Cost-benefit analysis for mercury regulation
The U.S. Supreme Court ruled on June 30 that the U.S. Environmental Protection Agency failed to properly consider the cost of its air regulation setting mercury and air toxic standards under the Clean Air Act (Michigan v. EPA, et al). The regulation required mercury emission reductions at coal-fired plants.
The Clean Air Act section under which the regulation was promulgated authorized the EPA to regulate power plants under the section only if it concludes that “regulation is appropriate and necessary.” The EPA refused to consider cost when making its decision, although it did consider cost when contemplating available technologies at a later step. The EPA estimated the cost of its regulations would be $9.6 billion per year, but the quantifiable benefits from the reduction would be $4 to $6 million per year.
The Supreme Court held that the EPA strayed well beyond the bounds of reasonable interpretation in concluding that cost is not a factor relevant to the appropriateness of regulating the plants. The court determined that the EPA must consider cost – including cost of compliance –
before deciding whether regulation is appropriate and necessary. It reversed and remanded the case back to the U.S. Court of Appeals, noting it will be up to the agency to decide (within the limits of reasonable interpretation) how to account for cost.
The importance of this case is in the court’s limitation on the discretion it accorded the agency in interpreting the statute and requiring consideration of cost as well as benefit when making a decision to regulate under that section of the act.
The U.S. Supreme Court last year determined the EPA exceeded its statutory authority in interpreting the Clean Air Act to require PSD and Title V permits for stationary sources based on their greenhouse gas emissions (EPA greenhouse gas “tailoring” rule in 2014). The court has now reversed lower courts and limited EPA discretion in its administration of the air programs in two cases and may be indicating closer scrutiny and less deference to the wide-ranging initiatives of the EPA under President Obama.
Required revision of Florida startup, shutdown and malfunction rule
The EPA, pursuant to a settlement agreement with third parties and implementing court order, issued an order in May requiring states to revise their State Air Implementation Plan.
Florida, along with many other states, will be required by November 2016 to revise the portions of its air rules allowing a defense to higher emissions during startup, shutdown or malfunction of an air source. Florida will begin rulemaking this fall to address the revisions required by the EPA.
Every indication is that Florida is willing to work closely with facilities to ensure their concerns are addressed to the extent allowed by the EPA.
Once the Florida startup, shutdown or malfunction rule is amended, air permits will also require revision to incorporate the new emission limits during startup, shut down and malfunction. This rulemaking should be carefully followed by facilities with air emissions, because previously allowed emissions during startup, shutdown and malfunctions may no longer be allowed. The rule will also impact existing and future permits.
Nonattainment of ambient air quality standards
Florida generally has very good air quality. However, the state Department of Environmental Protection has worked with various sources in southwest and northeast Florida to develop corrective action for two limited issues of nonattainment with air-quality standards. A plan has been developed for both of these areas and submitted to the EPA for approval.
The EPA is considering adoption of stricter standards nationally for the ambient air quality standard for ozone.
If the most stringent level under consideration is selected, it could place substantial areas of Florida into noncompliance, with implications for limiting future development and growth in areas of the state classified as nonattainment.
The Clean Air Act generally prohibits the issuance of air permits in areas the state has classified as nonattainment, unless stringent restrictions on emissions are placed in permits. The EPA rulemaking and later required rulemaking by Florida should be carefully followed by potentially affected facilities in Florida, including transportation. The most stringent air quality standard under consideration by the EPA is below levels considered as background in the state and thus may be very difficult to address.
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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
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