Powering America–Weighing the Costs of Industry Improvements for Social and Environmental Benefit

 

by Emily Griffith

 

In the United States approximately 67% of electricity is generated from Fossil Fuels, which are responsible for 70% of the nation’s sulfur dioxide emissions, 13% of nitrogen oxide emissions and 40% of carbon dioxide. Coal power generators alone account for 39% of total energy use in the United States and are the #1 source of mercury, hydraulic acid and arsenic emissions. Together, these emissions lead to smog, acid rain and severe human health risks. Under the Clean Air Act, the EPA has identified 187 such hazardous air pollutants, and creates rules to curb associated dangers to public health.

Section 112 of the Act deals with specifically with toxic power plant emissions as a separate source category. In Michigan v. EPA the regulation was challenged by 23 states and trade groups representing the electric, coal and mining industries; where in a narrow 5-4 opinion, the Supreme Court remanded the rule for review.

Critics of the regulation consider the Court’s decision a major victory—checking the Administration’s authority by hitting the EPA. Their argument follows that the agency’s regulation is too emboldened and would harm industry. However, the EPA maintains that the Court’s recent decision only requires a narrow revision to procedure and does not impact their power to regulate or the policies already in place under the Clean Air Act.

The case turned on the statutory language defining the EPA’s authority to regulate power plants when “regulation is appropriate and necessary”. The agency treated the early-stage analysis of pollution control in context of the comprehensive statutory purpose of the Clean Air Act—to protect public health and welfare by regulating emissions of hazardous air pollutants.  However, the Court adopted the challengers’ contention that the EPA acted unreasonably when it decided regulation was “appropriate” without considering costs as a threshold matter.

Following the procedure consistent with the Clean Air Act—regulation in the broader context of human health and prevention of environmental pollution—industry costs alone cannot serve as an accurate calibration for the cost benefit analysis. Still, the Court held that the EPA overstepped its authority by failing to make such costs the initial measure of its inquiry as a unique standard for power plants.

The regulation set floor standards from the industry’s best emissions controls within the top 12% of existing generator facilities. Nearly 70% of the affected industry has already adopted the regulation’s requirements. However, the court’s decision may deter generators from putting the improvements into use and delay compliance efforts by remaining facilities while the rule is in review.

The EPA has stated that this holding will not affect the final proposal of Section 111(d) of the Clean Air Act known as the “Clean Power Plan”.  Section 111 aims to cut national carbon emissions by 30% from 2005 levels, and requires states to adopt additional regulation standards for new and existing pollution sources to reduce human exposure to harmful emissions and mitigate the dangers of climate change. As costs are explicitly indicated in the rule-making procedure for Section 111, it is unlikely that the remand of Michigan v. EPA will require changes to be made in the Clean Power Plan. The recent case may even work favorably for the implementation of the Clean Power Plan because it will no longer be at risk of duplicating power plant regulation laid out in power plant provision in Section 112.

The United States is in a critical juncture after the Court’s striking measure of the EPA’s discretion. Shifting away from environmental regulation to insulate business from the realities unmitigated natural resource consumption presents real dangers to public health and the nation’s ability to curtail pollution. Yet the effect of Michigan v. EPA is still far from clear, and the Center for Resource Solutions will be closely watching these policies develop.

In a market that will necessarily be impacted by the availability and use of natural resources, the ideal regulatory model could incentivize both industry and consumers alike to re-evaluate and reimagine their energy consumption.  The Clean Power Plan could offer that model by stimulating technology innovation and expanding existing renewable energy markets—but only if the Nation first recognizes that the benefits to human health and ecological sustainability span beyond the bottom line.

 

Emily Griffith joined CRS in May 2015 as a Legal Intern and assisted with legal research and revision of contracts. She is a J.D. candidate at Georgetown University Law Center where she is specializing in Environmental Law. She is also a research assistant at the Georgetown Law Climate Center and the Chair of the Equal Justice Foundation. She holds a B.A. in Global Studies from U.C. Santa Barbara, and is deeply committed to environmental and community resilience. She aspires to contribute to the public sector working in sustainable policy development.