Court rejects Bush's mercury emissions trading plan

EPA's 'cap-and-trade' approach -- letting coal- or oil-fired power plants to buy credits from cleaner facilities -- broke the Clean Air Act, the judges said.

By Judy Pasternak
Los Angeles Times Staff Writer

February 9, 2008

WASHINGTON — New coal-fired power plants could have to include strict controls to keep mercury out of the air in the wake of a federal court ruling Friday. A three-judge appeals panel struck down a market-based effort by the Bush administration that would have allowed some generators of electricity to buy their way out of meeting their pollution-reduction targets.

The Environmental Protection Agency now must either pursue the matter further in court, or go back to the drawing board and write new rules to regulate mercury in both new and existing plants. The agency said Friday that it was reviewing the decision and had not decided its next move.

The appeals panel's unanimous decision said that the administration violated the Clean Air Act in 2005 when it established a national cap for mercury emissions and permitted power plants running on coal or oil to purchase credits from less-polluting plants.

The EPA illegally took the power plants off a list of industries that are required to use the best available technology at every facility to reduce mercury venting to the greatest degree possible, the judges wrote. EPA's defense was "not persuasive," they wrote.

A coalition of environmental groups and 17 states, California among them, challenged the policy, which was slated to take effect in 2010.

Environmentalists criticized the so-called cap-and-trade approach for mercury because the neurotoxin tends to accumulate near its source, rather than dispersing like other pollutants that have been regulated under similar mechanisms. Cap-and-trade has been used for sulfur, and there are proposals in Congress to use this form of control for the now-unregulated greenhouse gas carbon dioxide, which contributes to global warming.

Coal-fired power plants, which provide half of America's electricity, are major sources of mercury, as well as of sulfur and carbon dioxide.

"Today's ruling adds to the momentum against dirty power in this country," said John D. Walke, an attorney for the Natural Resources Defense Council, which was one of the petitioners. "It's a very big deal."

But Frank O'Donnell, president of Clean Air Watch, said the big problem is the roughly 600 existing coal-fired power plants that will not be federally regulated until a new rule is put in place.

"Even though the Bush administration lost, it probably bought the industry at least five more years" by proposing the cap-and-trade system, he said. "I believe this was a cynical ploy, that they knew it was illegal but that it would buy the industry time. I'm sure they will be dragging their feet on proposing new standards."

Some environmentalists noted that existing coal-fired plants may also be subject to case-by-case review by states as they renew operating permits. That could result in "faster pollution cuts than what the Bush administration would have gotten," Walke said.

The EPA had said the cap-and-trade program would cut mercury emissions by 70% from 1999 levels by 2018, but critics had said that requiring controls on every plant could cut emissions even further, by 90%.

More than half the states have either adopted stringent mercury regulations that will remain in place or have no coal-fired power plants within their borders, according to a review by Environmental Defense, another petitioner in the case.

The EPA's own Children's Health Protection Advisory Committee wrote in 2004 that the agency's proposed cap-and-trade system "does not sufficiently protect our nation's children."

The challengers said mercury "hot spots" could endanger children living near power plants that use the credits to send extra pollution into the air. Mercury that falls in water is converted to methylmercury. Developing fetuses, breast-fed infants and children exposed to methylmercury face the risk of learning disabilities. Adults who eat contaminated fish may also face the risk of impaired hearing and vision, motor disturbances and altered sensation.

EPA officials have said that as a practical matter, most people living near power plants do not eat local fish, but instead consume seafood from international waters. They add that airborne mercury is a global problem, with Asia contributing much of the pollution that ends up in the United States. Utility executives warned that overly aggressive regulation could damage their industry and jeopardize the nation's electricity supply.

Scott Segal, director of an industry group called the Electric Reliability Coordinating Council, said: "Ironically, with their aggressive litigation posture, the environmental community and their state allies have again caused uncertainty and delay in regulating mercury." The EPA, he said, "essentially must return to the drawing board in developing a new mercury rule."

EPA spokesman Jonathan Shradar said the agency has not decided whether to appeal the decision to the full appeals court or to draft a new mercury rule that complies with the judges' opinion. Any new rule would set standards for both new and existing power plants.

"We are disappointed," Shradar said. He called the panel's reasoning "kind of a legal technicality" and added that "mercury is a priority with us."

Jeffrey R. Holmstead, a former EPA official who oversaw the creation of the vacated rule, said an appeal would be "a bit of a long shot."

Holmstead, who is now a lobbyist for the utility industry, said that coming up with a new rule would take years and that in the meantime, he expected a thicket of challenges and litigation at the state level.

But he added that "technology has advanced since we were looking at it and people are more comfortable with it. Some of the uncertainties have been reduced."

judy.pasternak@latimes.com