EPA Reconsiders Benefits of Mercury and Air Toxics Limits

EPA Reconsiders Benefits of Mercury and Air Toxics Limits

Updated May 19, 2020
EPA Reconsiders Benefits of Mercury and Air Toxics Limits
In April 2020, the U.S. Environmental Protection Agency
CAA Section 112(n)(1) required EPA to study the “hazards
(EPA) concluded that limits on hazardous air pollutants
to public health reasonably anticipated to occur” from
(HAPs) from coal- and oil-fired power plants are not
HAPs emitted by power plants after imposition of other
“appropriate and necessary” (A&N) under Clean Air Act
CAA requirements. It also required EPA to examine the
(CAA) Section 112(n)(1) (“Reconsideration of
health and environmental effects of mercury emissions
Supplemental Finding and Residual Risk and Technology
from these sources, available control technologies and their
Review,” April 16, 2020). The 2020 A&N rule reversed
costs, and whether regulation of power plant HAPs was
prior A&N determinations, which led to the 2000 listing of
“appropriate and necessary” (42 U.S.C. §7412(n)).
coal- and oil-fired power plants as a major source of HAPs
and the 2012 Mercury and Air Toxics Standards (MATS)
In 2000, EPA determined that it was appropriate and
limiting those HAPs. Notwithstanding the 2020 A&N rule,
necessary to regulate hazardous air pollutants from coal-
the 2012 MATS limits remain in effect for power plants
and oil-fired power plants. This determination required
because EPA determined that it could not meet the criteria
EPA to take additional steps to regulate HAPs. EPA added
under CAA 112(c)(9) to delist them. Furthermore, the A&N
coal- and oil-fired power plants to the Section 112 list of
finding does not change the regulatory status of other
source categories in 2000.
pollution sources because CAA Section 112(n)(1) applies
only to power plants. Some have raised questions about
In 2005, EPA changed course. EPA withdrew the 2000
why EPA reversed the A&N finding and how it might
A&N finding and finalized a rule to remove coal- and oil-
affect regulated entities. For example, some power plant
fired power plants from the Section 112 list. Instead, EPA
owners are concerned the A&N reversal may compromise
promulgated a cap-and-trade program to limit power plant
their ability to recover from ratepayers the costs of
mercury emissions under Section 111. The U.S. Court of
installing MATS pollution controls. Others find this
Appeals for the D.C. Circuit vacated these 2005 actions,
unlikely, but legal challenges to the 2020 A&N rule are
however, and ruled that EPA unlawfully delisted coal- and
expected.
oil-fired power plants from the Section 112 list because
EPA failed to comply with the statutory delisting criteria.
The 2020 A&N rule reveals a change in EPA’s
interpretation of a unique statutory provision—Section
In 2012, EPA reaffirmed the 2000 A&N finding and
112(n)(1)—which may nonetheless set a precedent for
promulgated the Mercury and Air Toxics Standards Rule.
EPA’s consideration of benefits under other CAA
The rule, which remains in effect, established emissions
authorities. EPA stated that the 2020 A&N rule corrects
standards to reduce mercury and acid gases from most
errors in the agency’s consideration of benefits in a prior
existing coal- and oil-fired power plants.
A&N finding. In its determination for the 2020 A&N rule,
EPA excluded from consideration any co-benefits to human
EPA’s accompanying analysis, published in 2011, projected
health from reductions in pollutants not targeted by MATS.
annual benefits between $37 billion and $90 billion in 2016.
This In Focus discusses EPA’s reconsideration of benefits
Nearly all of the monetized benefits were from the rule’s
and costs and potential issues for Congress. Section 112(c)
particulate matter co-benefits. EPA monetized one of the
delistings and legal issues are beyond this product’s scope.
expected mercury impacts—intelligence quotient loss to
children exposed to mercury from recreationally caught
Historical EPA Actions
freshwater fish—but could not monetize other mercury
Hazardous air pollutants (HAPs) are pollutants known or
impacts. Such non-monetized impacts may include other
suspected to cause cancer or other serious health effects,
neurologic effects (e.g., memory and behavior),
such as reproductive problems or birth defects. Among the
cardiovascular effects, and effects on wildlife.
HAPs emitted by power plants, mercury has been of
principal concern. Mercury, which occurs naturally in coal,
EPA’s regulatory impact analyses have historically reported
travels through the air to water, where it is converted to
difficulty in monetizing HAP reduction benefits but have
methylmercury and moves up the food chain. Consumption
also noted that the lack of monetized estimates does not
of fish and shellfish contaminated with methylmercury is
mean the benefits lack value. Previous Administrations
the primary source of human mercury exposure. Fetuses
concluded that such benefits justify emission standards,
and children are particularly vulnerable to methylmercury
albeit under different CAA authorities. For example, EPA’s
exposure, which may impair neurological development.
2004 analysis of a rule to reduce power plant mercury
Methylmercury exposure at high levels may harm the brain,
emissions concluded that non-monetized benefits were
heart, kidneys, lungs, and immune system.
“large enough to justify substantial investment in emission
reductions” (“Benefit Analysis for the Section 112 Utility
Rule”).
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EPA Reconsiders Benefits of Mercury and Air Toxics Limits
Numerous parties petitioned the courts to review MATS.
commercial forest yields, visibility improvements, and
Among other things, some petitioners disagreed with EPA’s
reductions in nitrogen and acid deposition and the resulting
conclusion that it was not appropriate to consider costs
changes in ecosystem functions” (“Regulatory Impact
when making an A&N finding under CAA Section 112. In
Analysis for the Final Mercury and Air Toxics Standards,”
2015, the Supreme Court agreed with the petitioners and
2011). The 2020 A&N rule acknowledges HAP reduction
remanded the rule for further consideration, but it did not
benefits from MATS that cannot be monetized but finds
address whether EPA has authority to consider monetized
that the value of those benefits is unlikely to alter the
co-benefits in evaluating the cost of MATS (Michigan v.
agency’s conclusion. Specifically, EPA determined that the
EPA, 135 S. Ct. 2699 (2015)).
costs of the MATS would likely outweigh the HAP
reduction benefits even if the agency were able to monetize
In 2016, EPA finalized a supplemental A&N finding based
all of them. EPA noted that many of the non-monetized
on its review of the 2012 rule’s estimated costs. EPA
HAP reduction benefits relate to illnesses, which have had
evaluated whether compliance costs were “reasonable” and
lower economic values than mortality effects in its past
compared the estimated compliance costs to the estimated
analyses.
benefits, including co-benefits. EPA concluded that it was
appropriate and necessary to regulate mercury and other
Federal Guidance on Benefit-Cost
HAPs from power plants after considering regulatory costs.
Analysis
Separate from the CAA, federal guidelines inform EPA’s
2020 Appropriate and Necessary Finding benefit-cost analyses. For example, Office of Management
In 2020, EPA reversed the 2016 supplemental finding,
and Budget Circular A-4 directs agencies to assess whether
concluding that HAPs regulation is not appropriate and
the benefits of a proposal justify the costs. It does not
necessary under Section 112(n) because monetized costs
require monetized benefits to outweigh monetized costs.
exceed monetized HAP reduction benefits. The 2020 A&N
Circular A-4 recognizes that quantified benefit and cost
rule revised the 2016 benefit-cost comparison by excluding
estimates may not capture all anticipated benefits and costs
the monetized co-benefits. This exclusion resulted in the
and directs analysts to identify non-quantified impacts “of
estimated compliance costs ($9.6 billion in 2015),
sufficient importance to justify consideration in the
outweighing the monetized HAP benefits ($0.5 million to
regulatory decision.”
$6 million, depending on the discount rate, in 2016).
EPA has also developed its own guidance, Guidelines for
The 2020 A&N rule concluded that EPA’s benefit-cost
Preparing Economic Analyses, to complement Circular A-4
comparison for the 2016 supplemental finding was flawed
and other guidance. EPA has recently drafted updates to its
because it included co-benefits from non-HAP pollutants.
Guidelines, which its Science Advisory Board is reviewing.
While EPA acknowledged that estimation of all benefits
Among other things, the draft update affirms that economic
and costs, including ancillary impacts, is consistent with
analysis should account for all benefits and costs of a
federal guidance, the agency concluded that it had erred
proposal and advises distinguishing benefits from co-
when it gave equal consideration to benefits (HAP
benefits. It also advises considering whether “more
reductions) and co-benefits (non-HAP reductions) when
economically efficient or appropriate ways” are available to
making its 2016 A&N finding under Section 112(n). The
obtain co-benefits if the proposal is expected to “induce
2020 A&N rule concluded that an A&N finding under
large” co-benefits. In addition, EPA’s forthcoming
Section 112(n)(1) must instead be justified
proposed rule is expected to provide guidance regarding the
“overwhelmingly” by HAP reduction benefits.
agency’s approach to benefits assessment.
This interpretation marks a change from that of the prior
Potential Issues for Congress
Administration’s EPA, which concluded that nothing in the
EPA’s approach to benefits in the 2020 A&N rule may set a
CAA prohibits EPA from considering co-benefits in a
precedent for future rulemakings. Although EPA linked the
benefit-cost analysis for an A&N finding. The 2016
2020 A&N analysis to its interpretation of CAA Section
supplemental finding characterized the non-HAP reductions
112(n)(1), the EPA Administrator has said on the record
as a “direct result of achieving the HAP emission limits
that the analysis foreshadows a more general analytical
under MATS” and included these monetized co-benefits in
approach in future air pollution rulemakings. EPA has not
the total benefits estimate. EPA’s 2016 supplemental
specified whether that means it would exclude or give less
finding also pointed to the CAA legislative history, noting
weight to co-benefits in other air rulemakings. Such
that Senate Report 101-228 expected that HAP limits
modification of co-benefit estimates would result in less
“would have a collateral benefit of controlling criteria
favorable assessments, on a benefit-cost basis, of the rules.
pollutants as well and viewed this as an important benefit of
As EPA develops its benefits proposal and updates its
the air toxics program” (81 Federal Register 24439, April
Guidelines, Congress may exercise oversight over how
25, 2016).
EPA factors benefits and costs into regulatory decisions.
Issues include consideration of non-monetized benefits and
The 2020 A&N rule also reveals a potential shift in EPA’s
whether excluding co-benefits is consistent with the CAA.
assessment of non-monetized benefits. EPA’s 2011 MATS
analysis stated that non-monetized benefits “could be
Kate C. Shouse, Analyst in Environmental Policy
substantial, including the overall value associated with HAP
reductions, value of increased agricultural crop and
IF11078
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EPA Reconsiders Benefits of Mercury and Air Toxics Limits

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https://crsreports.congress.gov | IF11078 · VERSION 4 · UPDATED