How much do the EPA's regulations really cost?

Estimates on the cost-benefit ratio of the EPA's regulations on pollutant emissions differ drastically, making it difficult to determine the real value of the cost to power plants.

Matthew Brown/AP/File
In this July 1, 2013, file photo, smoke rises from a coal burning power plant in in Colstrip, Mont. A divided Supreme Court on Monday ruled against the Obama administration’s attempt to limit power plant emissions of mercury and other hazardous air pollutants, but it may only be a temporary setback for regulators who will have another chance to get the process right.

President Barack Obama’s environmental legacy took a hit Monday when the Supreme Court called for greater cost analysis in regulations of mercury and toxic substance emissions.

The court ruled that the Environmental Protection Agency, acting through provisions of the Clean Air Act, was wrong in choosing not to take costs into account when deciding to set limits on emissions.

Determining that the regulation of air toxins was “appropriate and necessary,” as required by the CAA, the EPA established regulations that they estimated would cost power plants about $9.6 billion a year.

Benefits estimates, however, ranged dramatically from $4 million to $90 billion a year, depending on how loosely one defined “benefits,” Justice Antonin Scalia wrote in the majority opinion – meaning the regulations, at worst, could have cost 2,400 times their benefits.

"One would not say that it is even rational, never mind 'appropriate,' to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits," Scalia said at the bench, according to USA Today. "No regulation is 'appropriate' if it does significantly more harm than good."

The EPA, however, estimated in its plan that, by forcing power plants to cut emissions of mercury and a variety of other metals and acid gases, benefits extended beyond the immediate $4 million to $6 million that critics claimed reductions in those particular pollutants brought.

Taking into account these extra benefits – like slashing emissions of additional pollutants – the Agency saw its benefits estimate soar to between $37 and 90 billion annually. At best, then, the regulations yielded benefits valuing more than 9 times their cost.

The regulations have already been adopted at many power plants, officials said, but threatened to put others out of business. The case will go to the District of Columbia Circuit Court of Appeals where, The New York Times reported, President Obama’s EPA legislation has a good track record.

Vermont Law School environmental law expert Patrick Parenteau told the Times the EPA policy would probably be upheld in D.C. while the Agency makes revisions.

“Given the fact that the EPA has already done a detailed cost benefit analysis justifying the rule, and the fact that the majority of the affected industries have already invested heavily in compliance, there is a good chance that the D.C. Circuit will allow the rule to remain on the books,” Mr. Parenteau said.

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