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EPA to Regulate Hazardous Air Pollutants From Power Plants Under Michigan Factors

EPA’s Clean Air Act (“CAA”) rulemakings directed at power plants are often the target of regulatory challenges in federal court.  EPA’s latest rulemaking regulating Hazardous Air Pollutant (“HAP”) emissions from coal- and oil-fired electric utility steam generating units (“EGUs”) is unlikely to be an exception. 88 Fed. Reg. 13956 (Mar. 6, 2023).  In the now final rule, EPA has revoked an earlier action taken in 2020, in which the agency declined to regulate HAP emissions from EGUs after comparing the costs of compliance relative to the benefits of regulation, relying at the time on the Supreme Court’s decision in Michigan v. EPA, 576 U.S. 743 (2015).  Id. at 13957; see also 85 Fed. Reg. 31286. Now, just three years later under a new administration, the agency has backtracked, finding that it is appropriate and necessary to regulate HAP emissions from EGUs based on new data regarding the costs and benefits of regulating HAP emissions.  EPA claims that its latest decision is actually more in line with the statutory factors identified in Michigan for determining whether it is “appropriate and necessary” to regulate HAP emissions from EGUs under the CAA.

Back in 2015 in Michigan v. EPA, the Supreme Court reviewed EPA’s final rule setting standards for the regulation of HAPs emitted by fossil-fuel-fired power plants. 576 U.S. at 747. The CAA directs EPA to regulate emissions from fossil-fueled power plants if it concludes that the regulation is “appropriate and necessary.” Id.  In Michigan, the Court held that EPA strayed beyond the reasonable interpretation of “appropriate and necessary” by not including cost in its analysis. Id. Although “appropriate and necessary” was a broad term, the Court held EPA may not fail to consider an important aspect of the problem, such as cost, when deciding whether regulation is appropriate. Id. at 752. An agency must consider all the advantages and disadvantages of the decision. Further, the Court reasoned that this reading was supported because the statute requires EPA to study hazards to public health posed by power plants and the costs of such technologies to reduce emissions. Id. at 753 (emphasis added). Thus, EPA was required to consider costs before determining whether it is appropriate and necessary to regulate EGUs. Id. at 758.

In the latest rulemaking, as required by Michigan, EPA applied a benefit-cost analysis approach to assess the disadvantages and advantages for the regulation of HAP emissions from EGUs. 88 Fed. Reg. 13957 (Mar. 6, 2023). In assessing the benefits, EPA concluded in the new rule that there was a substantial advantage to reducing HAP emissions from EGUs because mercury is a bio-accumulative toxic metal that once released from power plants into the ambient air, can be readily transported and deposited to soil and aquatic environments. Id. at 13969. Once deposited the metal transforms and becomes highly toxic to multiple human systems, such as adverse effects on the cardiovascular system, adult nervous system, and immune system. Id. Further, regulation of HAP emissions from EGUs would substantially reduce other criteria pollutants, such as PM2.5, nitrogen oxides (NOx), sulfur dioxide(SO2), by as much as 4.3 million tons. Id. at 13973. Although other provisions in the CAA seek to reduce the same criteria pollutants, EGUs are large contributors of criteria pollutants and several other chemical substances that cause adverse health effects. Id. at 13974.

When assessing the disadvantages of regulation, the agency revisited the 2020 action’s estimated cost of compliance, which totaled to over nine billion dollars per year. Id. 13975. Relying on new data and information, the agency revised this estimate downward in the new rule.  Specifically, the agency claimed that the EGU sector installed fewer controls to comply with HAP emissions standards than originally estimated. Id. EPA also put new emphasis on advancements in technology and a dramatic increase in the availability of inexpensive natural gas. Id. at 1375-76. Thus, EPA determined that it had previously overestimated compliance costs by at least two to four billion dollars. Id. The agency concluded that the power sector could comply with the best available technology requirement, while also maintaining its ability to distribute reliable electricity to consumers. Id. at 13977. Thus, when considering the disadvantages and advantages of regulation in accordance with Michigan’s holding, EPA concluded that it is “appropriate and necessary” to regulate EGUs under Section 112 of the CAA.  Id. at 13956.