Alex Mills
By Alex Mills
The U.S. Supreme Court ruled on June 29 that the Environmental Protection Agency (EPA) failed to adequately determine the cost of their regulation of stationary power plants when it adopted air emission standards.
In question is the meaning of “appropriate and necessary” in determining the cost of compliance with the standards set in the changes to the Clean Air Act last made in 1990.
Justice Scalia, who delivered the majority opinion of the court, said “EPA strayed well beyond the bounds of reasonable interpretation in concluding that cost is not a factor relevant to the appropriateness of regulating power plants.”
The Supreme Court remanded the case back to the U.S. Court of Appeals for the District of Columbia Circuit, and it is not clear what the appeals court will require of EPA and how that will impact the source of energy used by power plants in the future.
In the discussion about the meaning of “appropriate and necessary,” Scalia noted that the phrase plainly encompasses cost. “It is not rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.”
“EPA must consider cost – including cost of compliance – before deciding whether regulation is appropriate and necessary,” Scalia wrote.
The Clean Air Act targets more than 180 specified hazardous air pollutants. It divides these pollutants into major sources, those that emit more than 10 tons of a single pollutant or 25 tons of a combination of pollutants within a year, and any other source if it presents a threat of adverse effects to human health or the environment.
Congress directed EPA to perform a study of the hazards to public health reasonably anticipated to occur as a result of emissions from power plants. EPA completed the study in 1998. In 2000, EPA concluded that regulation of coal- and oil-fired power plants was “appropriate and necessary.” In 2012, the Obama Administration found implementation of the regulation became necessary because controls had become available to reduce risk.
“EPA concluded that costs should not be considered when deciding whether power plants should be regulated,” Scalia said. He said EPA concedes that the regulatory impact analysis “played no role” in its appropriate-and-necessary finding.
While producers of fossil fuels, especially coal, praised the court’s ruling, the reality is that most of the coal-fired electric generation plants that were the primary target of EPA’s regulation have already been converted to be in compliance, switched fuels, or closed before the compliance date in April. About one-third of the plants have applied for extensions.
The regulation was issued more than three years ago and a majority of the plants met those requirements in 2012.
The U.S. House of Representative passed legislation recently that allows states to opt out of the regulations until the courts issue their final ruling. Even if the Senate approves this legislation, President Obama has vowed to veto the bill.
Meanwhile, energy producers and utility companies try to make sense of it all.
Alex Mills is President of the Texas Alliance of Energy Producers. The opinions expressed are solely of the autho
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