In a major judicial victory for the EPA, all challenged aspects of the Agency’s February 2012 mercury and air toxics standards (MATS) for power plants were upheld by the U.S. Court of Appeals for the D.C. Circuit (White Stallion Energy Center, LLC v. EPA). 

One member of the three-judge panel disagreed with two aspects of the pro-EPA ruling written by the other two judges.  But, the case is a ringing endorsement of the MATS, a rule the EPA says will likely result in the retirement of up to 2 percent of existing coal-fired power plants because operators will find the necessary upgrades too costly.  According to the Energy Information Administration (EIA), at the end of 2012, there were 1,308 coal-fired generating units in the United States; the MATS would therefore result in the retirement of about 26 units, according to the EPA.

Top mercury source
White Stallion Energy Center, LLC v. EPA consolidates challenges to the MATS brought by industry, state, and labor petitioners as well as environmental organizations.  The MATS applies to electric generating units (EGUs) larger than 25 megawatts (MW) that burn coal or oil for generating electricity for sale and distribution through the national electric grid to the public.

According to the EPA, these facilities are responsible for about 50 percent of mercury emissions and 77 percent of acid gas emissions.  They are also the leading source of emissions of other toxics, including arsenic, nickel, selenium, and hexavalent chromium, says the EPA.  Under the rule, all power plants must ultimately prevent 90 percent of the mercury in coal burned from being emitted into the air.

Following are key challenges to the rule that were rejected by the D.C. Circuit majority.

Industry challenges

• In 2000, the EPA found that EGUs were appropriately regulated under the Clean Air Act Section 112(c).  In 2005, the G.W. Bush EPA removed EGUs from the list of Section 112(c) categories subject to maximum achievable control technology (MACT) requirements for hazardous air pollutants (HAPs).  In 2012, the EPA decided to reinstate the 2000 finding.  Industry petitioners claimed that the 2000 finding was unlawful because the Agency did not solicit and consider public comment and that the finding was flawed.  The D.C. Circuit majority said that in the 2012 MATS, the EPA adequately corrected the problems with the 2000 finding.   
• Petitioners claimed the EPA should have considered costs to utilities that will need to comply with the MATS.  The D.C. Circuit majority disagreed, stating that Congress did not direct the EPA to consider costs in listing categories of sources under Section 112. 
• Petitioners contended that the EPA was required to base its “appropriate and necessary” determination on public health hazards that occur exclusively due to EGU HAPs.   Thus, they contend, the EPA erred in considering EGU HAP emissions that merely “contribute to” or exacerbate otherwise-occurring health hazards.  The D.C. Circuit majority disagreed.  “Section 112(n)(1)(A)’s reference to hazards occurring ‘as a result of’ EGU HAP emissions could connote hazards caused solely by EGU emissions, but it could also connote hazards exacerbated by EGU emissions,” stated the majority.  “The notion that EPA must ‘pick and choose’ among HAPs in order to regulate only those substances it deems most harmful is at odds with the court’s precedent.”
• Other challenges by industry involved the change in EPA’s position between 2005 and 2012, EPA’s decision not to distinguish between major sources and areas sources, the achievability of the imposed limit for hydrogen chloride emissions, EPA’s decision not to issue separate standards for circulating fluidized-bed EGUs, and the beyond-the-floor standards the Agency issued for lignite-fired EGUs.  In each case, the majority denied the petitions.  

Environmental group challenges
Environmental petitioners maintained that stack testing conducted quarterly or once every 3 years cannot provide reasonable assurance of compliance with a standard set as a 30-day emissions rate given EPA’s determination that stack test results are highly variable.  The groups also contended that the EPA failed to explain how compliance options involving long intervals between performance tests and lacking any control of operating conditions between tests can provide sufficiently timely or reliable information to ensure compliance. 

The EPA explained that, in its judgment, the quarterly stack testing period, coupled with underlying monitoring of control devices or the additional monitoring for liquid oil-fired units, is expected to be frequent enough to ensure that a unit’s emissions control devices and processes continue to operate in the same manner as during the previous stack test.  The majority found this to be a reasonable explanation for the monitoring frequency and denied the challenge.

Dissent
Judge Brett Kavanaugh’s dissent focused on cost, which the majority said the Agency did not have to consider in setting the MATS.   “In my view, it is unreasonable for EPA to exclude consideration of costs in determining whether it is ‘appropriate’ to impose significant new regulations on electric utilities,” wrote Kavanaugh.  “To be sure, EPA could conclude that the benefits outweigh the costs.  But the problem here is that EPA did not even consider the costs. And the costs are huge, about $9.6 billion a year – that’s billion with a b – by EPA’s own calculation.”

White Stallion Energy Center, LLC v. EPA