On December 27, 2018, the Environmental Protection Agency (EPA) announced its proposal to revise its response to Michigan et al. v. Environmental Protection Agency etThis case held that EPA erred when it did not consider cost in its determination of whether regulation of hazardous air pollutant (HAP) emissions from coal and oil-fired electric steam generating units (EGUs) is “appropriate and necessary” under the Clean Air Act (CAA) section Under the revised action, EPA departs from its prior finding that Mercury and Air Toxics Standards (MATS) regulation of these EGUs is “appropriate and Instead, EPA reached this apparently antithetical decision based on the immensity of compliance costs relative to the benefits achieved by the reduction of HAP EPA now believes that the “cost reasonableness” test utilized by the 2016 Supplemental Finding did not adequately meet the statute’s requirement to fully consider costs and is an unreasonable interpretation of CAA section 112(n)(1)(A) post-Michigan. The cost reasonableness test was developed by EPA in response to D.C. Circuit Court opinions, such as Lignite Energy Council v. EPA and Sierra Club v. Costle, which preclude adoption of standards with associated costs that are exorbitant, excessive, or unreasonable. In other words, EPA’s cost reasonableness test evaluated whether the cost of compliance could be absorbed by industry without compromising its ability to perform its primary function. Under this test, the benefits of MATS regulation of coal and oil-fired emissions from EGUs outweighs the cost of compliance because the industry would be able to absorb those costs.
EPA’s decision could have a significant effect on the future regulation of air pollution.