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

July 21, 2000

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 Nobel 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.”

The Economists Signing the Brief Are:

Kenneth J. Arrow
Professor of Economics Emeritus, Stanford University
Nobel Laureate in Economics

Elizabeth E. Bailey
John C. Hower Professor of Public Policy, Wharton School, University of Pennsylvania
Former Commissioner, Civil Aeronautics Board

William J. Baumol
Professor of Economics Emeritus, Princeton University
Director, C. V. Starr Center for Applied Economics, New York University

Jagdish Bhagwati
Arthur Lehman Professor of Economics and Professor of Political Science, Columbia University
Senior Fellow, Council on Foreign Relations

Michael J. Boskin
T. M. Friedman Professor of Economics, Stanford University
Former Chairman, President’s Council of Economic Advisers

David F. Bradford
Professor of Economics and Public Affairs, Princeton University
Former Member, President’s Council of Economic Advisers

Robert W. Crandall
Senior Fellow, Brookings Institution
Fellow, AEI-Brookings Joint Center for Regulatory Studies

Maureen L. Cropper
Professor of Economics, University of Maryland
Chair, EPA Advisory Council on Clean Air Compliance Analysis

Christopher C. DeMuth
President, American Enterprise Institute
Former Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget

George C. Eads
Vice President, Charles River Associates
Former Member, President’s Council of Economic Advisers

Milton Friedman
Senior Research Fellow, Hoover Institution, Stanford University
Nobel Laureate in Economics

John D. Graham
Professor of Public Policy and Decision Sciences, Harvard School of Public Health, Harvard University
Director, Harvard Center for Risk Analysis

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

Robert W. Hahn
Director, AEI-Brookings Joint Center for Regulatory Studies

Paul L. Joskow
Professor of Economics, Massachusetts Institute of Technology
Director, MIT Center for Energy and Environmental Policy Research

Alfred E. Kahn
Robert Julius Thorne Professor of Political Economy Emeritus, Cornell University
Former Chairman, Civil Aeronautics Board

Paul R. Krugman
Professor of Economics, Princeton University

Lester B. Lave
University Professor and Higgins Professor of Economics, Carnegie Mellon University
Member, EPA Advisory Council on Clean Air Compliance Analysis

Robert E. Litan
Vice President and Director, Economic Studies Program, Brookings Institution
Codirector, AEI-Brookings Joint Center for Regulatory Studies

Randall W. Lutter
Resident Scholar, American Enterprise Institute
Fellow, AEI-Brookings Joint Center for Regulatory Studies

Paul W. MacAvoy
Williams Brothers Professor of Management Studies, Yale School of Management, Yale University
Former Member, President’s Council of Economic Advisers

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

James C. Miller III
John M. Olin Distinguished Fellow, Citizens for a Sound Economy Foundation
Former Director, Office of Management and Budget

William A. Niskanen
Chairman, Cato Institute
Former Member, President’s Council of Economic Advisers

William D. Nordhaus
Griswold Professor of Economics, Yale University
Former Member, President’s Council of Economic Advisers

Wallace E. Oates
Professor of Economics, University of Maryland
University Fellow, Resources for the Future

Peter Passell
Senior Fellow, Milken Institute

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

Paul R. Portney
President, Resources for the Future
Former Chief Economist, President’s Council on Environmental Quality

Alice M. Rivlin
Senior Fellow, Brookings Institution
Former Director, Office of Management and Budget

Milton Russell
Professor of Economics Emeritus, University of Tennessee
Former Assistant Administrator for Policy, Planning, and Evaluation, Environmental Protection Agency

Richard L. Schmalensee
Dean, Alfred P. Sloan School of Management, Massachusetts Institute of Technology
Former Member, President’s Council of Economic Advisers

Charles L. Schultze
Senior Fellow Emeritus, Brookings Institution
Former Chairman, President’s Council of Economic Advisers

V. Kerry Smith
University Distinguished Professor, North Carolina State University
Director, Center for Environmental and Resource Economics Policy, North Carolina State University

Robert M. Solow
Professor Emeritus, Massachusetts Institute of Technology
Nobel Laureate in Economics

Robert N. Stavins
Albert Pratt Professor of Business and Government, John F. Kennedy School of Government, Harvard University
Chairman, EPA Environmental Economics Advisory Committee

Joseph E. Stiglitz
Professor of Economics, Stanford University
Former Chairman, President’s Council of Economic Advisers

Laura D’Andrea Tyson
Dean, Haas School of Business, University of California, Berkeley
Former Chair, President’s Council of Economic Advisers

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

Murray L. Weidenbaum
Chairman, Center for the Study of American Business, Washington University, St. Louis
Former Chairman, President’s Council of Economic Advisers

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

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

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