On Monday President Obama is announcing the final version of his Clean Power Plan, the carbon-emission rules for power plants to secure his climate-change legacy. The plan is designed to hobble electricity generators much as the Environmental Protection Agency’s 2012 rule to reduce mercury and other emissions has harmed the coal industry.
Fortunately for consumers, on June 29 the Supreme Court slapped down the agency’s 2012 rule. In Michigan v. EPA, the court said the agency failed its legal obligation to compare the cost of its mercury standards with the benefits.
Reckless disregard for costs has also guided the agency’s Clean Power Plan. The White House promises Monday’s rule will offer more flexibility to meet emissions targets than an earlier draft, but the targets may be even more difficult to meet. That will force rate payers into steeper cost increases, and concessions the EPA makes to some states and industries will come at the expense of others.
If the EPA succeeds, Americans will be paying for decades. NERA Economic Consulting estimates that the Clean Power Plan will cost $366 billion and bring double-digit electricity-rate increases to 43 states. Regulators including the North American Electric Reliability Corporation warn that the plan could weaken the reliability of the national electric grid by forcing many power plants to close well before new ones can be built. Yet even the administration admits that the EPA plan will have only a trivial impact on the climate.
The Clean Power Plan gives each state an emissions budget and an ultimatum: Give us a plan to cut your carbon emissions using our assumptions about energy-efficiency improvements, green-energy construction, etc.—or we will impose a federal plan on your state. Never mind that most states have objected to the EPA plan.
Governors thus face a dilemma: Accept the EPA’s invitation by developing a state plan and open their states to lawsuits for any perceived breach, or decline to cooperate and take their chances with a federal plan.
The EPA says the Michigan decision has no bearing on the legality of the Clean Power Plan because the agency considered costs as it developed the rule. In all likelihood, the agency will again try to obscure the real costs of its regulations—by double-counting benefits derived from rules already on the books—as it did in the mercury rule.
But the Supreme Court’s decision in Michigan casts a longer shadow over EPA ambitions than the admonition to consider costs. The decision also affirmed the principle that an agency is not entitled to rewrite the law by selecting the legislative words it likes while discarding the ones it does not. The law directs the EPA to determine whether it is both “appropriate and necessary” to impose more regulatory burdens on power plants—but the agency heeded only the word “necessary,” altogether ignoring whether more regulations were “appropriate” in view of the massive potential costs. This, said the court, was an unreasonable interpretation.
This is where the agency’s hubris may be its undoing. In the Clean Power Plan, the EPA ignores words in the Clean Air Act that limit its standard-setting authority to individual sources of emissions. Instead, the agency targets the entire electricity industry as an emissions source. No words in the Clean Air Act plausibly—never mind reasonably—invite the EPA to coerce the wholesale transformation of state electric grids with arbitrary reduction targets.
The Clean Power Plan depends on states’ bowing to the EPA by drawing up plans that make their power supplies less diverse and more expensive. Without state complicity, the EPA’s ambitious carbon-reduction target is not achievable within the bounds of its legal authority and technical competence.
The governors of Oklahoma, Mississippi, Wisconsin, Indiana, Texas and Louisiana have already done the calculations and decided that the cost of collaborating with the EPA will be much higher than declining to do so. Especially with the legal prospects of the Clean Power Plan growing dimmer, there’s no reason for other governors to voluntarily turn the lights off on their economies.
Mr. Quinn is president and chief executive of the National Mining Association. Mr. Glaser, a partner at Troutman Sanders LLP, represented the association before the Supreme Court in Michigan v. EPA.
See the article here.
- On August 3, 2015