By Rob Port | Watchdog.org North Dakota Bureau
BISMARCK, N.D. — When the U.S. Supreme Court ruled the EPA had overstepped when it failed to consider the costs of regulations related to mercury emissions, many heralded it as a victory against bureaucratic excess. But North Dakota leaders say the ruling is coming years after damage from the regulations is done, though they are hopeful the ruling will help deter other EPA regulatory schemes.
“EPA refused to consider whether the costs of its decision outweighed the benefits,” Justice Antonin Scalia wrote in a 5-4 majority opinion in Michigan vs. the EPA. “The Agency gave cost no thought at all, because it considered cost irrelevant to its initial decision to regulate.”
“EPA must consider cost — including cost of compliance — before deciding whether regulation is appropriate and necessary,” he continued.
Damage already done
“North Dakota was one of the states that challenged this rule,” Attorney General Wayne Stenehjem, a Republican, told Watchdog. “But ND sources have already installed the required controls, not wanting to ignore the rule in the event the Court affirmed EPA’s position, so it’s hard to say what the effects will be on our state in the near term.”
Public Service Commissioner Randy Christmann, a Republican, said he’s “frustrated” because the courts weighed in years after the costs of the regulations have already hit power companies and their customers.
“I get so frustrated with how our federal government and our federal court system work,” he told Watchdog. “In this case they impose a rule like this, it takes years to litigate it, in the mean time companies have paid hundreds of millions of dollars per plant. It’s all coming back and being imposed on the ratepayers. And now after that work is done and the money spent, the Supreme Court points out that they should have been taking cost into consideration so they overturn it.”
“The reality is this rule was issued three years ago and most of the compliance is done,” Julie Fedorchak, another Republican member of the PSC, told Watchdog. “I know because we’ve approved a lot of the changes. North Dakota customers are already today paying for those improvements.”
Christmann noted the Big Stone II project in South Dakota, a coal plant owned by Otter Tail Power and the Montana-Dakota Utilities Company.
“They’ve already spent hundreds of millions. They may as well finish it now even though the Supreme Court has ruled that it was an unconstitutional overreach.
“The EPA already won,” he continued. “They imposed that cost because it took years to get an answer from the supreme court.”
Hope for carbon rules
The Supreme Court ruling may have benefits for another regulatory fight, though. North Dakota leaders say that if the EPA is forced to consider costs in new carbon regulations it could be a win for coal producers and energy customers.
“The decision may be most important for how it will impact future EPA rules and cases challenging those rules,” Stenehjem said. “It is a win for rational decision-making, I hope signaling that the Court will carefully scrutinize EPA’s upcoming Clean Power Plan Rules.”
Christmann called the potential impact of those rules, which seek to limit carbon emissions from power plants, “devastating.”
“When they come out with that CO2 ruling if it is even close to the initial proposal that they released last year it is going to be devastating,” he said. “A bunch of coal plants will have to be mothballed.”
But Fedorchak said the Supreme Court’s recent ruling could weaken the EPA’s case.
“It provides more hope for our coal industry because the cost issue is central to the retirement of the coal plants,” she said. “If you don’t have to factor in costs you can retire coal plants across the board.”
The emission limits proposed by the EPA for power generation in North Dakota allow no more than 1,817 pounds of carbon dioxide per megawatt hour by the year 2020, and 1,783 pounds per megawatt hour by 2030. Those limits were released for public comment earlier this year.
Coal-fired power plants average about 2,250 pounds per megawatt-hour. The EPA last year began taking public comment on a proposed cap of 1,100 pounds of carbon dioxide emissions per megawatt-hour of electricity generated for new power plants.
In June 2014, Commissioner Brian Kalk, the third member of the PSC, told Watchdog the “potential impact” of these regulations” could be “catastrophic.”