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EPA Disagreed With White House on Updating Mercury Analysis

May 28, 2020, 5:41 PM

The EPA disagreed with a White House request to use current data when revising its rule on mercury air pollution, publicly available email exchanges show, which a law professor says could weaken the agency’s legal defense of the regulation.

The regulation involved a second look at the Obama administration’s legal rationale to see whether it was “appropriate or necessary” for the Environmental Protection Agency to limit mercury and other toxic air pollution from power plants.

The Trump administration’s EPA concluded May 22 the mercury and air toxics standards, known as MATS, which were set in 2012 and met subsequently by the power sector, weren’t justified. It reached this decision by using the same health benefits and compliance estimates used in 2012 to set the standards.

The White House Office of Management and Budget asked the EPA to update its cost-benefit analysis, using the most recent findings on actual health benefits of reducing mercury, a known neurotoxin, as well as the costs that power plants incurred since 2012 to meet those limits.

But the emails show the current EPA said it wasn’t obligated to do so under the Clean Air Act.

The EPA’s rationale may fail under the Administrative Procedure Act, which bars federal agencies from making arbitrary decisions, said Melissa Luttrell, a University of Tulsa Law School professor. She said the emails show the agency simply chose not to use updated direct benefits and direct costs of reducing mercury and other targeted air pollutants.

“These emails make it really clear that a shoddy procedure was followed,” Luttrell told Bloomberg Law. “They show that EPA is not considering all the factors that it is statutorily required to consider.”

The EPA, for its part, said it doesn’t comment on the interagency process, but defended its regulation in an email to Bloomberg Law. It said the rule, as finalized, “properly evaluates” the compliance cost to coal- and oil-fired power plants and the benefits from reducing hazardous and air pollutant emissions from those power plants.

“Those power plants remain subject to and must comply with the mercury emissions standards of the MATS rule, which remains fully in effect notwithstanding the revised cost-benefit analysis,” the agency said in the email.

‘We Have to Discuss This’

The EPA had planned to issue its final mercury supplemental finding at the end of 2019, but observers tracking the regulation in December told Bloomberg Law that the Office of Management and Budget held up the rule’s release because it wanted the EPA to update its cost-benefit analysis, using the actual costs and updated health benefits.

The office’s Jan. 9 email to the EPA bolstered that claim.

“OMB requests that EPA update its analysis to provide current information about the projected costs, benefits and impacts of the rule,” Elke Hodson Marten, a policy analyst at OMB’s Office of Information and Regulatory Affairs, said in an email to EPA staff.

Instead of agreeing to the request, Nick Hutson, an air office staff member who was the EPA’s point of contact with OMB, demurred a day later, writing, “We have to discuss this internally, brief our management, and get back to you.”

But in a March 6 email exchange between OMB and EPA, Hutson suggested language to provide legal backing for not updating the analysis. The EPA interpreted the Clean Air Act’s Section 112(n)(1)(A) “as not obligating” the agency to update its data, “and we maintain that interpretation here,” Hutson wrote.

Supplemental Report

EPA Administrator Andrew Wheeler in April said the EPA “typically doesn’t do cost-benefit analysis for these type of rulemakings,” but stopped short of elaborating further.

Then, on May 22, the EPA published a supplemental cost finding, saying Obama-era standards for mercury and other air toxic pollutants weren’t justified by using the same cost-benefit analysis.

According to the final rule, the costs of complying with the requirements are projected at up to $9.6 billion annually, while direct benefits are estimated to be as much as $6 million each year.

Wheeler said the supplemental finding was a response to the U.S. Supreme Court’s 2015 decision in Michigan v. EPA. The justices had ordered the agency to account for the costs of compliance because the prior administration had not done so for them in writing the 2012 standards, even though it had done the analysis.

The analysis advanced initially in 2011 by the Obama administration, and again in 2016 to properly respond to the Supreme Court mandate, took a more expansive view of how mercury controls would benefit society and justified them by relying heavily on side reductions of fine airborne particle pollution tied to asthma attacks and premature deaths.

The new Trump administration approach, by contrast, limits its tally of benefits to only those directly tied to regulating mercury and other toxins -- while excluding the so-called co-benefits of simultaneously paring soot.

‘Being Hypocritical’

In a December 2019 study, EPA’s former ad hoc economic advisers said the agency should redo its cost-benefit analysis to better reflect the mix of coal-fired generation in 2019 rather than the coal-intensive power generation of 2011.

“EPA is being hypocritical in calling the Obama-cost-benefit flawed on the one hand, but then EPA is refusing to do a new cost-benefit analysis even though OMB believed it should do a new one,” said Amit Narang, a regulatory policy analyst with the progressive consumer rights advocacy group Public Citizen.

Wheeler in announcing the decision to redo the cost-benefit analysis that underscored the 2012 standards said he was responding to the Obama administration’s flawed analysis.

The emails show “that even OMB agreed with public health and environmental groups and EPA’s independent science advisers that EPA should have grappled with new information showing that the benefits of MATS are much greater than EPA estimated and the costs much lower,” Earthjustice attorney Neil Gormley said in an email.

Jeffrey Holmstead, the EPA’s former assistant administrator for air and radiation, defended the Trump EPA’s mercury regulation (RIN: 2060-AT99).

The legal issue is whether the Obama-era EPA’s “appropriate and necessary” finding was proper based on the administrative record that EPA had before it at the time, said Holmstead, now a partner at Bracewell LLP. The EPA in responding to the Supreme Court mandate in 2016 was using costs and benefits data from 2011, he said.

“When the Obama EPA responded to the Supreme Court remand in 2016, it didn’t update any of the information in the 2011 administrative record,” he said.

This is despite the fact that most of the power industry already had begun to comply with the 2012 standards, Holmstead said.

To contact the reporter on this story: Amena H. Saiyid in Washington at asaiyid@bloombergenvironment.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergindustry.com; Rebecca Baker at rbaker@bloombergindustry.com

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