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Michigan case pits health against power reliability

Melissa Nann Burke
Detroit News Washington Bureau

Washington — A case involving Michigan before the U.S. Supreme Court Wednesday could have multibillion-dollar consequences for the power-generating industry, stoking concerns about electricity reliability in the state and the region.

The Michigan Attorney General’s Office is representing 21 Republican-controlled states when the High Court hears arguments Wednesday in Michigan v. EPA concerning federal rules on pollution at power plants. They say coal- and oil-fired plants’ compliance with federal restrictions on emissions of mercury, arsenic and other toxic pollutants is too costly for utilities and, ultimately, ratepayers.

The U.S. Environmental Protection Agency’s regulations, which take effect next month, factored into the planned retirement of dozens of coal-fired generators nationwide this year and next. Some operators chose to close their dirtiest facilities rather than invest in pollution-control equipment to meet the stricter standards.

“This rule drives the amount of flexibility that the utilities would have had to retire them later,” said Peter Manning, chief of the Environmental, Natural Resources and Agriculture Division of the Michigan Attorney General’s Office.

Coal produced half of Michigan’s electricity in 2014, causing the regional grid operator and others to raise concerns over the state’s shrinking electric reserves.

The 21 states have sided with trade groups for utilities and coal suppliers. They want the justices to overturn a ruling by the U.S. Court of Appeals for the D.C. Circuit, which last year said the EPA properly looked at health risks — not compliance costs — in deciding that mercury and other hazardous pollutants should be regulated more strictly.

In its brief to the court, the EPA says it has authority under the Clean Air Act to regulate power plants when their emissions pose a threat to public health or the environment, and when controls exist to reduce emissions.

The agency determined the rules’ benefits will exceed the costs by a 3-1 ratio, noting that coal- and oil-fired power plants are the largest domestic source of mercury emissions, which settle in lakes and streams.

“There seems to be a coal and power-plant owners’ approach here to file a lawsuit against everything — throw the spaghetti against the wall and see what sticks,” said Howard A. Learner, founder of the Chicago-based Environmental Law & Policy Center who teaches environmental and energy law at the University of Michigan Law School.

“It’s time for the long-delayed mercury-reduction standards to finally take effect, so that the public health benefits in terms of protecting children and our Great Lakes can be achieved.”

Fetuses and children are especially vulnerable to mercury exposure, which is highly toxic and can affect neurological development. The EPA expects the rules to save between $37 billion and $90 billion a year in health and environmental costs.

Public health officials warn against eating fish from most Michigan waterways and the Great Lakes due to the level of mercury contamination — roughly half of which comes from coal-fired power plants, according to the National Oceanic Atmospheric Administration and the EPA.

“There’s nobody in the state that wants this health hazard present for women,” said Manning. “The question is, what can do we do that’s effective but also isn’t completely outrageous for the cost-benefit analysis.”

Robert Sedler, a constitutional law professor at Wayne State University Law School, said it’s difficult to predict how the justices will decide the case on the regulations.

“The rule is that if the language of the statute is absolutely clear, the administrative agency has to follow it. But if the language is ambiguous — which is often the case — the agency must interpret it,” Sedler said. “A lot of it depends on the statute and on the justification that the administrative agency gives.”

If the Supreme Court tosses out the EPA’s toxics rule, Michigan’s two largest utilities are unlikely to alter plans to retire a total nine aging coal-fired plants in 2016, company officials said.

CMS Energy Corp. is retiring seven units by April 2016 under an agreement with the EPA, spokesman Daniel Bishop said. The closures would occur regardless of the case’s outcome, in part because Michigan also has restrictions on mercury emissions, he said.

At DTE Energy, the EPA’s rules were “one of many factors” in the utility’s decision to retire two units at the Trenton Channel Power Plant, a spokeswoman said.

“Should the Supreme Court vacate the mercury and acid gas limits, DTE Energy will probably stay the course,” DTE’s Erica Donerson said.

The EPA’s toxics rule applies to more than 50 boilers at 21 power plants in Michigan, according to the state Department of Environmental Quality. The state has rules in effect mirroring the federal regulations, and Michigan’s rules aren’t being challenged.

“If the federal rules are no longer valid, the state rules remain in effect,” DEQ spokesman Brad Wurfel said.