The Mercury and Air Toxics Standards Rule: Making Sense of EPA's Decision

This afternoon, EPA will announce an important decision regarding the Mercury and Air Toxics Standards Rule, which regulates emissions of mercury and other hazardous air pollutants from coal and oil-fired power plants. First, and foremost, we understand that the decision does not affect the stricter emissions limits or other requirements of the MATS Rule in any way. Those limits will remain in effect and the projected environmental benefits of the MATS Rule should still occur.

Instead, the decision is intended to set precedent for how EPA performs similar cost-benefit analyses in future rulemakings. It rejects the consideration of so-called "co-benefits" from new emissions limits, which is one of the ways EPA justified the compliance and economic costs of the MATS Rule in 2016.

According to EPA statements in December 2018, the total compliance costs of the MATS Rule are between $7.4 and $9.6 billion per year. The total economic benefit associated with the reductions in mercury and other hazardous air pollutant emissions is between $4 and $6 million per year, i.e., the costs of the MATS Rule are over 1,000 times more than the hazardous air pollutant-related benefits.

However, in order to comply with the emission limits in the MATS Rule, power plants will need to install control technologies that also reduce emissions of particulate matter (PM) and sulfur dioxide (SO₂). So, in 2016, EPA calculated the economic benefits arising from those reductions in PM and SO₂ emissions and included the value of those benefits in the total economic benefits arising from the MATS Rule. This allowed EPA to conclude that the total economic benefits of the MATS Rule were between $31 billion and $81 billion and that regulating hazardous air pollutant emissions from power plants is "appropriate and necessary."

We understand the only effect of the decision is to reverse that "appropriate and necessary" conclusion. Nonetheless, it sends a strong message about how the current administration believes this type of analysis should be performed. The regulated community should expect future cost-benefit analyses from this administration to focus on the benefits of reducing the pollutants that are actually regulated by a new rule.