Mercury and air toxics standards

State environmental policy
U.S. environmental policy
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In 2011, citing its authority under the Clean Air Act, the U.S. Environmental Protection Agency (EPA) issued a rule (commonly known as the MATS rule) limiting the amount of mercury and other toxic air pollutants emitted by power plants. Mercury and air toxics standards (MATS) target mercury and other hazardous pollutants from over 580 coal and oil-fired power plants nationwide. The MATS rule was issued by the Obama administration as part of its larger policy limiting emissions from coal-fired power plants.

Proponents of the rule argued that it will produce health benefits of $37 billion and $90 billion each year in the form of fewer premature deaths, heart and asthma attacks. The total cost to the power plant sector is estimated at $9.6 billion each year, according to the EPA. In their messaging, opponents of the rule, including 21 states and industry groups, called the policy a war on coal that will lead to plant closures and job losses. These opponents argued that limits on mercury emissions will produce few health benefits to justify the rule's $9.6 billion annual cost.

Background

In December 2011, the Environmental Protection Agency (EPA) finalized a rule—commonly known as the MATS rule—limiting the allowable amount of mercury and other pollutants from coal and oil-fired power plants under the Clean Air Act. The Clean Air Act establishes regulatory programs for both stationary sources (such as power plants and refineries) and mobile sources (such as passenger cars and trucks) of air pollutants. Among the act’s regulatory programs is the National Emissions Standards for Hazardous Air Pollutants Program—commonly known as the Hazardous Air Pollutants Program. In establishing the program, Congress identified approximately 180 hazardous air pollutants and directed the EPA to draft regulations governing their emissions from stationary sources. Among these pollutants is mercury, a chemical element found in the emissions of coal and oil-fired power plants.

As of 2014, 585 power plants fell under the MATS rule. These power plants contained 1,400 oil and coal-fired electric-generating units, which produce the mercury and other pollutants. As of 2014, the electric-generating units affected by the MATS rule represented 29.6 percent of the 4,718 coal and oil-powered electric-generating units in U.S. power plants. In 2011, the EPA argued that power plants account for 50 percent of mercury emissions, 75 percent of acidic gases, and between 20 percent to 60 percent of toxic metal emissions in the United States. All coal and oil-fired power plants with a capacity of 25 megawatts or greater are subject to the standards. Of the 5,138 coal and oil-powered generators in 2011, 1,510 generators—41.6 percent—had a capacity of 25 megawatts or greater. Until 2011, no federal standards existed limiting mercury emissions from power plants existed, though standards existed for municipal waste combustors and medical waste incinerators.

Scope

St. Clair Power Plant, a coal-fired power plant in Michigan

The scope of the rule involves the extent to which a certain subcategory of stationary sources covered under the Clean Air Act can be regulated to reduce their mercury emissions. Proponents of the rule argued that mercury emissions from coal and oil-fired power plants have been overdue for regulation since Congress passed the Clean Air Act Amendments of 1990 and that the rule is necessary to protect public health and the environment. These proponents contended that the rule will result in health benefits such as fewer asthma attacks, fewer hospital visits, and fewer premature deaths. Further, proponents argued that the EPA acted appropriately and necessary under the Clean Air Act not to consider the costs of its rule in the agency’s initial decision to regulate power plants for their mercury and other emissions. Opponents of the rule argued that the EPA unlawfully disregarded the consideration of costs when it made its decision to regulate mercury emissions at power plants; opponents argued that the costs of the rule far exceed the rule’s potential benefits. Further, opponents questioned whether regulations like the MATS rule should be made by an administrative agency such as the EPA and not by Congress. Critics of the EPA cited the agency's other regulatory initiatives from 2009 to 2016, such as regulations covering bodies of water and carbon dioxide emissions from power plants, which had been temporarily blocked by federal courts as of January 2017, as evidence that the EPA's decisions are legally questionable.

Cost and benefit estimates

In 2011, the EPA argued that the MATS rule would produce between ancillary benefits of between $37 billion and $90 billion annually by reducing emissions of particulate matter and sulfur dioxide, which are regulated under the Clean Air Act as part of the National Ambient Air Quality Standards rather than under the Clean Air Act's hazardous pollutant program. Proponents of the rule argued that these ancillary benefits would pay for the rule's $9.6 billion annual cost. The benefits would include 11,000 fewer premature deaths, 130,000 fewer asthma attacks, fewer hospital visits, and fewer heart attacks, among others. Opponents of the rule argued that the benefits of solely reducing mercury emissions at power plants is between $4 million and $6 million annually, which would be considerably lower than the rule's annual cost as estimated by proponents. Further, opponents argued that the Clean Air Act already requires the regulation of particulate matter and sulfur dioxide, and that if the EPA seeks to produce the benefits of reducing those emissions, the agency should lower the national air quality standard for those pollutants rather than use the hazardous pollutant program to regulate power plants.

Affected power plants by state

As of 2014, the MATS rule covered 585 power plants in the 50 states (this figure excluded power plants affected in U.S. territories). The map below displays the number of power plants affected by the rule in each state.

Number of power plant affected by MATS by state Scroll over a state to see the number of power plants covered by MATS.

The map below displays the individual facilities covered by the MATS rule.

Political context

The political debate over the mercury and air toxics standards (MATS) rule is part of the larger debate over coal and its use in electricity generation. Republicans as well as coal and electric industry groups have largely opposed the MATS rule while Democrats and environmental groups have largely supported it.

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In their messaging, opponents dubbed the MATS rule as part of the Democrats' and the Obama administration's war on coal. These opponents include congressional Republicans as well as electricity industry representatives and other groups. The term war on coal is a response to a 2008 interview in which then-Sen. Barack Obama said, "If somebody wants to build a coal-fired power plant, they can. It's just that it will bankrupt them." Obama added, "Under my plan ... electricity rates would necessarily skyrocket." Obama was referring in particular to an economy-wide plan to cap carbon dioxide emissions from power plants rather than limits on mercury emissions. His statement was considered by Republicans and industry representatives as an attack on the coal industry and an admission that Democratic environmental policies would negatively affect the energy sector. Republican lawmakers, candidates, and 2012 Republican presidential nominee Mitt Romney used the term war on coal in their campaigns after the EPA finalized the MATS rule.

During the 2014 midterm elections, the war on coal was mentioned in the U.S. Senate races in Kentucky and West Virginia, which contain sizable coal industries. Both the Republican and Democratic Senate candidates in Kentucky and West Virginia criticized the Obama administration's stance on coal, including the EPA's MATS rule. Meanwhile, Democrats in other states as well as environmental groups largely supported the MATS rule.

2016 presidential election

See also: 2016 presidential candidates on energy and environmental policy

In May 2016, Republican presidential nominee Donald Trump referenced the war on coal and the EPA's regulations in an energy speech in North Dakota. Trump did not reference the MATS rule by name, but he argued that President Barack Obama "has done everything he can to kill the coal industry" and referenced "regulations that shut down hundreds of coal-fired power plants and block the construction of new ones." Trump criticized Democratic presidential nominee Hillary Clinton, who stated in 2016, "We are going to put a lot of coal miners and coal companies out of work." Trump proposed to eliminate "any regulation that is outdated, unnecessary, bad for workers, or contrary to the national interest."

During the campaign, Democratic presidential nominee Hillary Clinton promised to continue the Obama administration's environmental policies. As a U.S. senator, Clinton voted yes on a resolution in support of including coal and oil-fired electric generating units from power plants as sources of hazardous air pollutants under the Clean Air Act—a policy identical to the MATS rule. In a televised debate, Clinton said the United States should "move away from coal" and that "we're going to put a lot of coal miners and coal companies out of business." Clinton said she supports federal spending on renewable energy sources to replace coal as a source of electricity generation and replace coal-based industry as a source of employment in coal mining states. Clinton did not reference the MATS rule by name during her campaign, though her campaign website mentioned her support for federal limits on air pollution from power plants.

Legal challenges

See also: Michigan v. Environmental Protection Agency

21 states brought suit against the Environmental Protection Agency (EPA) for the MATS rule in 2013. At issue in the suit was whether the EPA overstepped its legal authority under the Clean Air Act when it refused to consider the costs of regulating mercury and other air toxins from power plants. Under the Clean Air Act, the EPA must take any appropriate and necessary actions (known as the appropriate and necessary standard) to regulate sources of hazardous air pollution. The EPA did not take industry costs into account when it began writing the MATS rule. The agency eventually estimated that compliance costs to power plants would total $9.6 billion annually. Legal challenges to the EPA's actions contended that the EPA violated the Clean Air Act's appropriate and necessary standard by refusing to consider these costs.

Petitioners that challenged the mercury standards in federal court included Michigan (which brought the case), Alabama, Alaska, Arizona, Arkansas, Idaho, Indiana, Iowa (on behalf of Republican Gov. Terry Branstad), Kansas, Kentucky, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, Texas, Utah, West Virginia, and Wyoming. Other petitioners included industry representatives such as the National Mining Association and the Utility Air Regulatory Group.

Of the 21 states that sued the EPA over the MATS rule, 17 states were Republican trifectas as of January 2016. A trifecta is when one party controls the office of the governor, the state House, and the state Senate. Five states—Alaska, Iowa, Kentucky, Missouri, and West Virginia—had split-party control (Kentucky was under split-party control in early 2015 and became a Republican trifecta in late 2015). The map below shows the trifecta status of the states that have sued the EPA over the MATS rule. States in red are Republican trifectas. States in purple are under split-party control.

Trifecta status of states that have sued over the MATS rule

The petitioners challenged the EPA's rule in the United States Court of Appeals for the District of Columbia Circuit in December 2013, arguing that the agency should have considered costs when it made the initial decision to regulate mercury from power plants. The circuit court decided in favor of the EPA, arguing that the agency had acted lawfully when it had postponed cost analysis until the agency set specific pollution standards. The Supreme Court granted certiorari on November 25, 2014, and oral arguments were heard on March 25, 2015. The court consolidated three separate petitions into one case, Michigan v. Environmental Protection Agency.

Supreme Court decision (2015)

Interior of the U.S. Supreme Court

The Supreme Court considered the question, "Did the U.S. Environmental Protection Agency (EPA) unreasonably refuse to consider costs when it decided to regulate hazardous air pollutants, such as mercury, from power plants?" The EPA argued before the court that it did not need to consider costs when it decided to regulate mercury from power plants. On June 29, 2015, the Supreme Court reversed the D.C. Circuit in a 5-4 decision and ruled against the EPA. The court held that the "EPA interpreted §7412(n)(1)(A) [of the Clean Air Act] unreasonably when it deemed cost irrelevant to the decision to regulate power plants." The majority opinion was written by the late justice Antonin Scalia and was joined by Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas and Samuel Alito. Justice Elena Kagan wrote a dissenting opinion and was joined by Justices Stephen Breyer, Ruth Bader Ginsburg, and Sonia Sotomayor.

Majority decision

Scalia argued that the EPA's actions went further than the Clean Air Act's text allowed when the agency refused to consider costs in the initial stages of writing its mercury rules. Specifically, the act allows power plant regulation if it is proved "appropriate and necessary" (as quoted from the Clean Air Act) to regulate power plants. According to Scalia, refusing to consider costs before the EPA decided to regulate mercury from power plants was a violation of the appropriate and necessary standard. "It is not rational, never mind 'appropriate,' to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits," Scalia wrote. Scalia cited the distinction between two programs under the Clean Air Act aimed at limiting hazardous air pollutants: a program for stationary sources more generally, such as refineries and factories, and a program for power plants. The former program does not allow for considering the costs of regulation while the latter program, according to Scalia and the majority, requires the consideration of costs. Scalia and the majority argued that this distinction between the two programs shows that Congress prioritized cost considerations in power plant regulation when it passed the Clean Air Act.

The majority on the court and the four dissenting justices rejected the EPA’s argument that the Clean Air Act made cost considerations irrelevant in any decision to regulate power plants. In administrative law cases, an agency’s regulatory decision can be upheld only on the grounds expressed by the agency when it made its initial decision. As a result, the justices argued that though the EPA's subsequent cost analysis might otherwise support the agency's initial decision, the EPA did not use this analysis as justification for that decision. In other words, if an administrative agency such as the EPA does not rely on a specific piece of evidence in its initial regulatory decision, it cannot cite the benefit of that evidence after the fact.

Scalia concluded the majority opinion arguing that the court would not require a formal cost-benefit analysis for every step of the EPA's actions but would allow the agency to choose how it would consider the costs of the MATS rule.

Dissent

Joined by Justices Stephen Breyer, Ruth Bader Ginsburg, and Sonia Sotomayor, Justice Elena Kagan authored a dissent arguing that the EPA conducted an extensive study of costs throughout the regulatory process. Kagan and the dissenting justices contended that the majority ignored the ways in which the EPA considered costs when writing its rules. Kagan agreed with the majority that the EPA's actions would be unlawful under the Clean Air Act if the agency refused to consider costs at all; Kagan, however, disagreed with the majority's focus on the EPA's initial decision to regulate power plants. Since the EPA ended up considering costs in several later regulatory steps after its initial decision, the agency’s mistake in refusing to consider costs earlier was innocuous, according to the dissenting justices. "The Agency acted well within its authority in declining to consider costs at the opening bell of the regulatory process given that it would do so in every round thereafter," Kagan wrote. Further, Kagan argued that the EPA could not have considered costs with accuracy at the initial stage of the regulatory process and that the EPA followed a process similar to the way it set emissions limits for other sources of hazardous air pollutants over the past 20 years.

Reaction

In response to the ruling, EPA spokeswoman Melissa Harrison stated, "EPA is disappointed that the Supreme Court did not uphold the rule, but this rule was issued more than three years ago, investments have been made and most plants are already well on their way to compliance."

U.S. House Majority Leader Kevin McCarthy's (R-Calif.) official statement praised the Supreme Court's ruling, saying, "The Supreme Court's decision today vindicates the House's legislative actions to rein in bureaucratic overreach and institute some common sense in rulemaking." The president of the National Mining Association, one of the petitioners, also praised the decision, calling the EPA's activities "reckless rulemaking that ignores the cost to consumers."

U.S. Senate Majority Leader Mitch McConnell's (R-Ky.) official statement applauded the ruling, saying, "The ruling serves as a critical reminder to every governor contemplating the administration’s demands to impose more regressive – and likely illegal – regulations that promise even more middle-class pain."

Meanwhile, environmental groups such as the Environmental Defense Fund and the Clean Air Council disagreed with the decision. "While today’s decision is a setback, EPA has ample information to swiftly address the Court’s concerns," said Vickie Patton, general counsel for the Environmental Defense Fund. Joseph O'Minnott, chief counsel for the Clean Air Council, also disagreed with the decision, saying, "It is clear that the benefits to public health and the environment this rule would provide dwarf the costs of implementing it, no matter when in the determination those costs are considered."

2016 stay request

In February 2016, 20 states asked the U.S. Supreme Court to stay the MATS rule. Though the Supreme Court's June 2015 ruling mandated that the EPA perform a cost-benefit analysis, the court did not strike down the rule. The states argued that the 2015 ruling meant that the EPA did not have the authority to impose the MATS rule; thus, the rule is an unlawful exercise of executive power beyond what Congress intended in the Clean Air Act.

On March 3, 2016, Chief Justice John Roberts denied the states' request to stay the EPA’s implementation of the standards. Roberts, who oversees stay requests from the U.S. Court of Appeals for the D.C. Circuit (where the earlier case was heard), denied the states’ request without comment. As a result, power plants would have to continue to comply with the MATS rule.

The states that asked the court for a stay included the following: Alabama, Alaska, Arizona, Arkansas, Idaho, Iowa, Kansas, Kentucky, Michigan, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, Texas, Utah, West Virginia, and Wyoming.

Cost and benefit estimates

Several studies have examined the economic and environmental impact of the MATS rule nationwide. Proponents of the rule argued that the rule would produce $37 billion and $90 billion in improved air quality and health benefits annually. Opponents of the rule argued that the potential benefits are exaggerated by billions of dollars and that the rule would lead to a loss in income equivalent to 180,000 full-time jobs.

Below is a summary of the existing studies on the costs and benefits of the MATS rule as of October 2016.

Costs

The EPA's cost estimate found that coal and oil-fired power plants would pay annual compliance costs of $9.6 billion under the MATS rule. This total includes the cost to the electricity-generating industry of meeting the emissions limits found in the MATS rule. The total does not include the economic loss resulting from power plant closures. In 2015, out of the nearly 18 gigawatts of electric generating capacity that were retired, more than 80 percent of the retired capacity was conventional steam coal—about 4.6 percent of total U.S. coal capacity at the beginning of 2015. According to the U.S. Energy Information Administration (EIA), approximately 30 percent of the coal capacity that retired in 2015 occurred in April when the MATS rule went into effect.

In its April 2016 cost-benefit analysis of the mercury standards, the EPA argued that the annual cost of compliance with the standards would amount to between 2.7 percent and 3.5 percent of electricity sales. The EPA contended that the standards would raise electricity prices by 3.1 percent over 10 years but would produce $9 in health benefits for every dollar spent to reduce mercury emissions and other pollution.

The EPA's cost figures were disputed as an incomplete complete assessment of the rule's costs. A 2012 study NERA Economic Consulting, a global consultancy group hired by electricity industry representatives, contended that in addition to the compliance costs, electric companies would face capital costs to install new pollution control technology in order to comply the MATS rule. Between 2012 and 2015, the study estimated that capital costs would require $84 billion to comply with the MATS rule and the Cross State Air Pollution Rule—an EPA rule requiring 27 states to reduce sulfur dioxide and nitrogen oxide emissions that may contribute to downwind pollution. The study concluded that the macroeconomic effect of increased capital costs would include lower industrial output (and thus lower income for employees) with a net impact of a loss in income equivalent to 180,000 full-time jobs. This net impact took into account the job gains associated with complying with the MATS rule, such as the building and refitting of power plants with new technology.

Benefits

The EPA argued that the MATS rule would prevent roughly 11,000 premature deaths and 130,000 asthma attacks nationwide and that the standards would produce $37 billion and $90 billion in improved air quality benefits annually. Of that total, between $500,000 and $6 million of the benefits would come from reducing mercury emissions at power plants. The agency contended that the implementation of the MATS rule would support 46,000 short-term construction jobs making upgrades to existing power plants. Researchers at the University of Massachusetts Political Economy Research Institute argued that the MATS rule and the Cross State Air Pollution Rule would create approximately 1.5 million jobs—an average of 300,000 jobs per year between 2010 and 2015.

Opponents of the MATS rule argued that the EPA had exaggerated the potential benefits of reducing mercury at power plants. Anne E. Smith, the senior vice president of NERA Economic Consulting, argued that the EPA's total benefits estimate of solely reducing mercury (the primary goal of the rule) is between $500,000 and $6 million, which is far below the EPA's estimate of between $37 billion and $90 billion in benefits. Smith argued that the remaining billions of dollars in benefits would come from reductions in particulate matter, which is already regulated under the Clean Air Act. Furthermore, Smith disputed the EPA's claim that the MATS rule would prevent 11,000 premature deaths, arguing that nearly all of the 11,000 deaths prevented include individuals who live in areas with an adequate safety from particulate matter-related health risks.

See also

• 

  Clean Air Act

• Air pollutants

• 

  Environmental policy in the U.S.

• Ozone standards

External links

• U.S. Environmental Protection Agency MATS standards for power plants
• Environmental Protection Agency analysis of MATS standards
• NERA study on MATS standards