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Environment & Energy Report

Court Battle Seen After EPA Rescinds Mercury Limit Rationale (1)

April 16, 2020, 3:54 PMUpdated: April 16, 2020, 10:39 PM

The EPA’s decision to ax the legal basis for setting limits on the amount of mercury air pollution allowable from power plants is likely to get tied up in lawsuits, according to interviews with multiple attorneys.

The Environmental Protection Agency’s rule, released Thursday, will maintain Obama-era limits on mercury and other toxic air pollutants—also known as MATS—but rescind the legal basis for the 2012 rule (RIN 2060–AP52; RIN 2060–AR31).

The actual mercury limits affect mostly coal-fired power plants, nearly all of which have met the standards after spending millions of dollars to install controls.

But President Barack Obama’s EPA relied too heavily on justifying its rule by pointing to the ancillary benefits, or co-benefits, of cutting mercury emissions, according to EPA Administrator Andrew Wheeler. And the EPA now says the costs to power plants of the technology to reduce mercury isn’t justified by the health benefits strictly from reducing the mercury.

The Obama EPA set “the cost benefit scales” in such a way “that any regulations, regardless of costs, could always be justified,” Wheeler told news reporters in a conference call ahead of the rule’s release.

‘Orders of Magnitude’

Wheeler’s rule will only account for the direct costs and benefits of controlling mercury air pollution from power plants; it will stop giving any weight to the co-benefits of the technology used to cut mercury pollution—such as the cuts in airborne fine particle pollution, linked to cardiac and respiratory illnesses, also captured in the technology that cuts mercury emissions.

Wheeler claimed that the costs of imposing the 2012 limits are “three orders of magnitude higher than the benefit.”

The EPA head also claimed that the agency is now putting in place “an honest accounting mechanism” that will balance the costs of controlling mercury or any other targeted pollutant with the benefits to human health, or other environmental benefits, derived specifically from reducing that pollutant.

“The co-benefits should never be the driver of regulations” like the Obama EPA did with the mercury standards, Wheeler said.

Mercury emissions from coal- and oil-fired power plants mix with rainfall and land back on land and water, where they are converted to methylmercury. The toxin reaches concentrations in fish that are up to 100 million times greater than concentrations in water, scientists say. People in the U.S. are then exposed to the neurotoxic metal by eating fish and shellfish.

Attorneys tracking the efforts say the agency’s latest action will result in protracted litigation, and market uncertainty about the fate of the mercury regulations.

‘Expect We Will See Challenges’

The Clean Air Act requires the EPA to determine that the standards for power plants are “appropriate and necessary” before imposing limits on toxic air pollutants like mercury.

According to Wheeler, the EPA’s action (RIN: 2060–AT99) Thursday will conclude the 2012 limits were neither appropriate nor necessary because of the reliance on co-benefits.

Wheeler said the new analysis simply “corrects flaws” in the previous finding, while maintaining the power plant limits imposed eight years ago.

“Let me be clear under this action, no more mercury will be emitted into the air than before. Anyone suggesting so is either purposefully misreading this action or simply does not understand it,” Wheeler added.

Thomas Lorenzen, a Clean Air Act attorney with Crowell & Moring LLP, said he is not persuaded by Wheeler’s arguments.

“I expect we will see challenges from environmental groups, and quite possibly utilities, that will argue that EPA should not reverse its appropriate and necessary finding because it places MATS at risk,” said Lorenzen, a former Justice Department attorney.

Lorenzen said he expects some utilities will argue that the EPA, in considering the MATS rule’s costs and benefits, should look at future costs, such as operation and maintenance costs, and “not at costs that are already sunk and can’t be recovered.”

National utility groups have been exhorting the EPA to retain the rule, saying they already have invested more than $18 billion in pollution controls. In 2018, they told the agency that state public utility commissions are already reviewing the costs of these controls that utilities passed on to customers via higher rates. They also noted that coal-fired power plants that have been retired or decommissioned since 2012 can’t be revived.

“The repeal of the underlying legal basis for MATS introduces new uncertainty and risk for companies that still are recovering the costs for installing those control technologies,” the Edison Electric Institute wrote in a statement Thursday. The group, known as EEI, represents the nation’s investor-owned electric utilities.

Duke Energy said they support keeping the 2012 standards in place, noting they have reduce mercury emissions from their coal-fired fleet by 95 percent since 2002.

Neither Duke Energy nor EEI responded when asked whether either would challenge Thursday’s regulation.

Wheeler, however, dismissed EEI’s concerns about uncertainty, saying “they are exaggerating.”

“I don’t buy that,” Wheeler said, adding that the agency made sure that emissions won’t increase by conducting a risk and technology review of the standards.

That review, which the Clean Air Act requires EPA perform eight years after a standard is set for a toxic air pollutant, ensures the controls remain in place.

‘No Basis’

The latest rule could also possibly lead to the scrapping of the mercury standards entirely, Lorenzen said.

“It’s also certainly possible that some interested parties will challenge the EPA action, arguing that there is no basis for maintaining the mercury standard itself once the ‘appropriate and necessary’ finding is reversed,” Lorenzen said.

While the vast majority of power plants have already complied with the Obama-era mercury standards, certain coal producers, such as Murray Energy Corp., have blamed the EPA’s stringent mercury limits for causing a decline in coal-fired generation, and thereby consumption.

Cody Nett, Murray Energy’s assistant general counsel at the time, asked the EPA last year to take the “reasonable action” of rescinding the mercury limits in response to withdrawing the legal foundation. Murray Energy didn’t respond Thursday when asked whether they would challenge the rule.

Environmental groups, including Earthjustice, the American Lung Association, and the Natural Resources Defense Council, have indicated they plan to sue the EPA for endangering public health. They said the EPA’s move to remove the legal basis for the mercury limits could let courts throw out the standards themselves, allowing power plants to operate without controlling for toxic air pollutants.

“EPA says it is not appropriate and necessary to cut brain poisons like mercury and lead, carcinogens & acid gases from their largest industrial source—only by ignoring real world benefits to Americans & grossly overstating costs to industry,” John Walke, NRDC’s clean air director, said in a message.

“EPA’s rule is a dumpster fire of illegal rubbish, and NRDC looks forward to taking the agency to court so judges can put out the fire that EPA started,” Walke said.

‘Cooking the Books’

Earthjustice staff attorney James Pew said the legal nonprofit plans to sue the agency for “cooking the books” to justify its final rule by relying on an outdated cost-benefit analysis that underestimates the actual benefits of reducing mercury from the mostly coal-fired electric power sector, while overstating the costs.

In a regulatory analysis in 2011, the EPA estimated that the power industry would spend between $7.4 billion and $9.6 billion to comply with the 2012 mercury standards, but said the direct benefits of reducing mercury—such as eliminating the adverse health effects on pregnant women, fetuses, and infant children from consuming freshwater fish contaminated by methylmercury— only amounted to between $4 million and $6 million.

At the time, the EPA estimated the side benefits of reducing fine airborne particle pollution, which is linked to severe respiratory and cardiac diseases, to range from $36 billion to $89 billion. Wheeler says the side benefits, or co-benefits, accounted for 99% of the environmental and health benefits under the Obama-era rule.

In the rule released Thursday, the EPA used the same projected costs from the 2011 analysis, disregarding new information that showed the costs to be less than a quarter of the original projection, based on industry’s compliance with the 2012 standards. The agency also is not expected to update the benefits of mercury reductions by using or conducting more recent studies.

Wheeler said the EPA “typically doesn’t do cost-benefit analysis for these type of rulemakings,” but stopped short of elaborating further.

Earthjustice also argues the EPA should consider the benefits of reducing other toxic air pollutants, such as arsenic and chromium, that the 2012 rule also targeted. The EPA has paid “lip service” to the other pollutants, “but there is no way to tell where the benefits of reducing other pollutants played into the agency’s determination,” Pew said.

Future Actions

Jeff Holmstead, a Clean Air Act attorney and partner with Bracewell LLP, said the groups challenging the agency’s rule would have a difficult time showing they even have standing to bring a court challenge.

“The mercury standards remain in place and the emissions have declined. I think the groups will have a difficult time proving they are harmed by a future action. I don’t see anyone has having the standing in cour to challenge the rule,” said Holmstead, who served as the EPA’s assistant administrator for air and radiation under President George W. Bush.

Some legal experts said scrapping the legal foundation for mercury limits would constrain future Democratic administrations from strengthening limits on mercury or using cobenefits to support other air regulations.

Amy Sinden, a law professor at Temple University, said the Trump administration has created a legal hurdle by not considering cobenefits. Future regulators would need to show they have a good reason for changing that position, she said. Those regulators would have to justify “even why they have reopened the finding,” Sinden said.

Crowell & Moring’s Lorenzen said if the courts decide to toss out the current standards because the EPA scrapped the legal foundation, future Democratic administrations will have no choice but to write new, more stringent mercury standards.

They will “have to start from scratch,” Lorenzen said.

—With assistance from Jennifer Dlouhy (Bloomberg).

(Updated with reaction from the power industry and EPA Administrator Wheeler's remarks)

To contact the reporter on this story: Amena H. Saiyid in Washington at asaiyid@bloombergenvironment.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Anna Yukhananov at ayukhananov@bloombergenvironment.com; Rebecca Baker at rbaker@bloombergenvironment.com

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