Senior decision-makers come together to connect around strategies and business trends affecting utilities.

36,382 Members

WARNING: SIGN-IN

You need to be a member of Energy Central to access some features and content. Please or register to continue.

Post

The EPA Wages War on the States - The State of Michigan v. EPA

Steam Stack

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 stated above represent those of the author.

Stephen Heins's picture

Thank Stephen for the Post!

Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.

Discussions

Richard Vesel's picture
Richard Vesel on Apr 24, 2015 6:00 pm GMT
Mr Heins - aside from this "article" being replete with self-serving political nonsense, perhaps you can provide a link to a legitimate source (not a blog site) to back up your statement:

"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."

I think that claim deserves some debunking, as I cannot find anything out there that supports it. Reply at your own risk.

RWV

Stephen Heins's picture
Stephen Heins on Apr 24, 2015 6:00 pm GMT
Richard,

It is always a risk to write an Op-Ed piece, especially on an emotionally charged issue like this one.

Anyway, the EPA has been using a strange, and unprovable, method of calculating overall health benefits, versus direct public benefits which are a fraction of their grandiose billions of dollars of indirect health benefits. That said, the EPA is arguing that they don't have to do a cost/benefit analysis before they make a regulation.

Both sides agree that he rule will cost about $9.6 billion each year. The EPA counters that the $4-6 million benefits figure ignored the $37 to $90 billion in co-benefits—i.e., the benefits resulting from control technologies in cutting emissions of other "criteria" pollutants, like SO2 and fine particulate matter. EPA argued it was reasonable to consider all benefits of imposing MACT standards, not just those resulting from reductions in the specific HAPs regulated. EPA Br. at 54-57.

"Maybe it would be appropriate to spend $9.6 billion every year to achieve an annual health benefit worth $4 to $6 million by reducing mercury in fish," Michigan Attorny General Bill Schuette wrote in the state's brief. "But EPA will not even weigh the costs in its analysis. The extraordinary costs of EPA’s rule will be borne by consumers of electricity—i.e., everyone in the nation—causing a significant nationwide economic impact in exchange for relatively little public health benefit." Parties to the suit include the states of Michigan, Alabama, Alaska, Arizona, Arkansas, Idaho, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, Texas, Utah, West Virginia, and Wyoming, along with the Texas Commission on Environmental Quality, the Texas Public Utility Commission, and the Railroad Commission of Texas.

The EPA’s own estimate shows that reducing mercury emissions will produce merely $500,000 to $6 million in direct public health benefits (fish consumption by pregnant women) annually. But it will cost the electric industry some $10 billion a year to comply—meaning as much as $20,000 may be needed to produce a single dollar of gains. The EPA pushed ahead anyway, even though the Clean Air Act instructs the agency to decide to regulate a pollutant only when such action is “appropriate and necessary.”

The EPA’s unflagging legal position—until Wednesday—was that public health is the only relevant consideration when making this “appropriate and necessary” finding. Costs, no matter how high or however diminishing the returns, should carry no weight. None, despite the restraint implied by “appropriate .”

P.S. There isn't a scintilla of documented proof that confirms the way the EPA does its overall health benefits computation.

Best, Steve

Stephen Heins's picture
Stephen Heins on Apr 24, 2015 6:00 pm GMT
P.S. I am very close to the State of Michigan v EPA case and just got back from an utility commissioner meeting where the major theme was the EPA Clean Power Plan and how the states and their utility commissions should respond to it. i asked the following question of the NARUC Santa Fe conference attendees in an open session this week: "Clean Power Plan: Isn't it really an artificial emergency with impossible deadlines created by hastily written federal regulations for unwilling states and their utilities." With exception of CA, OR, WA who attended the conference, the overwhelming answer was "yes." In all fairness, the East Coast group of states in RGGI where not in attendance, but I suspect they would have agreed with the West Coast states.
Stephen Heins's picture
Stephen Heins on Apr 24, 2015 6:00 pm GMT
Richard,

True, I am a member of the loyal opposition, but that doesn't mean you can use invective on me. It doesn't replace a good argument: To quote American historian Jamie McPherson, ""I welcome disagreement and dialogue, for that is how scholarship and understanding advance."

S

Stephen Heins's picture
Stephen Heins on Apr 26, 2015 6:00 pm GMT
Richard,

Ultimately, I don't believe that the federalization of the U.S. electrical grid makes any economic and environmental sense. The states and regions are so much better prepared to implement a clean energy plan. The only things that the EPA have: 20,000 employees, $8.2 billion annual budget, too much time on its hands and a distinctly progressive political agenda.

THIS IS HOW I AM THE LOYAL OPPOSITION OF A REGULATORY CAPTURE THAT YOU SEEM TO SUPPORT!

Steve

Richard Vesel's picture
Richard Vesel on Apr 27, 2015 6:00 pm GMT
Your responses are generally non-factual and highly subjective, especially the last one. Perhaps if someone suggested that YOU have too much money and too much time on your hands, you might take offense? This kind of fuzzy (rightwing) emotion-laden "stuff" belongs on the Fox Garbage Channel. Maybe you could get on one of their panels.

RWV

Richard Vesel's picture
Richard Vesel on Apr 27, 2015 6:00 pm GMT
I suggest you take a look at minutes 49-55 of this section of the public hearings before the EPA last July:

http://www.c-span.org/video/?320725-3%2Fclean-power-plan-afternoon-session

Stephen Heins's picture
Stephen Heins on Apr 27, 2015 6:00 pm GMT
Richard,

Could you be more specific which of my "facts" are non-factual? When are you going unveil your own facts!

Your name calling is quite unattractive!

S

Richard Vesel's picture
Richard Vesel on Apr 28, 2015 6:00 pm GMT
The first thing I did (see above) was challenge your statement:

"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."

Please provide a link which directly proves your assertion that the EPA *ADMITS* any such thing - I am referring to the $6M in benefits part of your statement, not the cost part. Can you do this simple thing? I am quite certain that the EPA has not admitted to only $6M in annual benefits, thus the construction of your statement, inferring a direct EPA-stated connection between the cost (admitted) and benefit (fabricated) is tantamount to a lie.

Everything that I claim as fact in these comment boards I can back up with links to primary data and/or first level research, undigested by obfuscating bloggers and other purveyors of nonsense. I seriously wish other people would do the same, to avoid exposing those who want to be educated here, to misleading subjective and specious arguments on what should be serious topics.

RWV

Stephen Heins's picture
Stephen Heins on Apr 28, 2015 6:00 pm GMT
http://regulatorystudies.columbian.gwu.edu/justices-debate-benefits-and-...

Justices debate benefits and costs of EPA mercury power plant rule

Power plant

by Susan E. Dudley, Director Regulatory Studies Center George Washington University

March 31, 2015

The Supreme Court last week heard oral arguments in Michigan v EPA regarding "whether the Environmental Protection Agency unreasonably refused to consider costs in determining whether it is appropriate to regulate hazardous air pollutants emitted by electric utilities."

The regulation being considered is a key part of the Obama administration's environmental agenda and would require coal-fired power plant operators to install equipment to reduce mercury and other air pollutants.

Petitioners in the case, which were electric utilities and several states, argued that the EPA acted improperly in setting 2012 mercury and air toxics standards (MATS). They argued that the EPA estimated the regulations would achieve relatively small reductions in mercury emissions, valued at up to US$6 million per year, without weighing those benefits against costs, which the EPA estimated at $9.6 billion per year.

Section 112 of the Clean Air Act directs the EPA to issue regulations that are "appropriate and necessary" to control hazardous air pollutants, including mercury. Thus, one area of debate is whether a standard that imposes very large costs relative to benefits is "appropriate" under the meaning of the statute.

When and whether to calculate costs

In oral arguments, justices appeared to be divided on the case.

Justice Scalia argued that the statutory term in the Clean Air Act would be meaningless if it did not permit such considerations, and Chief Justice Roberts questioned why the government had deliberately tied its hands by refusing to consider factors relevant to the decision. Justice Breyer, whose writing has supported the use of benefit-cost analysis in government regulation, argued that "you have to take into account cost somewhere" but offered a novel theory that the EPA could consider costs at a later point by establishing sub-categories of compliance.

A related topic of debate was the level of the EPA's discretion, with the more liberal justices arguing that the Court should defer to the EPA's interpretation of its statute, under the established "Chevron deference" principle. The liberal justices also pointed to agency representations that, while the rule would be one of the most expensive ever issued, it would provide annual health benefits valued at up to $90 billion per year, which "outweigh its costs by between 3 to 1 or 9 to 1."

Chief Justice Roberts raised questions about the composition of these estimated benefits, however, since ninety-nine percent of them derive from reductions in non-hazardous emissions of fine particles known as PM2.5, which are not the focus of this regulation and which the EPA has authority to regulate more directly - and more cost-effectively - elsewhere. (See figures showing composition of reported MATS rule benefits.)

Calculating health benefits

The direct health benefits EPA quantified stem from reductions in mercury emissions, which, when deposited in water can accumulate in fish and affect the IQ of children who consume large amounts of fish.

The EPA's modeling indicates that, under the final rule, the average IQ of exposed children will improve by .002 points, or 511 IQ points nationwide, to which it assigns a dollar value ranging from $500,000 to $6.2 million per year.

To put this in context, the EPA estimated that its 1986 regulations removing lead from gasoline would raise the average IQ of exposed children by 4 points - a factor of 2,000 greater than the per child benefits EPA attributes to the MATS rule.

It's worth nothing that the outcome of the Supreme Court's decision in this case is unlikely to have an impact on legal challenges to the Administration's efforts to regulate carbon emissions from power plants, as those depend on authority from other sections of the Clean Air Act which do not share the "appropriate and necessary" language in question here. However, the decision could have far-reaching impacts on American citizens....

Stephen Heins's picture
Stephen Heins on Apr 28, 2015 6:00 pm GMT
Richard,

Unsurprisingly, a few of my "activist" friends informed on the details of this Supreme Court case have noticed that you know little about this constitutional issue. Although, you can pontificate with the best!

Steve

Richard Vesel's picture
Richard Vesel on Apr 30, 2015 6:00 pm GMT
Courtroom "discussions" are rhetorical debate-club exercises, even in the Supreme Court. Be that as it may, the Supreme Court HAS upheld the constitutional authority of the EPA to control and regulate stationary and transportable source emissions numerous times, for a multitude of pollutants, now including CO2, despite an ongoing onslaught of challenges by entrenched and well-financed interests, whom you appear to represent. Realists expect further and ongoing "challenges", which will continue to be discarded as baseless.

Pontfication is rhetoric without a background of research and verifiable fact. You still have not provided one referable FACT supporting your claim about cost v. benefit. However, rather that wait for that which will apparently not arrive from you, I provide the following:

Specifically, back on the topic of mercury, here is are a few facts for our readers to mull over:

http://www.ncbi.nlm.nih.gov/pubmed/15866768

"Methyl mercury is a developmental neurotoxicant. Exposure results principally from consumption by pregnant women of seafood contaminated by mercury from anthropogenic (70%) and natural (30%) sources. Throughout the 1990s, the U.S. Environmental Protection Agency (EPA) made steady progress in reducing mercury emissions from anthropogenic sources, especially from power plants, which account for 41% of anthropogenic emissions. However, the U.S. EPA recently proposed to slow this progress, citing high costs of pollution abatement. To put into perspective the costs of controlling emissions from American power plants, we have estimated the economic costs of methyl mercury toxicity attributable to mercury from these plants. We used an environmentally attributable fraction model and limited our analysis to the neurodevelopmental impacts--specifically loss of intelligence. Using national blood mercury prevalence data from the Centers for Disease Control and Prevention, we found that between 316,588 and 637,233 children each year have cord blood mercury levels > 5.8 microg/L, a level associated with loss of IQ. The resulting loss of intelligence causes diminished economic productivity that persists over the entire lifetime of these children. This lost productivity is the major cost of methyl mercury toxicity, and it amounts to $8.7 billion annually (range, $2.2-43.8 billion; all costs are in 2000 US$). Of this total, $1.3 billion (range, $0.1-6.5 billion) each year is attributable to mercury emissions from American power plants."

That directly refutes your stated non-fact.

Furthermore:

http://www.epa.gov/ttn/oarpg/t3/reports/volume7.pdf

MERCURY STUDY REPORT TO CONGRESS VOLUME VII: CHARACTERIZATION OF HUMAN HEALTH AND WILDLIFE RISKS FROM MERCURY EXPOSURE IN THE UNITED STATES

See the following sections within this 152 page report:

2. HUMAN HEALTH EFFECTS: HAZARD IDENTIFICATION AND DOSE-RESPONSE

3. RISK CHARACTERIZATION FOR WILDLIFE

4. CHARACTERIZATION OF FATE OF ENVIRONMENTAL MERCURY

5. CHARACTERIZATION OF EXPOSURE

6. INTEGRATIVE ANALYSIS FOR METHYLMERCURY 6.1 Characterization of Risk: Quantitative Integration of Human and Wildlife Exposure and Dose-Response

Finally,

http://www.epa.gov/ttnatw01/utility/hgwhitepaperfinal.pdf

"Although the potential Hg emissions are calculated to be 75 tons per year based on the Hg content in coal, the actual current emissions are estimated to be 48 tons per year due to Hg capture with pollution controls for PM and SO2. The reduction at any individual plant ranges from 0 to 98% dependent on coal type, control technology type, and other unquantified factors."

$9.8B per year, spread across an industry which sees annual revenues of $375B (2014), amounts to a 2.6% increase in rates if directly passed on homogeneously to all power consumers. MY monthly electric bill would go up $2.

Tempest in a teapot, all for the sake of "doing business as usual".

RWV

Richard Vesel's picture
Richard Vesel on May 4, 2015 6:00 pm GMT
{crickets...}
Stephen Heins's picture
Stephen Heins on May 8, 2015 6:00 pm GMT
Richard,

You put a lot of research into your Mercury discussion. Why don't you actually write a piece on the subject?

Clearly, you don't know all that much about electric rates and rate making.

If you feel the need, I will let you have the last word.

Best,

Steve

Richard Vesel's picture
Richard Vesel on May 11, 2015 6:00 pm GMT
Clearly, I understand the difference between rhetoric and fact-based discussions. If I make any errors in my facts, I am happy to be corrected with provable information. In terms of rhetoric, I simply oppose authors who cobble together a stew of reality and fantasy facts, and use it as a delivery mechanism for industry propaganda disguised as a position paper.

I AM in this industry, and have been since the late 70's, in one capacity or another. I think it is only right to insure that what power producers deliver is as safe and clean and environmentally benign as possible, just like we expect from more competitively encumbered car companies. If true costs are properly assigned to the producers, and removed from the victim subclass, then we should expect that cost to be spread across all consumers, who will then drive the market towards more ideal means of production (i.e. the lowest true cost to produce).

RWV

Stephen Heins's picture
Stephen Heins on Jun 6, 2015 6:00 pm GMT
Richard, please stop your vituperations and your aspersions You are embarrassing yourself.

Frankly, I can't tell if you live in the U.S. or Europe, because the simplicity of your last paragraph suggests that you live in the EU.

It must be said that economics clearly is not your best intellectual weapon. Neither is your sense of history.

For the record, there is no we in "we." We are a world of over 190 countries, who have never, ever been able to do anything in concert. With all of your high mindedness, I can't help noticing that you have ignored the grinding poverty and authoritarism in the world.

Stephen Heins's picture
Stephen Heins on Jun 21, 2015 6:00 pm GMT
P.S. Name calling is not an argument.....

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »