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Altered Mercury Emissions Rule Is Latest Display of EPA's Changed Mindset



April 19, 2020 - The U.S. Environmental Protection on April 16 released a revised final rule on mercury pollutants and air toxics control for coal-fired and oil-fired power plants that now excludes the broader value of health and environmental improvements not expressly derived from those pollutants—a move agency chief Andrew Wheeler says “foreshadows” its changed approach in assessing benefits and costs to industry of future mandates.

EPA is not scrapping the Obama Administration's 2015 limits on those emissions, said Wheeler, who added they will remain in place for current and future power-plant compliance. "We believe it is appropriate to keep the [existing mercury] regulation in place," he said.

But the new rule replaces provisions that counted the benefit of reduced overall particulate matter in the rule's cost-benefits analysis, estimated at $9 billion for both categories annually, Wheeler said.

The agency will use the new scaled-back approach to determine costs and benefits to all Clean Air Act "targeted pollutants," he said.  A regulation outlining this is expected within weeks.

The change could create cost-recovery problems for utilities, most of which have already made changes to meet previous requirements.

Environmental groups say they will sue over the change, claiming EPA's cost figures dating back to 2011 don't reflect savings from new technology and that the revised legal-basis for the mercury standard and others could enable a court to eliminate those rules altogether.

New Justification

The new rule now assesses benefits to be just $6 million per year compared with a $9.6-billion annual industry cost. The Obama rule relied too heavily on its co-benefits, said the EPA administrator, a former coal industry lobbyist, attributing 99% of the annual total dollar-value benefit to particulate reduction. “It’s ok to achieve co-benefits but not as a primary justification,” he said.

Sen. Joe Manchin, a Democrat from West Virginia, said the revised mercury rule points to “vastly misplaced” priorities, especially with added respiratory risk from the current COVID-19 pandemic, noting also the huge industry compliance investments already made.

Wheeler argued that using co-benefits to justify regulation of a single pollutant such as mercury “not only is dishonest but counter to the Clean Air Act.”

Meanwhile, utilities had been concerned that EPA would rescind the mercury rule, or still may do on in the future despite Wheeler's stated intention to keep it, with impact on huge investments made to meet it as well as other clean-air emissions mandates.

"TVA has substantially met the requirements in the rule," says Tennessee Valley Authority spokesman Scott Brooks. "Revisions to the rule would not change our course."

Melissa McHenry, external relations manager for utility giant AEP, which has power operations in five states, says such a move also "will create new issues," contending that state utility commissions may not allow utilities to recover investments and ongoing operational expenses for them.

While "we disagreed with provisions of the rule when it was being promulgated, our controls are in place and compliance is being achieved,"  she says. "We can’t isolate the ... rule costs completely from other compliance activities."

Since 2000, AEP has invested nearly $8.8 billion in environmental equipment retrofits at its coal-fired plants, says McHenry, with "much of this" related to mercury-rule compliance. It also permanently retired nearly 7,300 MW of coal-fueled generation in 2015 and 2016. She says plant mercury emissions have dropped 97% since 2001.

New Uncertainty?

A spokesman for Edison Electric Institute, which represents investor-owned utilities, says "repeal of the underlying legal basis for [the rule] introduces new uncertainty and risk for companies that still are recovering the costs for installing those control technologies."

Former EPA Administrator Carol Browner called the policy a “sinister trojan horse that will undermine how EPA considers science and evaluates economic benefits of regulations in the future."

The new EPA rule "likely goes the furthest in limiting health benefit cost calculations in relation to costs of implementation and compliance," says Megan Houdeshel, a partner at Colorado-based law firm Dorsey & Whitney.  "Whether this cost-benefit analysis is applied to other regulatory actions under the Clean Air Act will be important to watch during the coming months before the election."