When is risk reduction not a benefit?

Posted on January 7, 2020 by Adam Babich

EPA filed a status report on October 15 in the slow-moving mercury and air toxics (MATS) litigation, which is now Murray Energy Corp. v. EPA, No. 16-1127 (D.C. Cir., filed April 26, 2016). The case is a challenge to EPA standards for coal-fired power plants that have been on the books since April 16, 2012, despite a U.S. Supreme Court remand in Michigan v. EPA, 135 S. Ct. 2699 (2015), followed by a D.C. Circuit decision not to vacate, White Stallion Energy Center v. EPA, 2015 WL 11051103 (D.C. Cir. 2015), cert. denied, 136 S. Ct. 2463 (2016), and the pending 2016 challenge to an EPA supplemental finding. EPA’s October 15 status report says that the agency has sent OMB a draft final rule regarding its proposal—published in February 2019—to withdraw its finding that a MATS rule is “appropriate and necessary” while leaving the applicable emission standards in place. 84 Fed. Reg. 2670 (Feb. 7, 2019). These proceedings retain a relevance apart from their utility in illustrating the occasionally bizarre nature of the world in which we live and litigate.

EPA’s proposal would, among other things, implement a new approach to analyzing the benefits of a regulation. Specifically—when calculating benefits for purposes of determining whether regulation of hazardous air pollutants is appropriate—EPA would eschew consideration of “co-benefits” flowing from accompanying reductions in emissions of other pollutants, such as nitrogen oxides, sulfur dioxide, and fine particulate matter. Thus, “if the HAP [Hazardous Air Pollutant]-related benefits are not at least moderately commensurate with the cost of HAP controls, then no amount of co-benefits can offset this imbalance for purposes of a determination that it is appropriate to regulate under CAA section 112(n)(1)(A).” 84 Fed. Reg. at 2676. The idea is that non-HAP benefits should not receive “equal consideration” because criteria pollutants “are already addressed” by another regulatory program. Id. at 2677.

The analysis is reminiscent of EPA’s infamous Select Steel opinion, which dismissed an environmental-justice complaint. EPA File No. 5R-98-R5. In that 1998 opinion, the agency found that because the NAAQS for ozone “has been set at a level that is presumptively sufficient to protect public health and allows for an adequate margin of safety … there is no affected population which suffers ‘adverse’ impacts within the meaning of Title VI resulting from the incremental VOC emissions [that do not cause NAAQS violations].” There could be no disproportionate impact on a minority community that met NAAQS because there was no “adverse” impact at all!

The conclusion that achievement of NAAQS eliminates risk ignores a reality that Congress perceived when it amended the Clean Air Act in 1977. Congress recognized the need to protect people from harmful exposures “notwithstanding attainment and maintenance of all national ambient air quality standards.” 42 U.S.C. § 7470(1). The legislative history acknowledges, “The idea that the national primary standards are adequate to protect the health of the public has been belied.” H.R. Rep. No. 95-294 at 112 (May 12, 1977) (accompanying H.R. 6161). Senator Muskie—the father of the Clean Air Act—explained, “[T]here is no such thing as a threshold for health effects,” S. Deb. on S. 252, 123 Cong. Rec. 18,460 (June 10, 1977). “Even at the national primary standard level, which is the health standard, there are health effects that are not protected against.” Id.

“Appropriate” is an “all-encompassing term that naturally and traditionally includes consideration of all the relevant factors.” 135 S. Ct. at 2707 (quotation marks and citation omitted). Just as it was not “appropriate” for EPA to ignore costs when deciding to promulgate MATS, id., it would be inappropriate to ignore the benefit of lives saved because of ancillary reductions of criteria pollutants.

Deference to EPA on the Wane?

Posted on July 13, 2015 by Renee Cipriano

The Supreme Court’s latest opinion in an environmental rule challenge, this to the Mercury and Air Toxics Standard, or MATS, raises more questions than it answers.  As discussed on this blog site (see here, here and here,) the Court in Michigan v. EPA held that EPA had not reasonably considered costs when determining to regulate power plant mercury emissions.  EPA must factor cost into its initial determination that it is “appropriate and necessary” to regulate hazardous pollutants from power plants.  The Court passed no judgment on whether EPA can meet that burden. 

At the heart of the issue was Congress’ acknowledgement that the 1990 Clean Air Act Amendments would subject power plants to numerous controls to reduce sulfur dioxide, nitrogen oxides, and particulates.  Section 112 of the Act requires EPA to regulate power plants if “regulation is appropriate and necessary after considering the results of the study.”  Congress further acknowledged that these measures also might reduce hazardous air pollutants, and that no one knew at the time whether additional controls would be required to protect human health from air toxics emitted by power plants. 

To determine that, EPA was required to conduct a study.  In 1998, EPA’s study concluded that regulation of coal and oil fired power plants was “appropriate and necessary.”  EPA reaffirmed this finding in 2012, noting that mercury and other hazardous air pollutants were “appropriate” to regulate because they posed a risk to human health and the environment and that controls were available to reduce the pollutants.  EPA found that it was “necessary” to regulate because other pollutant emission limits and requirements did not eliminate the risks. 

The Court, in a 5-4 decision written by Justice Scalia, analyzed EPA’s action through the Chevron deference standard, determining that “EPA strayed far beyond those bounds when it read §7412(n)(1) to mean that it could ignore cost when deciding whether to regulate power plants.”  Ultimately, the Court held that “Chevron allows agencies to choose among competing reasonable interpretations of a statute; it does not license interpretive gerrymanders under which an agency keeps parts of statutory context it likes while throwing away parts it does not.”  Id. at 9.

The Court went on to reject EPA’s contention that it need not factor cost into its initial determination to regulate because the agency must take cost into consideration when later determining how much to regulate.  The Court colorfully remarked that:  “By EPA’s logic, someone could decide whether it is ‘appropriate’ to buy a Ferrari without thinking about cost, because he plans to think about cost later when deciding whether to upgrade the sound system.” The Court’s strong language cautioning EPA to use “reasoned decision making” and not “gerrymander” statutory requirements should give EPA pause as it is set to promulgate greenhouse gas reduction measures for power plants in its Clean Power Plan this summer.  Numerous comments filed in the so-called Clean Power Plan rulemaking docket have charged EPA with overstepping its statutory boundaries, and the Court seems to be signaling its disfavor of such action.

Since the decision, speculation as to whether and how EPA will fix MATS has been rampant. 

  • Will EPA abandon MATS completely, requesting vacatur?  Not likely.  In public remarks and testimony before a Congressional subcommittee during the week of July 6, Administrator Gina McCarthy cited the health benefits already achieved by the rule, indicating the agency would not back down.
  • Can EPA fix the rule based on the current administrative record?  Some believe that EPA can simply re-jigger its existing analysis and logic, fronting the cost issue in the “appropriate and necessary” finding, perhaps calling this a “technical amendment” to the rule. 
  • Will EPA seek a stay of the existing rule while it recalculates costs and re-proposes the rule?  Because the rule went into effect in April 2015, companies already have installed a range of controls from activated carbon injection to installation of flue gas desulfurization equipment.  Each type of control has costs and benefits, as well as impact on other pollutants.  Many of these controls may remain operational to comply with other CAA requirements; therefore, a stay may have disproportionate impacts on industry members as some cease to operate controls and others continue to operate them.
  • But could EPA’s re-proposal result in even more stringent emission limits?   Absolutely.  Would EPA be wise to lower the standards further?  Given the cost and disruption caused by MATS so far, absolutely not.
  • And how will any of these possibilities affect the “already regulated” argument that will be used to attack the Clean Power Plan?  Section 111(d), the basis for the Clean Power Plan, prohibits regulation (whether of the source or the pollutant remains to be decided) if a Section 112 standard exists.  So if MATS goes away, does the legal basis for the Clean Power Plan become stronger?

How the ongoing, never-ending EPA effort to achieve hazardous pollutant reductions from power plants will play out remains to be seen.  The Supreme Court’s close reading of the directives contained in the statute, coupled with its references to balanced costs and benefits, leaves the impression that any rule with wide reach better be well-reasoned and justified.  No doubt EPA is taking notice. 

Can the Majority and the Dissent Both Be Wrong? The Supreme Court Remands the MATS Rule

Posted on June 30, 2015 by Seth Jaffe

In Jonathan Cannon’s excellent post on Monday’s Supreme Court decision in Michigan v. EPA, he noted that the majority and the minority aren’t actually that far apart in their views on whether EPA must consider costs in this rulemaking.  I have a slightly different take:  They may not be that far apart, but they’re both wrong.  

In fact, the issue in Michigan v. EPA seems so simple that the MATS rule could have been affirmed in a two-page opinion.  Judge Scalia notes that the word “appropriate” – on which the entire 44 pages of the majority, concurring, and dissenting opinions focus – is “capacious”.   I agree.  If so, and if Chevron means anything, “appropriate” is surely capacious enough to allow for an interpretation that does not include cost considerations.  That should have been the end of the case.

I do feel compelled to note, however, that Justice Kagan’s dissent also got it wrong, in at least three ways:

  • I think she’s flat wrong to suggest that, because the MATS “floor” is based on the top 12% of facilities already in operation, that means that establishment of the floor already takes cost into account. As Justice Scalia cogently notes, those existing facilities may well have been under their own regulatory duress – a duress that may not have considered cost.
  • Justice Kagan confuses cost-benefit analysis and cost-effectiveness analysis. For any given goal sought by EPA, the various options provided by the MATS rule may allow power generators to attain the goal in the most cost-effective means possible, but if even the most cost-effective approach were to yield $10B in costs and $10M in benefits, that would fail the cost-benefit test for most people.
  • Finally, and most importantly, Justice Kagan got the consequences wrong. Instead of suggesting, as she did, that the majority decision,
 "deprives the American public of the pollution control measures that the responsible Agency, acting well within its delegated authority, found would save many, many lives,"  
she should have made the point that the majority decision will have no impact on EPA or the MATS rule.  The Supreme Court did not vacate the rule; it merely remanded the rule to the Court of Appeals.  Justice Kagan’s position should have been that EPA still has sufficient discretion, even on the existing record, to defend the MATS rule within the confines of the majority opinion.  Instead, Justice Kagan gave ammunition to those who oppose the rule, by suggesting that it cannot be saved.

A pox on both their houses.