The WSJ Weekly Review reminds me:
EPA Defends Cost of 2015 Mercury Rules in Updated Analysis
by: Amy Harder
Apr 16, 2016
Click here to view the full article on WSJ.com
TOPICS: Environmental Regulation
SUMMARY: The Environmental Protection Agency issued an updated cost analysis, defending its issuance of the first-ever federal regulations requiring power plants to cut mercury emissions and other air pollutants.
CLASSROOM APPLICATION: Students can learn about the estimated costs and benefits of the EPA's new mercury regulations.
1. (Advanced) What are the benefits to people of reducing mercury emissions? What are the costs?
2. (Advanced) What is the effect of the new mercury regulation on electricity prices? Are households made better off by the combination of the mercury regulation and the higher prices?
3. (Introductory) Is a new regulation justified if the benefits outweigh the costs of the regulation?
Reviewed By: James Dearden, Lehigh University
This link to the article might be ungated. Here is an excerpt:
The Environmental Protection Agency Friday issued an updated cost analysis, defending its issuance of the first-ever federal regulations requiring power plants to cut mercury emissions and other toxic air pollutants.
The agency’s move was prompted by a Supreme Court ruling last year that said the agency hadn’t taken into account the costs to industry, as it was required to do, before deciding to adopt the rules.
The Supreme Court, in a 5-4 opinion last June, said the EPA must reconsider the mercury rules because of that omission. The rules, however, have remained in effect during that process.
The EPA says that power plants are the single-largest source of U.S. emissions of mercury, a neurotoxicant that can be particularly harmful to children and unborn babies.
The EPA initially adopted the mercury rules in 2012 and they took effect in April 2015. The agency initially concluded that costs weren’t a relevant consideration when it was deciding on the need for the mercury regulations.
Later, as it was writing the rule, the agency estimated an annual cost to the utility sector of $9.6 billion, compared with public-health benefits of at least $37 billion. The Supreme Court, however, said the agency should have made that calculation earlier, as it was deciding whether to adopt the rules in the first place.
In its updated analysis released Friday, the EPA listed three figures it said supported the case for regulating mercury emissions from power plants. It said utilities’ compliance costs would be a small fraction of their overall sales and their capital expenditures, and wouldn’t make electricity prices rise unduly for customers.
The estimate specifically applied the costs to the ongoing expenses of utilities and consumers. It found that the annual cost of complying with the rules would come to between 2.7% and 3.5% of annual electricity sales (relying on figures from 2000 to 2011). It said the capital costs of complying represent between 3.0% and 5.9% of annual power sector capital expenditures over 10 years. And it said the rules would raise electricity prices 3.1% over 10 years.
Most utilities have already complied with the rule, making Friday’s analysis more important for legal rather than substantive purposes. In one sign that stakeholders have moved on, EPA received just 39 comments as it prepared the updated analysis, compared with nearly one million comments when the rules were being written.
Some industry trade groups had argued that mercury rule would prompt blackouts and skyrocketing electricity prices. Neither scenario has materialized, due largely to the increased production of natural gas, which unlike coal produces no mercury and whose price has dropped sharply since 2008.
Here is a link to a previous post (where you can find more previous posts) on the mercury rule. It seems as if the EPA should have done the benefit-cost analysis ex-ante. But when they did the study the power plants should have said "better late than never" and moved on. The court case and the reanalaysis seem like an enormous waste of money.
But, it's not over:
The updated finding won't put an end to the continuing court fights over the rule, which has helped push dozens of coal-fired power plants to shut down.
The Supreme Court is considering a petition from 20 states led by Michigan that argue the rule should have been scrapped entirely and that a lower court's decision to keep it on the books was illegal.
Last month, the states argued that the move to keep the rule in place "effectively thwarts" the Supreme Court's decision rejecting the mercury rule.
Even if EPA issued its new finding to bring it in line with the Supreme Court's 2015 decision, "EPA never had authority to impose it in the first place," the states wrote (Greenwire, March 18).
The Obama administration's response to the states' Supreme Court petition is due May 6. The justices will then decide whether to hear the states' appeal. They could dismiss the request in a short order.
Here is EPA's Mercury and Air Toxics Standards website where you can find all of the technical documents.