More Than 40 Prominent Economists Urge Supreme Court to Let EPA Consider Costs and Consequences of Clean Air Regulations

More than 40 prominent economists filed a Friend of the Court brief with the Supreme Court today, asking the justices to overturn a lower court ruling that the Environmental Protection Agency (EPA) may not take into account the costs of regulations when setting standards under the Clean Air Act. Calling the lower court ruling “economically unsound,” the economists argued that the EPA “should be allowed to consider explicitly the full consequences” of regulatory decisions, including costs, benefits, and any other relevant facts.

In their Amici Curiae brief, the economists contended that the “plain aim” of the Clean Air Act “is protecting the public health.” That aim, they said, “is unlikely to be achieved without, at least, an implicit balancing of benefits and costs.”

The Supreme Court filing was organized by the American Enterprise Institute-Brookings Joint Center for Regulatory Studies. The bipartisan group of economists signing the brief included three Noble laureates, seven former chairmen of the President’s Council of Economic Advisers, and two former directors of the White House Office of Management and Budget. (A complete list of the economists signing the brief is attached to this

release.)

The case, American Trucking Association v. Carol M. Browner, Administrator of the Environmental Protection Agency, was appealed to the Supreme Court after a Federal Court in Washington D.C. ruled that the EPA was not permitted to consider costs in setting regulatory standards for enforcing the Clean Air Act.

“We believe it would be imprudent for the EPA to ignore costs totally, particularly given their magnitude in this case,” the economists stated in the brief. “The EPA estimates that those (clean air) standards could cost on the order of $50 billion annually.”

The brief argued, “Not considering costs makes it difficult to set a defensible standard, especially when there is no threshold below which health effects disappear.”

Ignoring costs, the economists said, “could lead to a decision to set the standard at zero pollution,” which would threaten “the very economic prosperity on which public health primarily depends.”

The economists declared: “The importance of this issue cannot be overstated. Both direct benefits and costs of environmental, health, and safety regulations are substantial – estimated to be several hundred billion dollars annually.”

If the Supreme Court overturns the lower court ruling and allows the EPA to consider costs in establishing clean air regulations, the brief argued, it would be “a historic moment in the making of regulatory policy.”

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For a copy of the brief go to:

http://www.aei.brookings.org

THE ECONOMISTS SIGNING THE BRIEF ARE:

Kenneth J. Arrow

Professor of Economics Emeritus, Stanford University

Nobel Laureate in Economics

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Elizabeth E. Bailey

John C. Hower Professor of Public Policy, Wharton School, University of Pennsylvania

Former Commissioner, Civil Aeronautics Board

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William J. Baumol

Professor of Economics Emeritus, Princeton University

Director, C. V. Starr Center for Applied Economics, New York University

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Jagdish Bhagwati

Arthur Lehman Professor of Economics and Professor of Political Science, Columbia University

Senior Fellow, Council on Foreign Relations

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Michael J. Boskin

T. M. Friedman Professor of Economics, Stanford University

Former Chairman, President’s Council of Economic Advisers

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David F. Bradford

Professor of Economics and Public Affairs, Princeton University

Former Member, President’s Council of Economic Advisers

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Robert W. Crandall

Senior Fellow, Brookings Institution

Fellow, AEI-Brookings Joint Center for Regulatory Studies

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Maureen L. Cropper

Professor of Economics, University of Maryland

Chair, EPA Advisory Council on Clean Air Compliance Analysis

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Christopher C. DeMuth

President, American Enterprise Institute

Former Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget

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George C. Eads

Vice President, Charles River Associates

Former Member, President’s Council of Economic Advisers

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Milton Friedman

Senior Research Fellow, Hoover Institution, Stanford University

Nobel Laureate in Economics

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John D. Graham

Professor of Public Policy and Decision Sciences, Harvard School of Public Health, Harvard University

Director, Harvard Center for Risk Analysis

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Wendy L. Gramm

Director, Regulatory Studies Program, Mercatus Center, George Mason University

Former Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget

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Robert W. Hahn

Director, AEI-Brookings Joint Center for Regulatory Studies

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Paul L. Joskow

Professor of Economics, Massachusetts Institute of Technology

Director, MIT Center for Energy and Environmental Policy Research

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Alfred E. Kahn

Robert Julius Thorne Professor of Political Economy Emeritus, Cornell University

Former Chairman, Civil Aeronautics Board

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Paul R. Krugman

Professor of Economics, Princeton University

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Lester B. Lave

University Professor and Higgins Professor of Economics, Carnegie Mellon University

Member, EPA Advisory Council on Clean Air Compliance Analysis

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Robert E. Litan

Vice President and Director, Economic Studies Program, Brookings Institution

Codirector, AEI-Brookings Joint Center for Regulatory Studies

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Randall W. Lutter

Resident Scholar, American Enterprise Institute

Fellow, AEI-Brookings Joint Center for Regulatory Studies

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Paul W. MacAvoy

Williams Brothers Professor of Management Studies, Yale School of Management, Yale University

Former Member, President’s Council of Economic Advisers

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Paul W. McCracken

Edmund Ezra Day Distinguished University Professor Emeritus of Business Administration, Economics, and Public Policy, University of Michigan, Ann Arbor

Former Chairman, President’s Council of Economic Advisers

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James C. Miller III

John M. Olin Distinguished Fellow, Citizens for a Sound Economy Foundation

Former Director, Office of Management and Budget

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William A. Niskanen

Chairman, Cato Institute

Former Member, President’s Council of Economic Advisers

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William D. Nordhaus

Griswold Professor of Economics, Yale University

Former Member, President’s Council of Economic Advisers

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Wallace E. Oates

Professor of Economics, University of Maryland

University Fellow, Resources for the Future

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Peter Passell

Senior Fellow, Milken Institute

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Sam Peltzman

Sears, Roebuck Professor of Economics and Financial Services, Graduate School of Business, University of Chicago

Director, George J. Stigler Center for the Study of the Economy and the State, University of Chicago

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Paul R. Portney

President, Resources for the Future

Former Chief Economist, President’s Council on Environmental Quality

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Alice M. Rivlin

Senior Fellow, Brookings Institution

Former Director, Office of Management and Budget

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Milton Russell

Professor of Economics Emeritus, University of Tennessee

Former Assistant Administrator for Policy, Planning, and Evaluation, Environmental Protection Agency

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Richard L. Schmalensee

Dean, Alfred P. Sloan School of Management, Massachusetts Institute of Technology

Former Member, President’s Council of Economic Advisers

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Charles L. Schultze

Senior Fellow Emeritus, Brookings Institution

Former Chairman, President’s Council of Economic Advisers

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V. Kerry Smith

University Distinguished Professor, North Carolina State University

Director, Center for Environmental and Resource Economics Policy, North Carolina State University

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Robert M. Solow

Professor Emeritus, Massachusetts Institute of Technology

Nobel Laureate in Economics

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Robert N. Stavins

Albert Pratt Professor of Business and Government, John F. Kennedy School of Government, Harvard University

Chairman, EPA Environmental Economics Advisory Committee

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Joseph E. Stiglitz

Professor of Economics, Stanford University

Former Chairman, President’s Council of Economic Advisers

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Laura D’Andrea Tyson

Dean, Haas School of Business, University of California, Berkeley

Former Chair, President’s Council of Economic Advisers

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W. Kip Viscusi

John F. Cogan, Jr., Professor of Law and Economics, Harvard Law School, Harvard University

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Murray L. Weidenbaum

Chairman, Center for the Study of American Business, Washington University, St. Louis

Former Chairman, President’s Council of Economic Advisers

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Janet L. Yellen

Eugene E. and Catherine M. Trefethen Professor of Business Administration and

Professor of Economics, University of California, Berkeley

Former Chair, President’s Council of Economic Advisers

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Richard J. Zeckhauser

Frank P. Ramsey Professor of Political Economy, John F. Kennedy School of Government, Harvard University

CONTACT:Robert W. Hahn, 202-862-5909, or Robert E. Litan, 202-797-6120, both

of the AEI-Brookings Joint Center for Regulatory Studies AEI-Brookings

Joint Center for Regulatory Studies, 202-862-5847