By Randy T. Simmons and Michael Jensen, September 27, 2016
This week, arguments for and against what has been called the “most aggressively litigated environmental regulation in U.S. history” — the Clean Power Plan — were presented to the D.C. Circuit Court of Appeals. The rule, issued last year by the Environmental Protection Agency (EPA), sets carbon dioxide emissions limits for fossil-fuel fired power plants, and is so controversial that 10 judges, rather than the usual three, will hear oral arguments.
The EPA has attempted to package and sell the rule as “fair” and “flexible,” but its legality is questionable and it is neither fair nor flexible. The greatest cost of compliance will not be primarily borne by the politicians and bureaucrats who dreamed it up, but by businesses and families across the country who lack the political clout to impose their vision of the future, and its cost, upon everyone else.
The EPA argues that the Clean Air Act grants the agency authority to promulgate the rule, that they have adequately considered the costs of compliance and that the carbon dioxide emissions limits imposed on fossil-fuel fired power plants are achievable.
Opponents of the rule, including 27 states and many non-state organizations, argue that the EPA has reinterpreted the Clean Air Act in an effort to grant itself authority it should not have, that the rule violates states’ rights by commandeering their resources and that the final rule is not a logical result of comments received on the proposed rule.
Regardless of the D.C. court’s ruling, the decision will be appealed to the Supreme Court. If the Clean Power Plan is ultimately upheld, the cost of compliance will be high, especially for people living in heavily coal-dependent states like Montana. Though the EPA claims the rule allows for flexibility, a study by the Bureau of Business and Economic Research, from the University of Montana, concluded that the state-specific carbon dioxide emissions limit “drastically reduces” Montana’s compliance options.
The bureau’s model indicates that Montanans will experience about half the economic decline they experienced during the Great Recession. The rule will likely result in the complete closure of the Colstrip Generating Station (a coal-fired power plant southeast of Billings, Montana) and a loss of more than 7,000 jobs, with the utility, mining, construction, and state and local government sectors being hit the hardest.
Additionally, the bureau concluded that Montana businesses will lose more than $1.5 billion in sales and that more than 10,000 people will leave Montana in search of better economic opportunities.
The Clean Power Plan isn’t the only bad news for Montanans. The Electric Reliability Council of Texas (ERCOT), which manages the electric grid for most of Texas, has also warned the rule will create major challenges for the Lone Star State. In combination with other EPA-proposed regulations, Texas may lose more than 4,000 megawatts of coal generation capacity (loosely, enough electricity to power 1.5 million to 2 million homes), which will challenge ERCOT’s ability to reliably supply electricity to customers. ERCOT estimates that compliance with the rule will increase energy costs to consumers by up to 16 percent by 2030.
Environmental regulations like the Clean Power Plan may warm the hearts of the politically powerful, but the rule leaves states with limited compliance options, major reliability concerns and comes with a hefty price tag. Unfortunately, it won’t be the environmental aristocracy in D.C. that gets stuck paying the bill.
Simmons, Ph.D., is a professor of political economy and director of the Institute of Political Economy at Utah State University. Jensen is a graduate student in economics at Utah State University and a policy analyst at Strata, an energy and environment research center based in Logan, Utah. Simmons is also president of Strata.
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