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03.25.2022 Legal News

Political Ping Pong? What’s Going On With the Utility Sector’s Clean Air Act Mercury and Air Toxics Standards?

EPA recently issued a proposed rule (“the Proposed Rule”) regarding the Mercury and Air Toxics Standards (MATS), which regulate hazardous air pollutant (HAP) emissions from coal and gas-fired electric generating units (EGUs) in the power sector. The Proposed Rule responds to Executive Order 13990’s instruction to EPA to reconsider the MATS Appropriate and Necessary final rule published on May 22, 2020 (“the 2020 Rule”). EPA undertook a thorough review of the 2020 Rule and its findings. The 2020 Rule has two components. First, it addresses the Clean Air Act (CAA) Section 112(n)(1)(A) required determination as to whether it is “appropriate and necessary” to regulate HAPs from coal and gas-fired units. Second, the 2020 Rule undertakes the residual risk and technology review (RTR) under CAA Sections 112(f)(2) and 112(d)(6). This article discusses both elements.

The Appropriate and Necessary Determination.

In 2000, EPA determined that it is appropriate and necessary to regulate HAPs from coal and oil-fired EGUs. The Final MATS Rule reaffirmed this finding in 2012, establishing HAP emission limits for coal and oil-fired units. The Final MATS Rule was challenged in the D.C. Circuit. On appeal, the U.S. Supreme Court took up the narrow issue of whether EPA considered the costs of MATS compliance when making the appropriate and necessary determination. In Michigan v. EPA, the Court remanded the case back to the D.C. Circuit, finding that costs must be considered. On remand, EPA addressed MATS costs in the 2016 Rule (“the 2016 Rule”) under the Obama Administration. The 2016 Rule found it is appropriate and necessary to regulate HAPs from EGUs. Then the 2020 Rule, under the Trump Administration, reconsidered the cost analysis and applied a different cost methodology than the 2016 Rule. In the 2020 Rule EPA found the MATS rule was not appropriate and necessary. By this point, the EGU sector had already achieved compliance with MATS by installing controls and monitors or opting to shut down units to avoid compliance costs.

The Proposed Rule rejects the 2020 Rule’s cost methodology and finds it is appropriate and necessary to regulate HAPs from coal and oil-fired EGUs. EPA based its analysis on the complete MATS administrative record and the statute. EPA proposes a “totality-of-the-circumstances” framework for the appropriate and necessary analysis. It considers the advantages of regulation (public health, environmental effects) and disadvantages of the regulation (costs, impacts to the EGU sector and society). EPA bases its appropriate and necessary conclusions on the public health and environmental impacts of mercury and other HAP emissions on the population. EPA ties these impacts to the power sector, finding that utilities emitted six times more mercury than any other sector and are the predominant source of hydrochloric acid and hydrogen fluoride emissions in the country. EPA ultimately decided that MATS compliance costs are small, considering either the higher 2012 cost estimate or EPA’s lower ex post cost estimate, when placed in the context of the industry’s revenues and expenditures.

The Risk and Technology Review.

CAA Section 112(f)(2)(A) requires EPA to consider each category of standards promulgated under Section 112 within eight years of promulgation. The second phase of rule development, RTR, is a risk-based analysis to determine whether more health-protective standards are needed to address remaining health risks from the source category “to provide an ample margin of safety to protect public health . . . or to prevent, taking into consideration costs, energy, safety, and other relevant factors, an adverse environmental effect.”

For MATS, the 2020 Rule finalized the RTR. That rule concluded that the residual risks of air toxic emissions from coal and oil-fired EGUs is acceptable, and the current MATS rule provides an ample margin of safety to protect public health and to prevent an adverse environmental effect. No new developments in cost-effective HAP emissions controls were identified in the technology review. The 2020 Rule maintained the MATS rule without revision. EPA is presently reconsidering the RTR review. The Proposed Rule deferred EPA’s decision on the 2020 Rule RTR findings to a later rulemaking.

What’s to come.

Comments are due on April 11, 2022. EPA seeks comments on the overall necessary and appropriate finding. EPA also requests information to be considered in the RTR review. EPA has an informal timeline for the RTR that includes publication of the Notice of Proposed Rulemaking on June 2022 with a Final Rule by April 2023, according to the Fall Unified Agenda.

So what now?

EPA’s decision to find that regulation of air toxics from coal and gas-fired EGUs is appropriate and necessary has been expected. It reaffirms prior EPA decisions in 2000, 2012, and 2016, bolstered by a belt and suspenders approach and a comprehensive dataset. Since EGUs are already in compliance with MATS, there may be even less motivation to challenge the appropriate and necessary determination, even if flaws are discovered in EPA’s analysis.

In contrast, the RTR reconsideration has the potential to disrupt the status quo. Specifically, EPA will determine if the current MATS Rule provides sufficient protection and what, if any, HAPs require further control to be sufficiently protective. More stringent emissions limitations or control technology requirements may result. Non-EGUs should track this rulemaking, as it may serve as a template for future RTR reviews for other Section 112 rules.

EPA has requested information in furtherance of the RTR review in the Proposed Rule. For example, EPA solicits emissions data, risk-related data, control technology information, monitoring information, and overall stakeholder input. We anticipate that EPA will evaluate the responses and will supplement the administrative record. EGUs subject to MATS should consider commenting. EGUs have special expertise concerning how their units operate and how MATS control technology works, including equipment limitations and emissions reduction capabilities. The EGU sector would better position itself by adding substantive information to achieve a balanced RTR administrative record.

EO 13990, “Protecting Public Health and the Environment and Restoring Science To Tackle the Climate Crisis” (Jan. 25, 2021)

Proposed Rule, “National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired Electric Utility Steam Generating Units—Revocation of the 2020 Reconsideration, and Affirmation of the Appropriate and Necessary Supplemental Finding; Notice of Proposed Rulemaking,” 87 Fed. Reg. 7624 (Feb. 9, 2022)

Final Rule, “National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired Electric Utility Steam Generating Units—Reconsideration of Supplemental Finding and Residual Risk and Technology Review,” 85 Fed. Reg. 31286 (May 22, 2020)

Final Rule, “Supplemental Finding that It is Appropriate and Necessary to Regulate Hazardous Air Pollutants from Coal- and Oil-Fired Electric Utility Steam Generating Units,” 79 Fed. Reg. 24420 (Apr. 25, 2016)

Final Rule, “National Emission Standards for Hazardous Air Pollutants From Coal- and Oil-Fired Electric Utility Steam Generating Units and Standards of Performance for Fossil-Fuel-Fired Electric Utility, Industrial-Commercial- Institutional, and Small Industrial-Commercial-Institutional Steam Generating Units,” 77 Fed. Reg. 9304 (Feb. 16, 2012)

Notice of Regulatory Finding, “Regulatory Finding on the Emissions of Hazardous Air Pollutants from Electronic Utility Steam Generating Units,” 65 Fed. Reg. 79825 (Dec. 20, 2000)

Michigan v. EPA, 576 U.S. 743 (2015)
42 U.S.C. § 7412 (Clean Air Act, Section 112)