Report: As EPA rewrites mercury rules, new cost-benefit approach could curtail future regulations

Dive Brief:

The Environmental Protection Agency (EPA) has reportedly completed a plan to rewrite mercury emission rules for coal plants that will also alter how the agency weighs the costs and benefits of air regulations.
The EPA has finished changes to the Mercury and Air Toxics Standards (MATS) and sent them to the White House for review, The New York Times reported Sunday. The rewrite does not consider the "co-benefits" of the rule — reductions in other pollutants not expressly covered by the regulation.
Excluding co-benefits will make the rule appear more costly and could make it more vulnerable to court challenges from industry. Most coal plants have either complied with the 2012 rule or shut down, and the utility industry pressured EPA this year not to open the rule for review.

Dive Insight:

The EPA's proposed rewrite of the MATS rule will have a bigger impact on its future regulations than on plants covered by the Obama-era pollution standards.

Finalized in 2012, MATS set federal standards for a variety of emissions from coal-fired power plants linked to health and developmental problems in humans, like mercury and dioxins.

For utilities, complying with the rule meant installing expensive pollution scrubbers on existing coal generators. The agency justified those costs in part by counting co-benefits, like reductions in particulate matter and other pollutants covered by separate EPA regulations.

Industry groups argued that analyzing co-benefits amounted to "double counting" the health impacts of EPA regulations, but it remained central to the agency's calculus. Consideration of co-benefits was a key element in the EPA's decision to keep the core of the MATS rule in place after the Supreme Court ordered the agency to review its cost-benefit analysis in 2015.

EPA expected the rule to cost $9.6 billion annually, but in a supplemental finding a year later said that the health benefits were worth the price tag.

Now, the Times reports EPA will seek to exclude co-benefits from the rewrite of the MATS rule altogether. If that approach is upheld in court, it would set a rulemaking precedent for less stringent pollution regulations in the future.

The changes come despite objections from many of the companies covered by the regulations. In July, trade groups representing electric utilities wrote to EPA, asking it to preserve MATS. The sector has already invested more than $18 billion to comply with the rule, they wrote, and many state regulators are still evaluating whether to allow utilities to recover the cost of pollution upgrades from customers.

"Units that retired in part due to MATS — along with other regulatory requirements, low natural gas prices, resource planning initiatives, and a variety of other factors — have been decommissioned and cannot be reinstated," utilities wrote.

The MATS rewrite is part of a broad campaign across the Trump administration to revive the domestic coal sector — much of it inspired by the industry itself.

Last year, coal mining magnate Bob Murray met with the Secretary of Energy Rick Perry and other administration officials to deliver an action plan to boost his struggling industry. That plan included rewriting MATS, repealing the Obama-era Clean Power Plan and subsidizing coal power plants for their onsite fuel supplies — all initiatives the White House has undertaken in the year since.

Acting EPA Administrator Andrew Wheeler was present for the meeting with Perry as well, but not in his current role. Until August of last year, Wheeler was a registered lobbyist working for Murray Energy.