQS for PM, 
RSP 1997-1 at 17 (March 12, 1997); Mercatus Center, Comments on 
NAAQS for Ozone, RSP 1997-2 at C-3 (March 12, 1997). And a Reason 
Public Policy Institute study estimated these costs as ranging from $20 
billion to $60 billion per year for the ozone rule, and $70 to $150 billion 
per year for the PM rule. Anne E. Smith, et al., Costs, Economic Impacts, 
and Benefits of EPA’s Ozone and Particulate Standards, Reason Public 
Policy Institute 15 (June 1997) (“RPPI ”). Using the $15 million income- 
health relationship, EPA’s cost estimate would imply an increase in 
mortality of 3,087 deaths each year. The RPPI’s estimates translate into 
additional annual fatalities of 1,333 to 4,000 for the ozone rule and 4,667 
to 10,000 for PM. To these numbers one also must add the 25-50 
melanoma deaths noted earlier (p. 16 supra) that are attributable to 
increased UV-B exposure because of reductions in ozone levels. 

20 

well as benefits of the intended regulation. The principle is 
widely recognized and imbedded in agency rulemaking 
subject to Presidential oversight. See, e.g., Executive Order 
12,866, 58 Fed. Reg. 51,735 (Sept. 30, 1993) (even though 
“some costs and benefits are difficult to quantify, [agencies 
shall] propose or adopt a regulation only upon a reasoned 
determination that the benefits of the intended regulation 
justify its costs”). A cost-benefit analysis is simply a 
comprehensive way of ensuring that a regulation does more 
good than harm. See, e.g., Kenneth J. Arrow, et al., Is There 
a Role for Benefit-Cost Analysis in Environmental, Health 
and Safety Regulation?, 272 Science 221 (1996); see also 
Edward W. Warren & Gary E. Marchant, supra. To deny an 
agency the authority to examine all benefits and costs— 
whether focused on economic trade-offs, comparing risks, 
evaluating technical requirements, analyzing feasibility, or 
assessing other opportunity costs—is to consign its 
regulations to weak and unsatisfactory justifications. 

EPA did conduct a Regulatory Impact Analysis that 
estimated the benefits and costs of the standards (in one year, 
2010), although it argued that this information was “not 
relevant to establishing the standards themselves.” RIA at 
ES-3. EPA concluded that the cost of fully attaining the 
ozone standard would be $9.6 billion and the benefits could 
range from $1.5 billion to $8.5 billion in 2010. Thus, under 
EPA’s estimate the ozone rule would impose costs in excess 
of benefits of between $1.1 billion and $8.1 billion per year. 
Meeting the PM standard in 2010, according to EPA’s 
estimates, would cost $36.7 billion, and offer benefits ranging 
from $19.8 billion to $109.7 billion. RIA at 13-2. EPA thus 
estimated that the net effect of achieving the PM standard in 
2010 could range from net costs of $18 billion to net benefits 
of $67 billion. 

By EPA’s own analysis, the ozone rule clearly fails a cost- 
benefit test, while the PM rule fails under certain 

21 

assumptions. Furthermore, EPA’s estimates have been 
criticized as overstating benefits and understating costs. The 
benefits figures are dominated by statistical deaths avoided 
which, according to EPA’s approach, are valued at $4.8 
million each; but this figure “significantly overstates the 
value most people would attach to the average number of life 
years saved (per person) by the [Clean Air Act].” Advisory 
Council on Clean Air Compliance Analysis Letter to EPA 
(October 23, 1996), docketed as EPA-SAB-Council- 
ltr-97-001<http://www.gov/science1/coul9701.pdf>; see Na- 
tional Research Council, Paying Our Way: Estimating 
Marginal Social Costs of Freight Transportation, TRB 
Special Report #246, at 159 (1996) (“12 years are lost on 
average by a person who dies prematurely as a result of air 
pollution”). Furthermore, the relationship between these 
pollutants and mortality itself is in question. CASAC did not 
review the studies EPA relied upon for the ozone mortality 
effects, RIA 12-32, and it was concerned about “the many 
unanswered questions and uncertainties associated with 
establishing causality of the association between PM2.5 and 
mortality.” CASAC Letter, PM JA at 3164. 

EPA recognized that its cost estimates were “speculative,” 
RIA at 13-7, because it knew of no technologies to bring 
many areas (at least 20% of the nation) into compliance with 
the standards by 2010. It overcame this by first assuming the 
deployment all known controls 

15 and then by assuming that 
additional emissions reductions required to attain the 
standards would cost $10,000 per ton. This arbitrary figure 

15 To estimate the cost of full attainment, EPA first identified all known 
technologies that could achieve emission reductions at $10,000 per ton or 
less. These technologies combined were only predicted to achieve 23 to 
38 percent, RIA at 7-9, of the emissions required to comply with the ozone 
standard and 40 percent, RIA at 9-9, of the emissions required to comply 
with the PM standard. EPA then assumed that the remaining emission 
reductions could be achieved at $10,000 per ton. 

22 

unrealistically assumes that the remaining residual tons of 
emissions can be removed as inexpensively as the earlier 
tons. But see Stephen G. Breyer, supra at 11 (“Remov- 
ing that last little bit can involve limited technological 
choice, high costs, devotion of considerable agency re- 
sources, large legal fees, and endless argument.”). Other 
estimates place the costs of reducing the residual emissions 
at between $30,000 and $90,000 per ton. RPPI at 15; 
see also Randall Lutter, Is EPA’s Ozone Standard 
Feasible?, AEI-Brookings Joint Center for Regulatory 
Studies, Regulatory Analysis No. 99-6 (December 1999) 
<http://www.aei.brookings.org/search/results.asp> (“meeting 
the standard in 2010 would cost nearly $5 trillion in one city, 
and $70 billion in seven other cities”). Again, had such 
calculations been considered as part of an explicit cost-benefit 
analysis, EPA would have been forced to select different 
NAAQS levels. 

16 

From a public health perspective, EPA’s deliberate 
disregard of the costs of its NAAQS standards is a serious 
deficiency because costs expended on reducing levels of 
ozone and PM could otherwise be devoted to more beneficial 
purposes. The net public benefit from a broader decision- 
making focus can be substantial. One recent study conducted 
at the Harvard Center for Risk Analysis found that a 
reallocation of current spending from lower risk to higher risk 
problems could more than double the number of lives saved. 
See Tammy O. Tengs & John D. Graham, The Opportunity 

16 Setting aside the likely overestimate of the benefits of the rules, and 
simply correcting for the effect of the arbitrary cost cut-off on total cost 
estimates suggests that both PM and ozone rules will impose social costs 
far in excess of their benefits. As noted above, RPPI estimated total 
ozone costs of between $20 billion and $60 billion per year, which is 
significantly higher than EPA’s expected benefits of $1.5 billion to $8.5 
billion. Similarly, RPPI’s estimated costs of the PM rule range from $70 
billion to $150 billion per year, compared to EPA’s projected benefits of 
$19.8 billion to $109.7 billion. 

23 

Cost of Haphazard Social Investments in Life-Saving, ch. 8, 
in Risks, Costs, and Lives Saved: Getting Better Results from 
Regulation (Robert Hahn, ed. 1996). Such gains are likely 
even when bureaucratic constraints, such as shifting funds 
across agencies, remain in place. 

The ultimate reason, however, for reversing the Lead 
Industries ruling is that it misreads Congress’ obvious intent 
when it required in § 109 that ambient air standards “protect 
the public health” with an “adequate margin of safety.” 
There is nothing in these terms or anywhere else in the Clean 
Air Act requiring that major rules encompassing all aspects of 
the economy be decided by looking selectively at only some 
of the facts and some of the effects of the rules. Indeed, it is 
irrational to suggest that Congress meant for EPA to do more 
harm than good by its regulations. See E. Warren & G. 
Marchant, supra at 417-28; see also Corrosion Proof Fittings 

v. EPA, 947 F.2d 1201, 1221-22 (5th Cir. 1991). Similarly, 
Congress could not have meant that EPA was authorized to 
set a standard at any level based on the Administrator’s 
“policy judgment.” Direct health effects that are considered 
under Lead Industries are important. But without identifying 
how and where the benefits diminish or the costs increase, 
arbitrary and erroneous decisions are inevitable. It is time, in 
other words, to correct the long-standing mistake made in 
Lead Industries that imposes an irrational decision-making 
process on EPA that Congress never intended. 

IV. UNDER CHEVRON, THIS COURT SHOULD 
DECIDE WHETHER THE CLEAN AIR ACT 
EXCLUDES CONSIDERATION OF COSTS AND 
OTHER EFFECTS AND REMAND TO EPA THE 
ISSUE OF IDENTIFYING SPECIFIC DETER- 
MINATE CRITERIA 

Lead Industries’ interpretation of the Clean Air Act to 
exclude consideration of anything other than direct health 
benefits is a question for the Court because it is clear that 

24 

Congress did not intend to constrain EPA’s assessment of the 
effects of its NAAQS rules. See Chevron U.S.A., Inc. v. 
NRDC, 467 U.S. 837, 842-43 (1984) (no deference by court 
where Congressional intent is clear); accord Federal Cert. 
Opp. Br. (Docket No. 99-1426) at 9 (review of Lead 
Industries as a Chevron step one case). Since Lead Industries 
was a pre-Chevron case, the lower court was, within the 
boundaries of stare decisis, bound by that determination. See 
Maislin Indus., U.S., Inc. v. Primary Steel, Inc, 497 U.S. 116, 
131 (1990) (once the Court has “determined a statute’s clear 
meaning, we adhere to that determination under the doctrine 
of stare decisis, and we judge an agency’s later interpretation 
of the statute against our prior determination of the statute’s 
meaning”); Lechmere, Inc. v. NLRB, 502 U.S. 527, 537 
(1992); National Fed’n of Federal Employees v. Dep’t of 
Interior, 526 U.S. 86 (1999) (“NFFE”). 

However, that does not answer whether this Court or EPA 
should decide in the first instance what “determinate 
criterion” should be employed by EPA in “drawing lines” of 
the levels of permissible pollutants pursuant to CAA § 109. 
By its terms, § 109 requires consideration of the effect of the 
selected standards on “public health” with an “adequate 
margin of safety”; however, beyond that positive require- 
ment, § 109 does not rule out consideration of any health, 
wealth or cost effects. By its terms, however, § 109 provides 
no direct guidance on the criteria to be applied by EPA in 
setting standards for particular pollutant levels or for setting 
the parameters on how EPA’s authority is confined. The 
circumstances here are similar to NFFE where the Court 
found that even though the agency’s initial interpretation of 
the ambiguous statutory term was reasonable, the issue had to 
be remanded to the FLRA for reconsideration under the 
newly defined mandate because it may have been clouded by 
the erroneous reading of the D.C. Circuit. Thus, under 
Chevron, the matter should be remanded to EPA to reinterpret 

25 

§ 109 under the new understanding of the factors that can be 
considered. See 467 U.S. at 842-43. 

V. CONCLUSION 

The holding in Lead Industries that, in setting and revising 
NAAQS under § 109 of the Clean Air Act, EPA may not 
consider the costs, feasibility or other effects of implementing 
the standards, should be set aside. By denying consideration 
of cost-benefit as well as of health-health and wealth-health 
effects, Lead Industries does more harm than good. Its 
mischievous redesign of § 109 should be set aside. Only a 
broad balancing of all consequences, such as are facilitated by 
a robust cost-benefit analysis, will truly meet the Clean Air 
Act’s goals. 

Respectfully submitted, 

ERNEST GELLHORN 

Counsel of Record 
ANN G. WEYMOUTH 
Suite 100 
2907 Normanstone Lane, N.W. 
Washington, D.C. 20008-2875 
July 21, 2000 (202) 319-7104