D.C. Circuit refuses to throw out MACT rule due to costs

The U.S. Court of Appeals for the District of Columbia Circuit handed a significant victory to the Environmental Protection Agency (EPA) on April 15, saying that cost concerns don’t trump the need for a regulation geared toward cutting emissions from coal and other fossil fuel power plants.

In White Stallion Energy Center LLC versus EPA, No. 12-1100, the D.C. Circuit rejected a challenge to a final EPA rule issued in 2012 that set emission standards for a number of listed hazardous air pollutants (HAPs) chiefly from coal and oil-fired generating units.

The rule said that for existing sources that maximum achievable control technology (MACT) standards may not be less stringent “regardless of cost or other considerations” than the average emission limitation reached by the best performing sources.

The three-judge panel for the D.C. Circuit issued a two-to-one decision that also featured a strongly-worded dissent by Circuit Judge Brett Michael Kavanaugh.

“In my view, it is unreasonable for EPA to exclude consideration of costs in determining whether it is “Ëœappropriate’ to impose significant new regulations on electric utilities,” Kavanaugh said in the dissent.

“To be sure, EPA could conclude that the benefits outweigh the costs. But the problem here is that EPA did not even consider the costs. And the costs are huge, about $9.6 billion a year — that’s billion with a b — by EPA’s own calculation,” Kavanaugh said.

MACT rule has long, complex history

The EPA rules were issued after a December 2000 EPA finding that regulation of HAP emissions from coal and oil-fired units under Section 112 of the Clean Air Act is “appropriate and necessary.” EPA said that its research had shown power plants are the largest source of mercury emissions in the United States.

In 2005, EPA reversed its 2000 finding and removed coal and oil-fired electric generating units [EGUs] from the list of source categories under Section 112(c). This reversal was based on a revised interpretation of the rules and “to some extent” on a revised assessment of the results of the 2000 utility study.

EPA said in its 2005 reversal that it should focus solely on the health effects directly attributable to power generation emissions, rather than on power plant contributions to overall pollution levels.

However, states and other groups petitioned for review and the D.C. Circuit would subsequently vacate the EPA’s 2005 listing decision.

So EPA proposed emission standards in February 2012 for a number of listed HAPs emitted by coal and oil-fired units.

The crux of the petitioners challenge to the final rule from 2012 focuses on EPA’s interpretation of the phrase “appropriate and necessary,” the court said.

On its face the section in question “neither requires EPA to consider costs nor prohibits EPA from doing so,” the court said.

“Even if the word “appropriate” might require cost consideration in some contexts, such a reading of “appropriate” is unwarranted here, where Congress directed EPA’s attention to the conclusions of the study regarding public health hazards from EGU emissions,” the D.C. Circuit said.

EPA, however, holds the position that “nothing about the definition” of the word appropriate compels a consideration of costs.

The D.C. Circuit panel majority held that there is much in legal precedent to support EPA’s position. “Basically, petitioners and our dissenting colleague seek to impose a requirement that Congress did not,” the majority said.

The court majority also said that EPA has concluded that the estimated number of early coal unit retirements that result from the rule is “less than 2% of all U.S. coal-fired capacity,” the majority said.

The rule merely requires owners of uncontrolled plants to install and operate control technology already operating at their competitors’ plants, according to the court majority.

Majority rejects challenges by CFB, lignite and environmental groups

The benefits of the rule will far outweigh the costs of the rule, the panel’s majority said. The D.C. Circuit also said that EPA did not err in declining to exercise its discretionary authority to require less stringent “generally available control technology” or GACT, the court said.

The court majority also rejected certain arguments made by environmental groups on monitoring and other issues.

The D.C. Circuit also said it was not persuaded by one group of industry petitioners who assert that EPA should have carved out a special subcategory for circulating fluidized bed (CFB) units.

“EPA’s decision not to create a CFB subcategory in the Final Rule is reasonable and well-supported by the record,” the court said. “Among other things, EPA noted that CFBs were among the best and worst performers for various pollutants, indicating that CFBs have emissions profiles similar to other coal-fired units despite their operational differences,” the court said.

Likewise, the court majority was not convinced that EPA incorrectly calculated the MACT floor for lignite units.

The court also held that EPA’s decision not to issue a “blanket extension” granting more time for all units to comply is not unreasonable.

The court also rejected a challenge by Julander Energy, an oil and natural gas company, which opposed EPA’s decision not to require “fuel switching” from coal to natural gas. The court suggested that Julander lacked standing in the case.

Julander could have sought permission to appear as an “amicus” or friend of the court brief status, in the case, but it did not, the panel said.

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Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 22 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants.

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