Fixing EPA’s ELG Rule

In November, 2015, EPA finalized one of its many “War on Coal” regulations – the revised Effluent Limitations Guidelines (ELG) rule that governs wastewater discharges from coal-fired power plants.  This stringent rule is already having impacts on the coal fleet.  For example, two utilities in Indiana have cited the rule in their decisions to retire seven coal-fueled electric generating units.  The total potential cost for these two small utilities alone is over $800 million.  Southern Company has stated that this rule and its companion coal combustion residuals rule will cost $1.8 billion, while American Electric Power has stated that its costs could be as high as $550 million for the ELG rule alone.

One might think the benefits justify these costs.  However, even EPA’s cost analysis shows that its annual cost estimate of up to $480 million per year exceeds EPA’s projected water quality benefits (the purpose of the ELG rule) of $150 million – $180 million. Only by including the now-withdrawn social cost of carbon for air emissions was EPA able to estimate benefits exceeding the ELG rule’s costs.

EPA can take five steps to fix this.  First, the Agency can grant the pending petitions for reconsideration of the ELG rule, which means that EPA is likely to change major aspects of the rule.  Second, EPA can petition the Fifth Circuit Court of Appeals, where the rule is in litigation, to suspend the litigation and return the rule to the Agency.  In the meantime, EPA can suspend all of the ELG requirements until it can rewrite the rule. Fourth, EPA can provide guidance to the states emphasizing that they have the flexibility to grant utilities as much as five extra years to comply with the rule.  And finally, EPA can conduct a new rulemaking to correct the problems with the rule.  By following these steps, EPA will have time to develop a reasonable ELG rule that protects both water quality and public health.