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New York — Despite the objections of public health advocates and even the U.S. electric industry, the US Environmental Protection Agency April 16 released a final rule rescinding the legal basis for the Obama-era Mercury and Air Toxics Standards. Importantly, the rule also signals the EPA's intent to give less weight to the side or co-benefits of a proposed action when conducting future rulemakings.

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Also known as the MATS rule, the 2012 regulation drove a wave of coal plant retirements by requiring those units to either retrofit with mercury-curbing pollution control technologies or shut down. Since the MATS rule was first proposed in 2011, power sector mercury emissions have plummeted nearly 82%, according to EPA data.

When it finalized the MATS rule, the EPA estimated it would produce between $37 billion and $90 billion in annual public health benefits compared to $9.6 billion in yearly compliance costs. However, virtually all of the public health benefits flowed from associated reductions in fine particulate matter, with just $4 million to $6 million in direct benefits related to reduced mercury exposure.

The MATS rule was met with stiff resistance by US electric utilities and challenged all the way to the US Supreme Court. In 2015, the high court in a 5-4 decision upheld the rule while remanding the regulation back to the EPA after finding the agency failed to consider compliance costs early on enough in the proceeding. In response to the Supreme Court's remand, the EPA in 2016 largely relied on its original cost-benefit analysis to issue a supplemental "appropriate and necessary" finding required under Section 112 of the Clean Air Act.

Murray Energy Corp., the nation's top private coal producer, subsequently challenged that finding at the US Court of Appeals for the District of Columbia Circuit. Following the election of President Donald Trump, the D.C. Circuit agreed to put the case on hold while the EPA reviewed the previous administration's supplemental finding.

Meanwhile, a coalition of electric utility trade groups took the unusual step of publicly warning the EPA against jeopardizing the $18 billion in capital investments the industry had made to fully comply with the rule. In addition, environmental economists pointed to a 2017 peer-reviewed study that found the annual health benefits of reductions in mercury emissions are actually about $4.8 billion instead of the low millions of dollars estimated by the EPA.

Despite recent evidence that the health benefits of mercury reductions are far greater than originally projected, the final rule released by the EPA on April 16 has concluded that regulating coal- and oil-fired power plants for mercury and other air toxics such as acid gases "is not 'appropriate and necessary.'"

'NEW UNCERTAINTY AND RISK'

On a press call with reporters, EPA Administrator Andrew Wheeler framed the final regulation as an effort to correct "technical flaws" in the Obama administration's supplemental finding currently before the D.C. Circuit ⁠while leaving the underlying MATS standards in place.

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

Nevertheless, the final rule was swiftly denounced by utilities and environmental groups alike, who suggested it could do just that.

"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," a spokesman for the Edison Electric Institute, which represents the nation's investor-owned utilities, said in an email.

A February analysis by Regulatory Research Associates, a group within S&P Global Market Intelligence, of pending rate cases cited by the Edison Electric Institute in public comments last year found that 33 out of 39 MATS-related rate cases have now been decided. However, an Exelon Corp. spokesperson said in an email that the EPA's new rule "could lead existing coal plants to turn off pollution controls to save money, resulting in dirtier air at a time when the value of clean air and clean energy have never been more clear."

Asked about the utilities' concerns, Wheeler called them "exaggerated." He noted that the final regulation also completed what is known as a residual risk and technology review, which concluded no further mercury pollution controls are required.

"I think our regulation is grounded in the science, it's grounded in good cost-benefit analysis, we have the [risk and technology review] which is backing it up, and I think the courts will uphold this," Wheeler said on the press call.

Wheeler also said the revised supplemental finding is part of a broader coordinated effort to revamp how the agency calculates cost-benefit analyses in rulemakings.

"When you're crafting a regulation ... and you have a targeted pollutant, you should be looking at the costs and the benefits from that targeted pollutant," Wheeler said. "Now it's appropriate to still take a look at co-benefits and we still will encourage a look at co-benefits, but the co-benefits should never be the driver on either the benefits or the costs."

In a statement, former Obama EPA Administrator Gina McCarthy tied the final rule to the coronavirus pandemic and worried the regulation could open the door to a legal challenge to the MATS standards themselves.

"If these standards are overturned, there would be nothing to prevent power plants from immediately emitting a range of toxic pollutants — and you can bet they will," said McCarthy, now the president and CEO of the Natural Resources Defense Council. "Undermining these vital safeguards now also directly threatens the people hardest hit by the COVID-19 pandemic — making it even harder to breathe and putting people with respiratory illnesses at even higher risk."

Parties will have 60 days to file petitions for review at the D.C. Circuit after the rule is published in the Federal Register.