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May 15, 2019
EEI says the MATS provides certainty

The Edison Electric Institute (EEI), which represents the interests of all U.S. investor-owned electric companies, does not believe the EPA should eliminate its 2012 Mercury Air Toxics Standard (MATS). According to the EEI, the electric power sector has fully implemented the MATS, and its elimination would imperil the industry’s long-term certainty. That certainty, the EEI adds, would be strengthened with the EPA’s finalization of its proposed Residual Risk and Technology Review (RRT) of the MATS; this would assure the public that compliance with the MATS protects human health with an ample margin of safety and also causes no adverse impact on the environment. In other words, finalization of the RRT would make it unlikely that power plants would be compelled, perhaps for many years, to comply with new Clean Air Act (CAA) rules governing emissions of hazardous air pollutants (HAPs).

Appropriate and necessary ruling

In 2015, the U.S. Supreme Court ruled in Michigan v. EPA that the EPA had not considered cost when it determined that regulation of HAP emissions from coal- and oil-fired electric generating units (EGUs) is appropriate and necessary under CAA Section 112. In response to that ruling, the EPA undertook several cost studies of the MATS. The first, issued in April 2016, concluded that after factoring in cost, the MATS remained appropriate and necessary. Then in February 2019, the Agency proposed to find that because of the high cost of compliance with the MATS, it is not appropriate and necessary to regulate HAP emissions from power plants, reversing the EPA’s prior conclusion.

Eliminating the appropriate-and-necessary finding would not by itself strike the MATS from the books, but it can serve as the first necessary step in doing so. In fact, should the EPA decide to reverse the previous finding, the Agency would probably find itself in deep legal trouble if it did not follow through with the elimination of the MATS.

Also, in the February 2019 proposal, the EPA said its RRT found that it was not necessary to either lower the MATS emissions limits to protect human health and the environment or impose new requirements on power companies because of recent developments in air pollution control technologies.

$18 billion invested

According to the EEI, the EPA’s proposal to revisit the appropriate-and-necessary finding presents a unique “factual situation” because the electric power industry has already fully implemented the MATS and incurred “substantial costs” in doing so. The EEI continues:

“Many of these costs have been recovered, or are currently being recovered, through electricity rates paid by customers. Though some parties continue to challenge the lawfulness of EPA’s 2016 supplemental appropriate-and-necessary finding, which remains before the D.C. Circuit in abeyance, circumstances have changed since that finding was issued—and even more so since publication of MATS in 2012. Since the MATS rule became effective in 2012, it is estimated that the owners and operators of coal- and oil-based EGUs have spent more than $18 billion to comply, as well as retired assets and invested in new, replacement generation—including zero-emissions generation. Given this investment and industry’s full implementation of MATS, regulatory and business certainty regarding regulation under CAA Section 112 is critical. EPA accordingly should leave the underlying MATS rule in place and effective. EPA should not rescind or change MATS or the 2016 supplemental appropriate-and-necessary finding.”

On the other hand, the EEI states that the Agency should “expeditiously finalize” the RRT. Finalization would effectively mean that no new control measures, technologies, or practices have been identified for meaningfully reducing EGU HAP emissions.

The EEI adds that there should be a separate rulemaking to change the MATS—without eliminating it—to reduce compliance costs. These changes would include allowing performance tests to be conducted less frequently and issuing an amendment to ensure that the MATS does not interfere with the use of natural gas in MATS-affected units capable of utilizing it.

MATS and the prospects for coal

While the power industry itself is not inclined to eliminate the MATS, the coal mining sector sees the rule as a major impediment to the survivability of coal-fired energy.

“We welcome the agency’s proposal to revisit what stands as perhaps the largest regulatory accounting fraud perpetrated on American consumers,” said Hal Quinn, President of the National Mining Association, in December 2018, after the EPA announced that it planned to reassess the MATS and its costs.

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