EPA and States Square Off Over Mercury

In the current Supreme Court case known as State of Michigan v. Environmental Protection Agency (EPA), Michigan and 22 other states have sued the EPA over new regulations that were designed to further reduce the level of mercury, arsenic and acid gases emitted by power plants. That's almost 50 percent of the states that are feeling beleaguered by EPA's ever expanding power grab. The current Supreme Court case is the first example of what many people are calling the EPA's waging of war on the states.

The other problems with the new EPA regulations of 2012 are: (1) they divide the states into two warring factions, the 23 states that oppose the new regulations and the 15 states that support them; (2) they divide many of the utilities-publicly traded, municipals, cooperatives-into those that oppose the new regulations and those that support it. In reality, EPA has also created a war between the states, choosing winners and losers on a national scale.

It all started in late 2010, when the EPA began developing a regime based on a broader interpretation of the Clean Air Act of 1970 and the 1990 Amendments. It claimed the authority to regulate all pollutants. The EPA finished its new regulations in 2012. In it, the EPA ignored the fact that Congress had established two regimes for regulation, one for virtually everybody else and one for power plants.

While there are actually three cases, (Michigan, Utility Air Regulatory Group, National Mining Association) included together in the suit against the EPA, there two overarching issues that are now being considered by the Supreme Court: (1) Did Congress really want the power plants to be treated differently from all other sources of hazardous air pollutants - which the EPA ultimately decided not to do? And, (2) Did the EPA have the right to refuse to take into account what it would cost those plants to reduce significantly their pollution output?

For a little background, 60 percent of generating power plants are more than 40 years old. However, many of the old and new power plants have upgraded their antipollution technology to include coal scrubbers, significantly more efficient boilers and other environmental improvements mandated by state utility commissions, and paid for by ratepayers.

Here is where the practical considerations take over. The EPA admits that its new "mercury, arsenic" rule will cost some $9.6 billion a year, bringing about $6 million in yearly health benefits,  instead of the stated billions in annual savings.

Its financial benefits are also limited, because the EPA already has limits in place for the level of arsenic, mercury, sulfur dioxide, nitrogen oxides, and particle pollution that power plants can emit. As if to bolster its case, the EPA maintains that the long term societal benefits of its 2012 plan will yield - in dollar terms - benefits between $37 billion and $90 billion annually, without providing any statistical basis or medical proof.

This disjuncture between factual and hypothetical benefits creates an enormous credibility problem for the EPA. For example, its website says that there is significant public health and climate benefits: Climate and weather disasters in 2012 cost the American economy more than $100 billion, which means these added emission controls will save Americans billions of dollars; Overall, the EPA reiterates its claim that these emission reductions will lead to climate and health benefits worth, an estimated $37 billion to $90 billion per year in 2030. This includes avoiding 2,700 to 6,600 premature deaths and 140,000 to 150,000 asthma attacks in children.

As the EPA puts it, "these climate and health benefits far outweigh the estimated annual costs of the plan, from the soot and smog reductions alone, for every dollar invested through the Clean Power Plan, American families will see up to $7 in health benefits.”

While studies - for or against the new regulations - are often funded by the interests groups seeking to influence public policy, ultimately, the 23 state defendants are claiming that the EPA has no right to ignore the net benefits, benefits minus costs, while it was formulating their new mercury rules.

With the new environmental regulations (including the Clean Power Plan of 2014), the EPA has begun the process of taking jurisdictional control of the U.S. electrical grid; and, in the process, the EPA is waging war on the states and their 80 years of self-determination and cooperative federalism.

In 1990, Congress gave the EPA a special assignment regarding whether and how to regulate pollution from power plants if the EPA determined that reducing pollution from power plants is "appropriate and necessary." The EPA believes that this ruling gives it the right to make any decision it deems appropriate without first considering the costs of that decision - all without a congressional mandate.

The views here represent those of the author and not necessarily those of Public Utilities Fortnightly.

Lead image © Can Stock Photo Inc. / Blakeley

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Stephen Heins is an energy and regulatory consultant for Tocqueville Asset Management, LLC of New York City. Previously, Heins was Vice President of Corporate Communication for Orion Energy Systems, a publicly-traded leader in innovating energy and lighting systems based in Manitowoc, Wis.