Monday, September 22, 2014
Risk Policy Report - 01/03/2012

Limited EPA Mercury Data May Bolster Industry Challenge To Utility MACT

Posted: January 3, 2012

EPA's utility air toxics rule is intended to curb mercury and other emissions but the agency was largely unable to quantify the benefits of reduced air toxics and instead is touting co-benefits provided by reduced fine particulate matter (PM2.5), a move that may fuel legal and political challenges to EPA's finding that the rule is "appropriate and necessary."

EPA finalized its maximum achievable control technology (MACT) standard for coal- and oil-fired electric generating units (EGU) on Dec. 16, touting the rule as a victory for public health in the reduction of mercury, acid gases, metals and other hazardous air pollutants (HAPs) that may contaminate ambient air and many watersheds. Relevant documents are available on (Doc. ID: 2385613)

Underlying the rule is a key determination under Clean Air Act section 112(n)(1)(A) which states that EPA produce a study on "the hazards to public health reasonably anticipated to occur" from air toxics emissions from power plants, and that EPA regulate such plants "if the Administrator finds such regulation is appropriate and necessary after considering the results of the study."

Outgoing Clinton EPA officials issued a section 112 determination in December 2000, but the Bush EPA then sought to reverse the finding in order to issue a trading rule under section 111 of the air law.

The U.S. Court of Appeals for the District of Columbia Circuit, however, vacated the rule, saying the Bush EPA conceded that it failed to prove the "specific findings" necessary for delisting power plants from section 112. As a result, the court said utilities could not be delisted as a source category under section 112 and therefore could not be regulated under section 111.

The Obama EPA subsequently agreed to a deadline for crafting a replacement MACT under section 112, and in the final rule reaffirms the 2000 finding that it is both appropriate and necessary to regulate both mercury and non-mercury toxics. Among other things, EPA found that mercury from power plants continues to pose a hazard to up to 28 percent of watersheds, resulting in exceedances of the agency's mercury reference dose, the amount below which the agency does not anticipate adverse non-cancer health effects if consumed daily over a lifetime.

EPA also found that mercury emissions from power plants are reasonably anticipated to pose a hazard to public health even after implementation of a host of other air rules for power plants, including the agency's Cross-State Air Pollution Rule.

But the agency was largely unable to quantify the benefits of reducing mercury and other HAPs even though the rule seeks to regulate them.

Instead, the agency estimated that the rule -- expected to impose $9.6 billion in annual costs -- provides $37 billion to $90 billion in benefits in 2016 largely from reduced PM2.5 emissions that curtail premature deaths, asthma attacks and other maladies. EPA analysis shows the agency estimated that only about $6 million of the total economic benefits can be attributed to mercury reductions -- due to IQ improvements.

Industry and other sources say the cost-benefit analysis may bolster their efforts to challenge the "appropriate and necessary" finding in an almost certain court challenge.

"They have a problem when it gets to court," an industry source says, noting that the Obama EPA will have to defend its finding in the face of the Bush EPA in the past finding that section 112 regulation was unnecessary and current analyses showing the risks are low. The source also notes that EPA already has a program to reduce PM2.5 -- namely, national ambient air quality standards (NAAQS) -- which raises the question of whether a MACT program is needed. "I think this is their biggest legal vulnerability," the source says.

A second industry source concurs, saying that EPA's approach in the rule creates "somewhat of an inconsistency with what EPA is doing to justify this rule." The source also argues that EPA in the final rule does not provide adequate justification for its decision to regulate acid gases from power plants and only provides minimal justification for its decision to regulate metals from such sources.

The Utility Air Regulatory Group, an industry organization that challenged the Clinton EPA's original listing decision, says in a Dec. 8 presentation to the White House Office of Management and Budget (OMB) that the use of PM2.5 benefits "[g]ives EPA a shield to build a complex web of many different rules, when EPA could provide almost all of those purported health-protective benefits with just a single rule: the PM2.5 NAAQS." The presentation also notes that EPA does not quantify direct benefits from reduced metals or acid gases in the rule.

EPA's cost-benefit analysis may also bolster political effort to challenge the rule. Sen. James Inhofe (R-OK), the ranking Republican on the Senate environment committee, has already indicated he will file a petition under the Congressional Review Act seeking to block the regulation.

Inhofe has also sought an Inspector General study into the agency's scientific review procedures of its mercury risk assessment. He also recently wrote EPA Administrator Lisa Jackson expressing concern about the data underpinning the MACT rule, in which he faults EPA's process for review of its risk assessment of mercury as a HAP for the "appropriate and necessary" finding.

But EPA and environmentalists are defending the mercury benefits that the rule provides and deflecting industry criticisms of the appropriate and necessary finding. As part of the rule, the agency rejects an industry petition to delist power plants as a regulated source category under section 112 and responds to criticism that the appropriate and necessary finding is improper.

In the response to comments section of the rule, EPA writes that commenters argued that -- for the last 40 years -- "EPA has come to a single, repeated conclusion that HAP emissions from EGUs pose little or no risk to public health," and that EPA's "newfound concern" about HAPs is based on PM2.5 and other nonhazardous pollutants. Commenters more broadly say that, for these and other reasons, listing under Section 112 is unlawful.

But EPA says that "the commenter seems confused about the basis for the Agency's appropriate and necessary finding because it maintains that the EPA made the appropriate and necessary finding based on the health co-benefits attributable to PM reductions that will be achieved as a result of the Agency's regulation of HAP emissions from EGUs. Nowhere in the May 2011 proposal does EPA state that it based the appropriate and necessary finding on hazards to public health attributable to PM emissions. The commenter's allegation lacks foundation."

"The appropriate and necessary finding unmistakably focuses on the hazards to public health and hazards to the environment associated with HAP emissions from EGUs," EPA writes in the rule."

And according to an internal EPA memo reviewed by Inside EPA, the agency says that if officials were able to quantify the full benefits of reducing mercury emissions, the benefits would be even higher than the benefits EPA has calculated. "Unfortunately, we cannot monetize all of the health and environmental benefits associated with reducing mercury and other air toxics due to data limitations," the memo says. "If full accounting was possible for all of the benefit categories, the benefits would exceed the costs by an even greater amount than we currently estimate."

The memo also notes that EPA was only able to quantify one health endpoint for mercury -- IQ -- and that it is considered by the Science Advisory Board to underestimate benefits. It also notes that low-income African-American and some Native American populations are more exposed to mercury than other populations, and that EPA's use of qualitative analysis of the health effects of reduced toxics is consistent with OMB guidelines for when important costs and benefits are "too difficult to quantify or monetize."

And Lynn Goldman, EPA's toxics chief during the Clinton administration and now a professor at the George Washington University School of Public Health, argued the agency was justified in its approach because air toxics are often emitted in the form of PM, making it difficult to distinguish the benefits. "It's not like they're different things," Goldman told a Dec. 21 conference call hosted by Environmental Defense Fund.

She added that adverse health effects caused by PM can be compounded by mercury exposure. The argument that the health benefits stem more directly from PM reduction over cutting mercury emissions is often a "false dichotomy" because toxic metals are frequently emitted in particulate form," Goldman said.

Industry sources say that these and other arguments show EPA is seeking to rebut criticisms of the findings and its justifications for the rule, with the second source noting that because the effects of mercury emissions are subtle, it is difficult to quantify them despite EPA's best efforts. -- Bobby McMahon

Risk Policy Report - 01/03/2012, Vol. 19, No. 1