AIR POLLUTION

Industry, states ask court to scrap MATS rule

Several states and industry groups yesterday asked a federal court to toss out the Obama administration's landmark standards for reducing mercury pollution at coal-fired power plants.

Led by White Stallion Energy Center LLC and the state of Michigan, the parties argued that a Supreme Court decision earlier this year rendered the standards illegal.

In a 5-4 ruling in June, the high court sent the standards back to the U.S. Court of Appeals for the District of Columbia Circuit, finding that EPA should have considered costs when it found that it was "appropriate and necessary" to regulate hazardous emissions from power plants.

"An agency's rule cannot continue to have the force of law, imposing binding obligations on private citizens, when it has been declared unlawful," the industry parties wrote in a motion filed yesterday.

The Obama administration and its allies from states and green groups, meanwhile, urged the appeals court yesterday to keep the rule in place while allowing EPA to address the problems flagged in the Supreme Court's ruling.

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EPA issued the Mercury and Air Toxics Standards, or MATS, in December 2011 to require coal-burning power plants to reduce emissions of mercury, lead, arsenic and other hazardous air pollutants. Coal plants are the country's largest emitters of mercury, and EPA said that MATS would prevent 11,000 premature deaths a year and yield up to $90 billion in health benefits.

Although EPA considered costs later in the regulatory process, the agency relied only on a public health analysis when determining that power plants emissions should be regulated in the first place.

In their brief asking the court to completely scrap MATS, industry and the states argued that the Supreme Court had unequivocally ruled that EPA exceeded its authority under the Clean Air Act when it issued the mercury standards.

EPA, they said, "failed to answer the threshold question Congress directed it to consider before regulating the emission of hazardous air pollutants from power plants: Is such regulation worth it -- that is, are the benefits of regulation worth the costs?"

Nearly 20 states -- Texas, Utah, Oklahoma, South Carolina, North Dakota, Ohio, Nebraska, Missouri, Mississippi, Kentucky, Kansas, Indiana, Idaho, Arkansas, Arizona, Alaska and Alabama -- joined Michigan and White Stallion in the request. Iowa Gov. Terry Branstad (R), Oak Grove Management Company LLC, the Gulf Coast Lignite Coalition and the National Mining Association also joined the motion.

To support their request, states and industry noted that EPA mostly relied on co-benefits -- health benefits not directly attributable to reductions in mercury -- to come up with its estimate that the rule would yield billions of dollars in benefits.

The groups argued that removing those co-benefits resulted in a "gross imbalance" between the benefits of the rule and its expected cost of $9.6 billion a year.

"Despite this gross imbalance of costs and benefits, EPA refused to consider costs when making the initial decision whether to regulate," their motion says. "Instead, the agency found regulation was 'appropriate' because power plants' remaining emissions of hazardous air pollutants pose hazards to public health and the environment and because controls are available to address those hazards."

Tri-State Generation and Transmission Association Inc., a small generation company that operates a coal-fired power plant in Colorado, filed a separate motion yesterday asking the court to throw out the rule. Tri-State also asked the court to suspend requirements for power plants that had asked for a one-year extension from the original compliance deadline of April 2015 in the event that MATS is left in place.

A separate group of industry intervenors in the case that includes geothermal power producer Calpine Corp. and Exelon Corp. instead urged the court to leave the rule in place. EPA, the companies said, had already collected "considerable information" about costs and benefits of the rule.

Eliminating the rule, the firms said, would have "disruptive consequences" for the electric power industry given the "substantial" investments companies have made to comply with the rule.

EPA warns vacatur would be dangerous, disruptive

EPA yesterday asked the appeals court to keep the rule in place while it tweaks its rule on an "expedited basis" to address the Supreme Court's "limited holding."

Keeping the mercury rule in place, the administration argued, would "preserve the important public health and environmental benefits achieved by the rule, and avoid regulatory uncertainty and significant complications for other important EPA programs, without significant disruptive consequences for regulated sources."

Although the Supreme Court found that EPA failed to consider costs when the agency determined that it was "appropriate and necessary" to regulate hazardous air emissions from power plants, EPA argued that the existing record for the rule contains extensive documentation about the costs of compliance. Based on the cost data that's already available, the agency believes there is a "serious possibility" that EPA will reaffirm its finding.

EPA also said it intends to wrap up its consideration of costs as close to April 15, 2016, as possible.

The agency also argued that the health and environmental consequences of gutting the rule would be dire, including "extremely dangerous" threats posed by mercury to children and developing fetuses. Vacating the rule would additionally have "significant disruptive consequences" for regulated industries, the administration said.

EPA's state and environmental backers also pressed the court to keep the rule in place while sending it back to the agency for a quick fix.

"Vacating the rule would be profoundly disruptive, creating and exacerbating significant hazards to public health and the environment and disrupting the administration of other vital air and water pollution control programs," EPA's supporters told the appeals court.

That brief was filed by a coalition including Massachusetts, California, Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Minnesota, New Hampshire, New Mexico, New York, Oregon, Rhode Island, Vermont, Baltimore, Chicago and the District of Columbia. Among the other groups that submitted the brief were the American Lung Association, Environment America, the Environmental Defense Fund, the Natural Resources Defense Council and the Sierra Club.

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