In the last month of 2018, EPA released two proposals that it claims will have no immediate effect—revised CO2 standards for new coal-fired power plants that EPA does not expect anyone to build, and a determination that it is not “appropriate and necessary” to have a mercury rule that it nevertheless plans to keep on the books. The question many may be asking is why EPA would issue two highly controversial rules if they won’t have any practical effect? The answer may lie in the precedent they will set.
The first proposal, released December 6th, includes a revision to the CO2 performance standard for new coal-fired power plants that EPA set in 2015 based on partial carbon capture and sequestration (CCS) technology. EPA now proposes to determine that CCS is too costly and not sufficiently available to support a standard. Instead, EPA proposes to find that an efficient steam cycle is the “best system of emission reduction” for new coal plants, technology that maximizes the amount of electricity generated so that fuel can be used most efficiently, thus releasing fewer emissions for the same amount of electricity produced.
Recognizing that no new coal plants are planned in the near future, EPA’s impact analysis for the rule predicts that the rule will result in no costs and no benefits. However, it sets a precedent for how standards should be set under a provision of the Clean Air Act—Section 111—the key Clean Air Act program used by the Obama Administration to address climate change. Specifically, the proposal confirms that a standard should be based on a measure that is cost-effective and actually available to an entire industry, not just a measure that has depended heavily on government funding and worked only in a few isolated and unique circumstances.
EPA’s second proposal, released after the government shutdown but while the agency was operating on reserves, could have even greater implications, despite its lack of immediate impacts. The proposal involves EPA’s “Mercury and Air Toxics Standards” (MATS), adopted in 2012 to address the emission of hazardous air pollutants from coal- and oil-fired power plants. The Clean Air Act only directs EPA to regulate those emissions if EPA first finds that such regulation is “appropriate and necessary.” The Obama Administration made that finding (like the Clinton Administration before it), but in doing so decided to ignore how costly the regulations might be.
Now, under the Trump Administration, and in the wake of a Supreme Court decision heavily critical of EPA’s decision to ignore costs when adopting MATS, EPA has proposed to determine that regulating hazardous air emissions from power plants is not “appropriate and necessary” (like the Bush Administration before it). At the core of the proposal is the question of whether, and more importantly how, to consider “co-benefits”—benefits that are not the direct target of a proposed regulation but projected to occur as a side effect of the rule.
Under the Obama Administration, EPA touted billions in “co-benefits” from MATS, primarily reductions in particulate matter, even though many other programs already regulate those emissions. EPA’s new MATS proposal does not entirely ignore potential co-benefits, but recognizes that they should not carry “equal weight.” And, since the benefits directly targeted under MATS pale in comparison to costs (only $1 of benefit for at least $1,200 spent), EPA proposes to determine that no amount of co-benefits would be enough to overshadow that disparity. While EPA is proposing to leave MATS in place due to a provision of the Clean Air Act that imposes strict requirements on fully rescinding a standard, EPA’s new approach to evaluating co-benefits could set a significant precedent for future rulemaking actions.
The issues raised in these two late 2018 proposals will surely draw a raft of comments from interested stakeholders in the coming months, despite their lack of any immediate real-world impacts, due to the important precedents they could set.