Public Comment on EPA's Proposed Supplemental Finding that it is Appropriate and Necessary to Regulate Hazardous Air Pollutants from Coal- and Oil-Fired EGUs

Supreme Court
by Susan E. Dudley, Director
January 11, 2016

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The George Washington University Regulatory Studies Center works to improve regulatory policy through research, education, and outreach. As part of its mission, the Center conducts careful and independent analyses to assess rulemaking proposals from the perspective of the public interest. This comment on the Environmental Protection Agency’s (EPA’s) proposed “Supplemental Finding that it is Appropriate and Necessary to Regulate Hazardous Air Pollutants from Coal- and Oil-Fired Electric Utility Steam Generating Units” does not represent the views of any particular affected party or special interest, but is designed to evaluate the effect of EPA’s proposal on overall consumer welfare.

Background

On May 3, 2011, EPA determined that regulation of hazardous air pollutants (HAP) from coal- and oil-fired electric utility steam generating units (EGUs) was appropriate and necessary, and proposed “mercury and air toxics standards” (MATS) pursuant to section 112 of the Clean Air Act (CAA).[3] The agency issued final MATS on February 16, 2012.[4]

In response to challenges, in July 2015, the Supreme Court ruled that “EPA interpreted [the Clean Air Act] unreasonably when it deemed cost irrelevant to the decision to regulate power plants.”[5] In a 5-4 opinion, the majority sided with petitioners (electric utilities and 23 states), who argued that EPA acted improperly in determining that the 2012 MATS were appropriate and necessary without considering the estimated $9.6 billion per year cost of meeting them. 

The key statutory phrase in Section 112 of the Clean Air Act,[6] which authorizes EPA to regulate to control hazardous air pollutants, including mercury, is whether the standard is “appropriate and necessary.” In setting the 2012 standards, EPA interpreted this phrase as not requiring it to consider costs. The majority of the Court disagreed. While the Court was not explicit on how EPA should consider costs, it did offer the observation that “[o]ne would not say that it is even rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.”[7]

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See also: Prepared Statement of Susan E. Dudley, Hearing on Review of Mercury Pollution’s Impacts to Public Health and the Environment, Before the Senate EPW Subcommittee on Clean Air and Nuclear Safety, April 17, 2012