The EPA has finalized the court-ordered Mercury and Air Toxics Standards (MATS) for power plants. Commonly called the Utility MACT (maximum achievable control technology) rules, they are the first ever standards limiting mercury, acid gases, and other toxic pollution from power plants. The standards were originally ordered to be completed by November 16, 2011, but the court-ordered deadline was extended by a month to accommodate the extended comment period and the volume of comments the EPA received on the proposed rule.

The EPA-projected total national annual cost of this rule is $9.6 billion. The EPA estimates that for every dollar spent to reduce pollution from power plants, the American public will see up to $9 in health benefits. The total health and economic benefits of this standard are estimated to be as much as $90 billion annually.

Background

The 1990 Clean Air Act (CAA) Amendments authorized the EPA to issue standards to reduce toxic air emissions from many sources, and to study whether to do so for power plants. On December 20, 2000, the EPA made the determination that it was appropriate and necessary to regulate coal- and oil-fired electric generating units (EGUs) under CAA section 112, and added such units to the CAA section 112(c) list of sources that must be regulated.

On January 30, 2004, the EPA proposed section 112 standards for mercury (Hg) emissions from coal-fired EGUs and nickel (Ni) emissions from oil-fired EGUs, and, in the alternative, proposed to remove EGUs from the 112 list based on a finding that it was neither appropriate nor necessary to regulate EGUs under this section of the CAA.

On March 29, 2005, the EPA issued a final revision of the appropriate and necessary finding for coal- and oil-fired EGUs and removed such units from the 112 list. The EPA never finalized the proposed section 112 standards for Hg and Ni. The removal of EGUs from the 112 list was challenged in court, and on February 8, 2008, the D.C. Circuit Court, in State of New Jersey v. EPA, determined that the EPA violated the CAA by removing EGUs from the 112 list. As a result of the ruling, EGUs remain a CAA section 112(c) listed source category. In accordance with a consent decree stemming from another court action, the EPA was required to issue a final section 112 rule by November 16, 2011.

On May 3, 2011, the EPA proposed section 112 air toxics standards for all coal- and oil-fired EGUs that reflect the application of the maximum achievable control technology (MACT) consistent with the requirements of the CAA. The court-ordered deadline was extended by a month to accommodate the extended comment period and the volume of comments the EPA received on the proposed rule.

Outside attempts to extend the deadline further were fruitless. On October 24th a federal court denied an industry group’s request to postpone the deadline for one year. Congress discussed and even voted on some bills that would delay the rule, but none of them passed both houses, and the White House indicated they would veto any such bills.

The final standards were issued on December 21, 2011.

Standards

The final MATS rule is mostly unchanged from the proposed rule. The rule regulates units at both major and area sources. The mercury and air toxics standards will affect Electric Generating Units (EGUs) that burn coal or oil for the purpose of generating electricity for sale and distribution through the national electric grid to the public. These include investor-owned units as well as units owned by the Federal government, municipalities, and cooperatives that provide electricity for commercial, industrial, and residential uses.

The final rule identifies two subcategories of coal-fired EGUs, four subcategories of oil-fired EGUs, and a subcategory for units that combust gasified coal or solid oil (integrated gasification combined cycle (IGCC) units) based on the design, utilization, and/or location of the various types of boilers at different power plants. The rule includes emission standards and/or other requirements for each subcategory.

The EPA also signed revisions to the new source performance standards (NSPS) for fossil-fuel-fired EGUs. This NSPS revises the standards that new coal- and oil-fired power plants must meet for particulate matter (PM), sulfur dioxide (SO2), and nitrogen oxides (NOx).

The NSPS will affect boilers that burn fuels, including coal, oil, or natural gas to produce steam to produce electricity or provide heat. This includes boilers used at industrial facilities (e.g., refineries, chemical and manufacturing plants, and paper mills), commercial establishments (e.g., stores/malls, laundries, apartments, restaurants, hotels/motels), and institutional facilities (e.g., medical centers, educational and religious facilities, and municipal buildings).
It is the intention of the EPA that this proposed rule force companies to make a decision between controlling emissions or retiring older EGUs and shifting to more modern methods of generation.

Requirements

• For all existing and new coal-fired EGUs, the rule establishes numerical emission limits for mercury, PM (a surrogate for toxic non-mercury metals), and HCl (a surrogate for all toxic acid gases).
• For existing and new oil-fired EGUs, the standards establish numerical emission limits for PM (a surrogate for all toxic metals), HCl, and HF. EGUs may also show compliance with the HCl and HF limits by limiting the moisture content of their oil.
• The rule establishes alternative numeric emission standards, including SO2 (as an alternate to HCl), individual non-mercury metal air toxics (as an alternate to PM), and total non-mercury metal air toxics (as an alternate to PM) for certain subcategories of power plants.
• The standards set work practices, instead of numerical limits, to limit emissions of organic air toxics, including dioxin/furan, from existing and new coal- and oil-fired power plants. Because dioxins and furans form as a result of inefficient combustion, the work practice standards require an annual performance test program for each unit that includes inspection, adjustment, and/or maintenance and repairs to ensure optimal combustion.
• The standards also set work practices for limited-use oil-fired EGUs in the continental U.S.
• A range of widely available and economically feasible technologies, practices and compliance strategies are available to power plants to meet the emission limits, including wet and dry scrubbers, dry sorbent injection systems, activated carbon injection systems, and fabric filters.
• The revisions to the NSPS for fossil-fuel-fired EGUS include revised numerical emission limits for PM, SO2, and NOX.
   

The EPA estimates that there are approximately 1,400 units affected by this action. Approximately 1,100 existing coal-fired units and 300 oil fired units at about 600 power plants. The EPA expects that dozens of coal-fired plants already meet at least some part of the proposed standards, however, about 44 percent of all coal-fired plants lack advanced pollution control equipment.

Existing sources generally will have up to 4 years if they need it to comply with the rule. This includes the 3 years provided to all sources by the Clean Air Act. The EPA’s analysis continues to demonstrate that this will be sufficient time for most, if not all, sources to comply. Under the Clean Air Act, state permitting authorities can also grant an additional year as needed for technology installation. The EPA expects this option to be broadly available.

Electric Reliability Concerns

In mid-November it was discovered that a draft of the proposed rule acknowledged concerns about the regulation’s effect on electricity reliability, but that language was deleted before publication. The language appeared in the version of the utility MACT rule that the Environmental Protection Agency sent to the White House Office of Management and Budget for interagency review February 19th, but it was deleted when the EPA signed and issued the proposed rule.

The draft rule said the EPA “is aware that concerns have been expressed by some, even in advance of this proposed rule, that this regulation may detrimentally impact the reliability of the electric grid. The Agency recognizes the critical need for reliable operation of the grid and the special concerns that may be presented if sources integral to reliable operation are not able to comply within the statutorily prescribed compliance timeframe.”

The draft proposed rule went on to say that the agency takes those concerns seriously but that the Clean Air Act gives the EPA the “tools to ensure that any such sources do come into compliance without unduly impacting electric reliability.” The Clean Air Act requires compliance with a MACT standard within three years of the promulgation of the standard, but allows for a one-year extension on a case-by-case basis. In addition, the President has the authority to grant two-year extensions of the deadline where justified by national security considerations.

The final standards are accompanied by a Presidential Memorandum that directs the EPA to use tools provided in the Clean Air Act to implement the Mercury and Air Toxics Standards in a cost-effective manner that ensures electric reliability. For example, under these standards, the EPA is not only providing the standard three years for compliance, but also encouraging permitting authorities to make a fourth year broadly available for technology installations, and if still more time is needed, providing a well-defined pathway to address any localized reliability problems should they arise.

Utility industry groups argue that the three-year compliance deadline will not be feasible for utilities to meet. The American Public Power Association argues that community-owned utilities may require as long as six years to comply with the proposed rule.

The Electric Reliability Coordinating Council (ERCC), which includes power companies, has raised concerns that the utility MACT rule would put electricity reliability in jeopardy. Scott Segal, director of the ERCC, said in a November 14th letter to Cass R. Sunstein, administrator of the OMB Office of Information and Regulatory Affairs, that the organization was “alarmed” to see the language in the February draft. He said, “There is nothing to suggest any changes to the rule itself had been made to justify this administrative sleight of hand.”

Responding to industry concerns, the Energy Department issued a report December 1st finding that the utility MACT rule would not jeopardize electric reliability. However, this conflicts with other reports. For example, the North American Electric Reliability Corporation (NERC) completed its Long-Term Reliability Assessment, and concluded that between 32.6 GW and 53.6 GW of capacity will retire by 2018 as a result of the EPA’s regulations, causing available capacity to fall below target reserve margins in Texas and New England. Other regions of the country would continue to have adequate reserve margins following the implementation of EPA regulations, according to the NERC report.

On December 12th, Sen. Lisa Murkowski (R-Alaska) announced she is drafting a bill that would create a “safety valve” intended to ensure the electric grid remains reliable as EPA implements its utility MACT rule and other regulations.

In Wisconsin

There are 15 Wisconsin facilities covered by the rule. The EPA estimates the new standards will prevent up to 220 premature deaths in Wisconsin while creating up to $1.8 billion in health benefits in 2016.

Electric reliability is of particular concern in states that, like Wisconsin, rely on coal for a significant portion of their energy production. An article in the Milwaukee Journal-Sentinel noted that “coal-fired power plants generating 12,600 megawatts of electricity – enough to power more than 10 million homes – are at risk of being shut down as utilities strive to comply with environmental rules.”

The Wausau Daily Herald reported on December 2nd that at least one Wisconsin utility is considering laying off workers as a result of the Utility MACT and other EPA rules. The lay-offs would come as some generators are shut down so that the utility can comply with the new standards.

The Great Lakes Legal Foundation is researching what modifications to Wisconsin law will be necessary to incorporate the federal rules.

Additional information and source documents related to the Utility MACT rule are available on the Great Lakes Legal Foundation Utility MACT webpage.

This post was authored by GLLF Staff Attorney Emily Kelchen and originally published on the GLLF Reg Watch Blog.