Last month, a federal appeals court rejected the Bush administration's Clean Air Mercury Rule (CAMR) for regulating mercury emissions. How will this ruling impact utilities that have proposals for new coal-fired power plants in the works? Which states will be most affected? Should existing projects and proposals have to meet the more stringent standards called for in the ruling? During today's OnPoint, John Walke, clean air director and senior attorney at the Natural Resources Defense Council, explains why he believes all pending projects should be required to meet new, more stringent, mercury emissions standards.
Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is John Walke, clean air director and senior attorney at the Natural Resources Defense Council. John, thanks coming on the show.
John Walke: Good afternoon and thank you.
Monica Trauzzi: John, I'd like to track back a bit to early February, when a federal appeals court ruled on mercury pollution standards. What does this ruling state and how significant is this ruling in terms of air pollution control?
John Walke: The U.S. Court of Appeals for the D.C. Circuit on February 8 overturned two EPA rulemakings covering mercury from power plants. The first EPA rulemaking had purported to remove power plants from a regulatory list that required the most stringent air toxics controls under the Clean Air Act. The court found that EPA had illegally removed power plants from that list and, therefore, overturned that EPA action. As a result of that action the court found that this second EPA rule, which had established a pollution trading program for mercury emissions from power plants, was itself illegal because it could not be adopted as a substitute for the more rigorous pollution controls required by the Clean Air Act, the so-called maximum achievable control technology standards. What this means in total is two things of immediate consequence. The first is that EPA will be set back on the course it should have been following since 2000 to adopt these federal air toxics standards, the maximum achievable control technology standards, for the power sector. That's something they will do over the next several years. The second immediate consequence, however, is that every new coal-fired power plant in the country will be immediately required to adopt the most stringent controls for not just mercury, but all of their toxic pollution before they may be constructed and operated.
Monica Trauzzi: And there's some controversy already involving that. And NRDC has just released a list of 32 coal-fired power plants in 13 states that are being impacted by this ruling. Which areas of the country will be most affected and which states have the most at risk coal-fired power plants?
John Walke: What are listed was focused on those 13 states that had the most number of projects announced. And it's really all different parts of the country ranging from Utah to Illinois to Ohio to Pennsylvania to Texas, so it really covers a large swath of the country. And what we did in our list was focus on those new power plants that either had pending permits or perhaps recently issued permits where none of those permits now comply with federal law. None of those permits have the required pollution limits and pollution controls covering mercury and all other toxics from power plants, which includes arsenic and lead and chromium and some heavy metals. None of those permits have the required limits or controls now, which means the permitting authorities and the power plant developers are going to have to go back to the drawing board, so to speak, back to an evaluation of whether their permits and pollution controls now comply with federal law following this court decision and following the requirement to meet these case-by-case, maximum achievable control technology standards.
Monica Trauzzi: So, the utilities have to essentially resubmit for permits, even if these projects are already active and construction has already begun?
John Walke: That is correct. The permits they received were permits, lawful or not, depending upon appeals and challenges, but lawful only insofar as their conventional pollutants, nitrogen oxide, sulfur oxides. They had mercury limits in the permits, but those mercury limits were designed to meet the federal rules that the court had just tossed out. So, what has happened is federal law has returned to what it was before this ruling and the court said that the regulatory listing of power plants remains in force, remains in effect; meaning that they will have to now evaluate, from the beginning, again, whether they meet the federal requirements that the court made clear apply here.
Monica Trauzzi: Obviously, the utilities are not too happy with this ruling. And what impact do you see this having on electrical utilities down the line in the immediate future?
John Walke: Well, the immediate consequence will be delay while they undergo an evaluation of the pollution controls and limits they have to adopt. Ultimately, the costs will be manageable. These power plants cost well over a billion dollars and the pollution controls they will have to adopt will range from $10 to $50 million in capital costs, depending upon size and other factors. So, the cost is going to be manageable, but it's going to cause delay. And where projects and power plants should not go forward on any number of grounds, ranging from global warming concerns to financing, to escalating costs to a lack of demand sufficient to meet all of this slug of power plants we have under development, this mercury ruling will just add momentum against those power plants being constructed at all.
Monica Trauzzi: And the technology exists to implement these more stringent standards?
John Walke: Yes, absolutely. We have many, many applications across the country where the technology -- the starting technology for evaluation will probably be something called activated carbon injection, which is basically just added to the scrubbers and bag houses that many of these power plants already had for their sulfur pollution and their soot pollution. So, the technology is available. Industry will resist it no doubt, but the evaluation and the delay that accompanies that are going to be the immediate consequence, the additional expense to meet the controls will follow.
Monica Trauzzi: And some utilities have said that this is actually a setback for efforts to establish new mercury regulations and they say that this is going to mean uncertainty for them down the road. Is there any merit to that?
John Walke: Well, it will mean uncertainty for them, but they rolled the dice and thought they were going to get away with everything under the Bush administration by breaking the law, but that didn't happen. So now this is catching up with them. It's really nonsense to claim that this is a setback for environmental protection or public health because the Bush rules weren't going to kick into effect and require any mercury reductions until a decade from now. So the clean air rules, the Clean Air Interstate Rule that already applies to reduce smog and soot pollution will incidentally reduce mercury pollution. That remains in effect. The court's decision didn't affect that rule, so we're still going to get the mercury reduction that the Bush administration was relying upon.
Monica Trauzzi: So, I think you've made it pretty clear in our discussion so far, but let's lay out who the biggest winners and biggest losers are with this ruling.
John Walke: Well, I think that the biggest losers really are the power sector who are now going to have to face much tighter controls and much faster controls than they were anticipating had the Bush administration's trading program been upheld by the courts. Secondly, new power plant developers among the utility industry generally are going to face immediate delays and cost increases in their projects and it's going to add to the controversy associated with projects that shouldn't even be built.
Monica Trauzzi: And the states that you have listed in your list of the dirtiest coal-fired power plants, do you see any impact on them financially, economically, because they're not going to be able to move as quickly with these proposals?
John Walke: You know, a power plant takes three to four years to construct and the ones on our list either have not begun construction or received final permits within the past three to six months. So, this is a four year process. It's worth it for a plant that's going to have a lifetime of 60 years to step back and to make sure it has the most protective toxic controls reducing mercury, arsenic, and lead among other things. I believe the states are going to recognize that this is the right thing to do, the responsible thing to do. It's a manageable cost. It's a manageable delay. They should just get to the business of doing this and there have been encouraging signs from the states that they are prepared to address this ruling responsibly and to make sure these plants now comply with the law.
Monica Trauzzi: And final question here, the consumers and the people living in these areas, what does this all mean for them?
John Walke: Well, this decision is not going to be dispositive of the fate of any given power plant in the country in all likelihood, but global warming considerations and financial considerations and unreasonable burdens on ratepayers are going to be dispositive. This ruling will add to the momentum against unnecessary plants. We're building too many power plants in this country based upon the demand, so the public is being taken for a ride with a bunch of very costly projects that are spiraling in cost. I think this is going to be a good thing for consumers.
Monica Trauzzi: All right, I'm sure that there are many utilities out there that would disagree with that, and we'll have them on the show to counterbalance what you just said. And I thank you for coming on.
John Walke: Thank you very much Monica.
Monica Trauzzi: All right. This is OnPoint. I'm Monica Trauzzi. Thanks for watching.
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