The Environmental Protection Agency is facing a major fight over its plans to rein in power-plant pollution as the Supreme Court hears oral arguments Wednesday in a case that challenges the agency’s refusal to factor in the costs of the stringent rules.
The case could have implications for the EPA’s proposed emissions rules for existing power plants, also known as the Clean Power Plan, observers and legal experts say.
At the heart of the issue is whether the EPA is allowed to shrug off weighing the cost of a utility rule – in this case, the mercury and air toxics rule – before making utilities comply. The EPA said the Clean Air Act does not require it to weigh the costs, which the U.S. Court of Appeals for the District of Columbia Circuit agreed with in April.
But 21 states, led by Michigan, and the utility industry petitioned the high court to rehear the case and send the rule back to the EPA, arguing that the agency has to consider the cost of compliance, which they say could run more than $9 billion a year. Utilities argue that the rule is unprecedented in scope, will pose reliability challenges, and raise costs for consumers and utilities alike to unprecedented highs.
The rule is set to regulate mercury and other toxic pollutants from coal-fired power plants beginning in about a month. While many power plants spent billions of dollars to comply, many others decided the cost was not worth it and decided instead to shut those power plants.
Utility officials in the Midwest and other coal-dependent areas say they are bracing for potential power outages as plants that can’t meet the new mercury rules close over the next seven years, causing the utilities to not be able to meet demand.
The EPA and the states backing the agency argue that the health benefits from the stricter rules outweigh the costs for utilities. Proponents of the regulations say the health benefits alone will save taxpayers $90 billion a year, compared to the roughly $9.6 billion the utilities will pay. The utilities put the health benefit at $4-$6 billion a year.
The Supreme Court’s decision in Michigan v. EPA could pose some complicated challenges for the agency’s greenhouse gas rules, known as the Clean Power Plan.
Jeff Holmstead, a partner with law firm Bracewell & Giuliani, says on the surface the cost arguments being made against EPA in the mercury case do not affect the climate rules because the EPA has already decided it would evaluate the costs of the emissions rules.
But a variety of legal strategists in Washington say the EPA’s regulation of mercury could give the agency a leg up over arguments that say the agency overstepped it authority in issuing the Clean Power Plan.
Holmstead says “there is one potentially important connection” between the mercury and emissions rules. Because the EPA used section 112 of the Clean Air Act when issuing the mercury rule and section 111(d) for its proposed emissions rules, it is possible that keeping the mercury rule intact would stop the EPA from implementing the climate rules.
The argument goes back to the D.C. Circuit court, where the climate rules are being challenged and where “one of the main arguments against the proposed [Clean Power Plan] is that EPA cannot regulate existing power plants under both Section 112 and Section 111(d) but must choose one or the other,” Holmstead said.
“If the courts end up agreeing with this argument, the fact that EPA has already regulated power plants under Section 112 [the mercury rule] would preclude EPA from using section 111(d) to regulate the same sources,” he said.
Meanwhile, other legal strategists are “wondering whether an EPA loss in the [mercury] case might actually allow EPA to shore up its legal defense of the 111(d) rule.”
