Thursday, July 2, 2015

The Supreme Court Looks at EPA’s Mercury Rule

On Monday, June 29th 2015 the U.S. Supreme Court ruled that the U.S. Environmental Protection Agency (EPA) must consider compliance costs as a part of its mandate to issue "appropriate and necessary" regulations under the Clean Air Act. In a 5-4 decision the court ruled that the EPA interpreted the Clean Air Act improperly in crafting the regulation because it did not consider the costs of emissions reductions. The Supreme Court remanded the regulation back to the D.C. Circuit, which must now decide how to proceed with the EPA.

The regulation in question was the Mercury and Air Toxics Standards (MATS) which is intended to regulate mercury, arsenic, acid gas, nickel, selenium, and cyanide from coal fired power plants. In 2011 EPA estimated that it would cost $9.6 billion annually to comply with the MATS regulations, the costliest regulation-ever. Industry analysts believed that 10% to 20% of U.S. coal-fired generating capacity would be shut down by 2016 and could impact electrical grid reliability. A coalition of states and industry groups lead by Michigan sued, arguing that the EPA did not properly consider the costs of compliance for the MATS regulations when crafting the rules. However, because the MATS regulation had a compliance deadline of April 16, 2015, most power companies have already largely chosen to retire or retrofit coal plants that would be impacted by the rule. The impact of the ruling, if any, will be on future regulations.

According to the EPA, MATS combined with another rule, the Cross-State Air Pollution Rule, (CSAPR), will prevent up to 46,000 premature deaths, 540,000 asthma attacks among children, 24,500 emergency room visits and hospital admissions. A 2011 press release stated: “The two programs are an investment in public health that will provide a total of up to $380 billion in return to American families in the form of longer, healthier lives and reduced health care costs.” The EPA did not give an estimated combined cost of the two rules; however, the Edison Electric Institute, an industry trade group, claimed the combined new rules would cost utilities up to $129 billion and eliminate one-fifth of America's coal electrical generating capacity. The regulation would slash emissions of these pollutants from coal fired electrical generation plants.

The Cross-State Air Pollution Rule, which requires reductions of sulfur-dioxide and nitrogen-oxide emissions in 23 Eastern and Midwestern states, as well as seasonal ozone reductions in 28 states has suffered delays from legal challenges. On December 30, 2011, CSAPR was stayed by the D.C. Circuit court prior to implementation. On April 29, 2014, the U.S. Supreme Court issued an opinion reversing an August 21, 2012 D.C. Circuit decision that had vacated CSAPR. Following the remand of the case to the D.C. Circuit who granted EPA’s requested that the court lift the CSAPR stay and roll the CSAPR compliance deadlines by three years. Thus, CSAPR Phase 1 implementation is now scheduled for 2015, with Phase 2 beginning in 2017 and MATS has already pretty much been implemented. Combined these two rules will have a significant impact on particulate pollution, the amount of power generated from coal and the future cost and availability of electrical power in the United States and should be part of a careful and well thought out and communicated environmental and energy plan for the nation.
data from EIA

Next up the challenges to the Clean Power Plan and EPA regulatory program announced in 2014 to cut carbon emissions from existing power plants and put the states on a “carbon diet.”

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