The U.S. Environmental Protection Agency's move to revoke the legal basis for the Obama-era Mercury and Air Toxics Standards, or MATS, rule would create years of unnecessary uncertainty for an industry that has already complied with the regulation, a former EPA official said May 21.
Echoing a March letter from major power industry groups, former EPA air regulator Janet McCabe said the Trump administration's proposal to rescind a 2016 finding that regulating oil- and coal-fired power plants for harmful mercury emissions is "appropriate and necessary" would threaten billions of dollars in pollution control investments electric utilities are currently recovering or seeking to recoup from customers.
McCabe, who helped develop the MATS rule as acting assistant administrator in the EPA's Office of Air and Radiation, delivered her comments at a House Energy and Commerce Committee oversight hearing on the EPA's proposal.
"If EPA reverses the finding, it will kick the legal legs out from under the [MATS] standards themselves, and if the requirements go away it may complicate rate recovery or utilities may decide to operate their controls less, which would mean a return to higher mercury and other toxics in our communities," McCabe told the committee.
The EPA in December 2018 proposed to revoke the legal justification for the Obama-era MATS rule by finding the EPA's original cost estimate "dwarfs" millions in estimated direct public health benefits related to mercury reductions, although one recent peer-reviewed study estimated the MATS rule is actually responsible for billions in annual public health benefits directly tied to reduced mercury emissions.
While the EPA has stressed that it is not proposing to rescind the MATS standards altogether, McCabe predicted during the hearing that the proposal, if finalized, would almost certainly invite a fresh legal challenge to the rule itself.
"If people think that EPA is not going to be asked to move forward to vacate the rule if they rescind the appropriate and necessary finding, they are mistaken," McCabe said. "Requests will come immediately."
But Adam Gustafson, a partner at Boyden Gray & Associates, contended that the EPA has correctly argued that legal precedent prohibits the agency from rescinding the MATS standards. Gustafson noted that Section 112 of the Clean Air Act would require the EPA to successfully complete an extensive "delisting" process for power plants before scrapping the MATS standards entirely. "That delisting process is set out in statute, and I would be surprised if it could be met," he said.
New Jersey v. EPA
The MATS rule can be traced back to a series of amendments made to the Clean Air Act in 1990, when Congress listed 189 air pollutants, including mercury, as hazardous under Section 112 of the statute. The amendments contained a special provision written specifically for the utility industry that requires the EPA to make an "appropriate and necessary" finding when issuing performance standards to reduce hazardous air pollutants from power plants under Section 112.
In 2000, the Clinton EPA determined that regulating mercury from power plants was appropriate and necessary in part because those electric generating units represented the nation's single largest source of mercury emissions. However, the George W. Bush-era EPA attempted to "delist" power plants under Section 112 by rescinding the previous administration's appropriate and necessary finding. Instead, the Bush EPA sought to regulate mercury emissions under Clean Air Act Section 111, which traditionally has been used to regulate a different set of air pollutants.
In ruling on a legal challenge in New Jersey v. EPA, the U.S. Court of Appeals for the District of Columbia Circuit struck down the Bush administration's proposed mercury rule. In doing so, the court unanimously held that the EPA cannot delist power plants under Section 112 without first showing that the regulated emissions from that source category do not "exceed a level which is adequate to protect public health with an ample margin of safety."
Murray Energy Corp., the coal company behind a stayed legal challenge to the Obama administration's 2016 finding for its own rule, argued in comments on the EPA's proposal that the D.C. Circuit's reasoning in New Jersey does not justify continued enforcement of MATS. Instead, the company argued that the plain language of the Clean Air Act demonstrates that "EPA has no legal authority to continue regulating [power plants] under Section 112 if the agency has affirmatively determined that such regulation is not 'appropriate and necessary.'"
The Edison Electric Institute disagreed, asserting the EPA "correctly" explained that under the New Jersey precedent its determination that a source category was listed in error "does not by itself" remove that source category Section 112.
Acknowledging the power sector's concerns with the EPA's proposal, McCabe said the EPA's final rule could lead to "potentially years" of uncertainty. In her prepared testimony, she noted that a representative for Peabody Coal Co recently argued that the Northern Indiana Public Service Co. was overestimating the future costs of compliance with MATS.
"There is a significant likelihood that EPA will withdraw MATS entirely or drastically alter the rule as to reduce the ongoing [operation and maintenance] cost burden," the representative told the Indiana Utility Regulatory Commission in February. "The EPA's current proposal regarding the MATS rule could be subject to legal challenge and force it to go through the de-listing process" under Section 112, the representative added.
Gustafson was the lone witness invited by Republicans. An EPA spokesperson said agency officials were unable to testify due to scheduling conflicts, but they could do so in June.