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The Ongoing Struggle to Correct the Damage of Government Overreach

 

 

January 3, 2019 - It wasn’t all that long ago that coal fueled more than half of the nation’s electricity generation. Coal’s retreat from that position hasn’t come by accident, nor has it come without consequences.


While some pundits have pointed to the marketplace as the cause of coal’s slide, that’s a convenient tale that barely hints at the real story. Just last week, the U.S. Environmental Protection Agency (EPA) provided a timely reminder of the truth.


The EPA announced that it would reassess the Mercury and Air Toxics Standards (MATS) put in place in 2012. MATS, as Hal Quinn, National Mining Association (NMA) President and CEO, pointed out, was “perhaps the largest regulatory accounting fraud perpetrated on American consumers.”

 


When the EPA proposed MATS, it estimated the annual compliance costs at $9.6 billion. To justify this enormous cost, EPA tried to double-count the benefits it would produce while suppressing the effect it would have on the coal fleet. EPA estimated that the rule would result in less than 5 gigawatts (GW) of coal retirements. In reality, it pushed nearly 10 times as much coal capacity off the grid. As for benefits, those have come in the range of just $4-$6 million per year. For every 60 cents in potential benefits, American households and businesses have paid $960 in costs – an absurd cost to benefit ratio that should have stopped the rule before it ever left the ground. Unfortunately, it didn’t.


NMA and others challenged the MATS rule and the Supreme Court ultimately found that EPA had adopted MATS without appropriately considering the costs, reversing the decision and sending it back to the D.C. Circuit Court. But despite the legal victory, the damage had already been done. Utilities had been forced to scramble to come into compliance and decisions about the future of plants had already been made. For many plant operators, shutting down coal plants was the more cost-effective decision that incurring the truly extraordinary costs of installing control technology that would only make their plants less efficient.


MATS may have been the centerpiece of the last administration’s regulatory onslaught on the coal industry but it was just one piece of a carefully-orchestrated symphony of market manipulation. The MATS rule, the Clean Power Plan, renewable fuel standards, New Source Performance Standards, retroactive vetoes of mining permits and hefty federal subsidies for competing fuels were all put in place to dethrone king coal. This laundry list of rules and subsidies is now conveniently called market conditions by coal’s critics, but make no mistake, these were government decisions – decisions that have weakened the reliability of U.S. electric grid and pushed tens of thousands of miners out of work. 


Recall that in 2011, the year before the MATS rule became law, the Mine Health and Safety Administration (MHSA) reported 143,940 coal miners employed. By the close of 2016, just 81,875 of those miners were left working. More than 62,000 miners had lost their jobs. Despite the Trump administration’s efforts to take the government’s foot off the chest of the industry and allow it to compete again, the damage done by MATS and the regulatory onslaught it epitomized continues to reverberate.

 

EPA’s decision to revisit the rationale behind the MATS rule is an important effort in recognizing and correcting prior government overreach. But it must also serve as a reminder that the coal industry and the tens-of-thousands of jobs and countless communities it supports are still waiting to compete in a marketplace that begins to resemble something free and fair.