Long Time Cutting

On March 15, the Environmental Protection Agency is under court order to finalize regulations to reduce mercury emissions from coal-fired power plants. If it does so, the date will mark the end of years of rereviewing scientific studies of mercury's effect on humans, arguing about the cost of power plant regulations, stalling by both Republican and Democratic Administrations, and litigation springing from the delays.

Coal-fired power plants are the last large, unregulated emitters of mercury. Electric utilities and coal companies are of key importance to the nation's economy and are major players in its political system. Coal-burning utilities produce 53% of the nation's electricity, and, according to the Center for Responsive Politics, energy and coal-mining companies have provided $109 million to federal political campaigns since 1990. The year is important because it was in 1990 that Congress passed the Clean Air Act Amendments. The law held compromise language that set a path intended to lead to a reduction in mercury emissions from electric utilities.

It called for EPA to conduct a major study of mercury by 1993 and to develop a regulatory approach for utilities by 1994. Neither happened. EPA staff moved along on its tasks, but the document's release was held up by the Clinton Administration Office of Management & Budget as utilities, members of Congress, and others raised questions about the cost of controlling mercury emissions and mercury's impact on human health.

The delay led to litigation by environmental groups, and due to a court order, the Administration issued the mercury study in 1997 and the report on utility regulation a year later. The regulatory decision document, however, was incomplete and failed to recommend a regulatory approach.

Meanwhile, evidence supporting the need for mercury controls grew. In the end, new reviews by the National Academy of Sciences, the Centers for Disease Control, and EPA all supported regulation.

As the years rolled by, the number of water bodies found to be polluted by mercury increased, as did the number of children affected by mercury exposure. An NAS study in 2000 estimated that some 60,000 babies were born annually in the U.S. with some degree of neurological deficit owing to exposure to mercury in the womb. A few years later, another government study pushed that number to 630,000.

In late 2000, EPA finally released a regulatory decision--again under court order--as President Clinton was turning the reins of government over to President-Elect George W. Bush. EPA said mercury from power plants should be reduced and regulated and committed the agency to proposing regulations by 2003 and finalizing them by 2004.

In the meantime, a federally appointed committee of state regulators, utilities, environmental groups, air pollution control companies, and others had been meeting trying to work out a regulatory solution. The state regulators and pollution control technologists said mercury emissions could be reduced by 40 to 90% by 2007 using currently available technology. Utilities disagreed, and so did the Bush Administration.

The Administration disbanded the committee, and in 2003, EPA issued its proposal with two related approaches. It states that utilities must reduce their annual 48 tons of mercury to 34 tons by the end of 2007. However, utilities could meet that number by installing technologies needed to control other pollutants--sulfur dioxide and nitrogen oxides.

Under the second approach, utilities would have until 2018 to reduce mercury emissions by 70% under a cap-and-trade proposal. With cap and trade, the Administration offers each utility a declining number of annual mercury pollution allowances. If a utility exceeds its cap, then it can buy more rights to a pollutant from another utility that has excess credits because it cut pollution beyond what was required. Utilities would also be able to buy allowances from the future if they fail to make the required reductions. This would cut total emissions to about 15 tons per year.

State regulators and environmental groups say both proposed approaches are inadequate. A few weeks ago, they were joined by EPA's independent Office of Inspector General (OIG).

Inspector General Nikki L. Tinsley issued a report highly critical of the mercury regulation and how it was developed. The report concludes that EPA violated the Clean Air Act and that its mercury regulation should be proposed again. The opinion was based in large part on interviews with EPA staff and internal e-mails showing how the Administration ordered staff to develop data to support the regulation.

Top EPA officials, OIG says, forced a predetermined outcome of a regulatory process by telling staff to provide backup data to justify the 34-ton annual cap. Agency staff, the OIG report says, did as they were told and ran repeated computer calculations until they hit the control scenario that management wanted.

But, OIG notes, the Clean Air Act requires emissions standards for air toxics like mercury to be based on "maximum achievable control technology," and EPA was supposed to set the mercury standard based on how much is removed from smokestacks by the cleanest burning, least polluting 12% of coal-burning power plants.

State regulators say this approach would result in a much lower emissions cap, OIG notes, and it recommends that EPA reanalyze its data on the least polluting power plants before finalizing the rule.

The report also questions the EPA mercury-trading plan. Although the trading proposal did not set an interim cap on emissions, OIG says EPA suggested the cap be 34 tons, which happens to be the amount achievable as a cobenefit of other regulations.

OIG says a 34-ton cap provides little incentive to make early reductions, and many utilities may simply wait until 2018--trading and buying future emissions allowances--before installing any mercury-specific control technologies.

To discourage endless buying into the future, the trading proposal sets a price that utilities must pay for allowances and assumes that as new technologies are developed, the cost of controls will decline, making the purchase of allowances increasingly too expensive. But the OIG report warns that EPA may have set the price of these future allowances too low and it may be cheaper to buy allowances than to install new technologies well into the future.

IN THE END, the cost of buying control technologies will drop only if more companies install the technologies, but the 34-ton interim cap provides little incentive to utilities to install new mercury control technologies.

The report also urges EPA to reconsider its trading proposal in light of growing evidence of mercury "hot spots" where the element has been found to be deposited in higher concentrations near an emissions source.

EPA strongly disagrees with the report's views and says OIG misunderstands the regulatory development process. The agency, EPA officials say, intends to move ahead and finalize the mercury regulation. Among its comments, EPA notes that mercury emissions from U.S. utilities are a small part (3%) of global emissions, that the rulemaking process is not finished and the rule is not yet final, and that the economics of the trading program will encourage utilities to make reductions before the 2018 date.

The OIG report was requested by seven Democratic senators on the Environment & Public Works Committee. The committee is tied up in a debate over the Administration's Clear Skies initiative, which holds provisions closely mirroring the mercury proposal. If the bill passes, it would supercede the mercury regulation required under the air act.

Sen. James M. Inhofe (R-Okla.), who introduced the initiative and is committee chairman, was particularly critical of Tinsley for "politicizing the office."

Tinsley is a Clinton appointee who has led the office since 1996. The office is independent of EPA and funded separately from the agency. For 15 years before her current job, Tinsley conducted audits for the Department of the Interior and the General Accounting Office.

Come March 15, the much-discussed and long-awaited mercury regulation is likely to emerge from EPA. More litigation is sure to follow. But if the 2018 compliance date stands, coal-fired utilities will have been given 28 years since enactment of the Clean Air Act Amendments to bring their mercury emissions under control.