Yesterday, the D.C. Circuit Court of Appeals ruled 2-1 to uphold the EPA’s nonsensical Mercury Air Toxics Standards (MATS) Rule. The MATS Rule requires electric utilities to install maximum achievable control technology (MACT) to reduce emissions of mercury and other hazardous air pollutants (HAPs) from coal-fired power plants.
The rule is nonsensical because, as explained below, although one of the most expensive regulations in history (officially estimated at $9.6 billion in 2016), its health benefits are illusory.
In the case, titled White Stallion Energy Center LLC et al. v. EPA et al., Judge Brett Kavanaugh wrote a powerful dissenting opinion, as my colleague William Yeatman noted yesterday. Kavanaugh agreed with industry petitioners that EPA unreasonably excluded cost considerations (economic impacts) when determining whether MACT regulation of power plant HAPs is “appropriate and necessary.”
The two-judge majority partly based their opinion on the Supreme Court’s ruling in Whitman v. American Trucking Ass’ns (2001) that EPA may not take costs into consideration when setting national ambient air quality standards (NAAQS).
Kavanaugh argues the majority ‘misreads’ or ‘over-reads’ Whitman by ignoring a key difference between the Clean Air Act provisions governing NAAQS rulemakings – §108(a) and §109(b) – and the provision addressing potential MACT regulation of power plant HAPs – §112(n)(1)(A).
The NAAQS provisions clearly allow no room for cost considerations. If an air pollutant is emitted by numerous or diverse mobile or stationary sources and the associated air pollution is reasonably anticipated to endanger public health or welfare, then, pursuant to §108(a), EPA must establish NAAQS for those pollutants, and, pursuant to §109(b), the standards must be requisite to protect public health with an adequate margin of safety. Period. End of story.
In contrast, §112(n)(1)(A) requires EPA to study and issue a report on the public health hazards anticipated to occur as a result of power plant HAP emissions, and then apply MACT regulation “if” the Administrator “finds such regulation is appropriate and necessary.” The provision does not define the terms “appropriate” and “necessary.” Common sense suggests that a regulation is “appropriate” if the benefits justify the costs.
Perhaps more importantly, §112 tasks EPA to determine whether MACT regulation of HAPs is “appropriate and necessary” only for “electric steam generating units.” For all other major sources of HAP emissions, EPA has no discretion and is simply required to promulgate MACT regulations. The statute thus seems to contemplate that, in the special case of coal power plants, MACT regulation may not be appropriate even if the associated HAP emissions pose public health hazards. In other words, a less stringent form of Clean Air Act regulation (such as new source performance standards) or state-level regulation might be “appropriate.”
Yeatman opines that Kavanaugh’s dissent may persuade the Supreme Court to review the case. If so, the Court might rule that EPA is allowed or even required to consider costs when determining what is “appropriate” when regulating HAP emissions from power plants. That, in turn, could set the stage for litigation on whether the MATS Rule is too costly to be “appropriate” within the meaning of the statute.
Of course, EPA contends the MATS Rule is a bargain at almost any price, delivering $33 billion to $89 billion in annual health benefits. Litigation reviving public debate on such claims could be a great teaching moment.
Our June 2012 study, All Pain and No Gain, provides a detailed critique of EPA’s MATS Rule health benefit estimates. Below is a summary of key points.
Revisiting EPA’s MATS Rule Benefit Estimates
The MATS Rule establishes first-ever maximum achievable control technology (MACT) standards for hazardous air pollutant (HAP) emissions from power plants.
Mercury is the principal HAP targeted by the Rule. Unlike most air pollutants, mercury poses health risks not via inhalation but after being deposited in water bodies. Microbes can transform some of the mercury into an organic compound, methylmercury, which can accumulate in aquatic food chains. For humans, the “primary route of exposure” is eating fish.
EPA contends that pregnant women in subsistence fishing households consume enough mercury in self-caught fish to impair their children’s cognitive and neurological development. Although that is theoretically possible, in the 24 years since Congress tasked the EPA to study the health risks of mercury, the agency has not identified a single child whose learning or other disabilities can be traced to prenatal mercury exposure. Nor has it identified a single pregnant woman whose blood mercury levels from fish consumption are high enough to cause mental retardation or other cognitive abnormalities.
The EPA’s December 2000 “appropriate and necessary” determination, the trigger for the Utility MACT Rule, depicted power plant mercury emissions as a significant growing public health threat. At best, that was sheer exaggeration.
The EPA projected that power plant mercury emissions would increase from 46 tons per year (TPY) in 1990 to 60 TPY in 2010.  In fact, emissions declined to 29 TPY in 2011 – 50% below EPA’s projection. 
Citing a 1999-2000 Centers for Disease Control and Prevention (CDC) survey, EPA stated that 7% of childbearing age women in the U.S. (one in every 14) had blood mercury concentrations exceeding the agency’s reference dose (the “safe” exposure level).  But the relevant subpopulation is pregnant women, not women of childbearing age (defined as 15 to 44 years). Childbearing age women are older, on average, than the average pregnant woman, and blood mercury levels increase with age.  In the CDC’s 2001-2004 surveys, only 0.4% of pregnant women (one in every 250) had blood mercury levels exceeding the reference dose. 
More importantly, the EPA’s reference dose is not a valid measure of actual health risk. The reference dose is 1/15th the lowest exposure level – a value known as the “benchmark dose” – associated with mild, subclinical effects in any epidemiological study. The highest exposure measured in any pregnant woman by the CDC during 1999-2004 was 3.7 times the reference dose – about 1/4th the benchmark dose. Serious harm such as neurological disorders requires exposures higher than the benchmark dose. 
In the MATS Rule, the EPA assumes that any increase in prenatal mercury exposure above the reference dose produces a corresponding decrease in the child’s IQ. Here the EPA relies on a single study funded by the agency and led by an EPA scientist.  The study purports to be an “integrative assessment” of epidemiological studies conducted in the Faroe Islands , the Seychelles , and New Zealand . However, the Seychelles study – the most reliable of the three (the study with the fewest potential confounding variables) – found no association between prenatal mercury exposure and IQ even though exposures were as high as 18 times the reference dose. 
The EPA estimates that implementing the MATS Rule will cost $9.6 billion in 2016. The agency also estimates that the required mercury reductions will provide $0.5 to $6 million in health benefits in the same year.  The EPA does not even try to estimate the benefits of the Rule’s MACT standards for other HAPs such as chromium, nickel, and acid gases. For the HAP reductions that are the Rule’s statutory purpose, estimated costs exceed estimated benefits by 1,600 to one or even 19,200 to one.
Even those numbers give the MATS Rule too much credit. The EPA’s benefit estimate assumes that mercury emission reductions achieved in 2015 yield proportional reductions in fish tissue concentrations in 2016. Yet the agency admits that fish tissue concentrations may not decrease for “years to decades.” 
The benefit estimate further assumes that the hoped-for reduction in fish mercury concentrations will avert the loss of 0.00209 IQ points per child in a guesstimated population of 240,000 subsistence fishing households, and that those “saved” IQ points will boost aggregate lifetime income by $0.5 million to $6 million.  This is not verifiable even in principle. IQ cannot accurately be measured out to five decimal places. Consequently, it is also impossible to determine whether any relationship exists between income and IQ for increments as tiny as 0.00209 IQ points. In short, the EPA’s benefit estimate is a statistical figment.
The EPA nonetheless assures us the Rule will pay for itself many times over. This supposedly is due to the “co-benefits” of coincidental reductions in non-HAP emissions, particularly sulfur dioxide, which is a precursor of fine particulate matter (PM2.5). The EPA estimates that in 2016, the Rule’s coincidental PM2.5 reductions will avert 4,200 to 11,000 premature deaths, generating co-benefits of $33 billion to $89 billion, or $3 to $9 in health benefits for every dollar of cost.  None of this is credible.
As Anne Smith of NERA Economic Consulting points out, almost all of the projected 11,000 premature deaths averted are in areas already in attainment with the then-current National Ambient Air Quality Standard (NAAQS) for PM2.5.  By law, NAAQS are set at a level “requisite to protect public health” with an “adequate margin of safety.”
After the MATS rule was adopted, the EPA revised the NAAQS for PM2.5 from 15 micrograms per cubic meter (15 μg/m3) to 12 μg/m3.  Even so, Smith notes, between 94% and nearly 100% of the 11,000 avoided PM2.5-related deaths that EPA estimated from the MATS Rule are attributed to reductions in PM2.5 concentrations below the levels deemed by the new, more stringent NAAQS to be protective of public health with an adequate margin of safety. 
Smith also notes that EPA attributes up to 89% of the estimated co-benefits to PM2.5 reductions below the lowest exposure associated with mortality risk in any epidemiological study. 
EPA’s claim that, despite decades of air quality improvement, PM2.5 still poses major health risks in the U.S. chiefly derives from two epidemiological studies, the Harvard Six Cities study  and the American Cancer Society (ACS) study . This is cherry picking. The MATS Rule overlooks at least six other epidemiological studies that find no association between current PM2.5 levels and mortality. 
Most PM2.5 pollution from power plants is in the form of ammonium sulfate and ammonium nitrate. As air quality analyst Joel Schwartz documents , clinical studies of volunteers, elderly asthmatics, and animals find that neither substance is harmful even at levels many times greater than are ever found in the air Americans breathe .
To sum up, the benefits of the MATS Rule do not come close to justifying the costs. If benefits must justify costs for MACT regulation of power plants to be “appropriate” within the meaning of §112(n)(1)(A), then the MATS Rule is unreasonable and should be overturned.
 EPA, 65 FR 79828, Regulatory Finding on the Emissions of Hazardous Air Pollutants From Electric Utility Steam Generating Units, December 20, 2000 (hereafter Appropriate and Necessary Finding), http://www.epa.gov/ttn/caaa/t3/fr_notices/utilfind.pdf.
 EPA, Revised Technical Support Document: National Scale Assessment of Mercury Risk to Populations with High Consumption of Self-Caught Freshwater Fish, In support of the Appropriate and Necessary Finding for Coal- and Oil-Fired Electric Generating Units, December 2011, p. 7, fn. 9, http://www.epa.gov/mats/pdfs/20111216MercuryRiskAssessment.pdf.
 EPA, Appropriate and Necessary Finding, 65 FR 79827.
 Lindsey Jones, Jennifer D. Parker, and Pauline Mendola, Blood Lead and Mercury Levels in Pregnant Women in the United States, 2003-2008, NCHS Data Brief No. 52, December 2010, http://www.cdc.gov/nchs/data/databriefs/db52.pdf.
 Joel M. Schwartz and Seven E. Hayward, Air Quality in America: A Dose of Reality in Air Pollution Levels, Trends, and Health Risks (Washington, D.C.: American Enterprise Press), 2007, p. 169, http://www.globalwarming.org/wp-content/uploads/2012/06/Schwartz-Hayward-Air-Quality-in-America.pdf.
 Schwartz and Hayward, Air Quality in America, p. 170.
 Daniel A. Axelrad, David C. Bellinger, Louise M. Ryan, and Tracey J. Woodruff, “A Dose-Response Relationship of Prenatal Mercury Exposure and IQ: An Integrative Analysis of Epidemiologic Data,” Environmental Health Perspectives, Vol. 115, No. 4, April 2007, pp. 609-615, http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1852694/.
 Philippe Grandjean, Pal Weihe, Roberta F. White, Frodi Debes, Shunichi Araki, Kazuhito Yokoyama, Katusyiuki Murata, Nicolina Sorensen, Rasmus Dahl, and Poul J. Jorgensen, “Cognitive Deficit in 7-Year-Old Children with Prenatal Exposure to Methymercury,” Neurotoxicology and Teratology, Vol. 19, No. 6, 1997, pp. 417-28, http://www.ncbi.nlm.nih.gov/pubmed/9392777.
 Gary J. Myers, Philip W. Davidson, Christopher Cox, Conrad F. Shamlaye, Donna Palumbo, Elsa Cernichiari, Jean Sloanne-Reeves, Gregory E. Wilding, James Kost, Li-Shan Huang, and Thomas W. Clarkson, “Prenatal methylmercury exposure from ocean fish consumption in the Seychelles child development study,” The Lancet, Vol. 361, May 17, 2003, pp. 1686-92, http://www.ncbi.nlm.nih.gov/pubmed/12767734.
 Tord Kjellstrom, Paul Kennedy, Sally Wallis, Alistair Stewart, Lars Friberg, Birger Lind, Ted Wutherspoon, and Colin Mantell (1989). Physical and mental development of children with prenatal exposure to mercury from fish. National Swedish Environmental Board, (Report no. 3642), http://books.google.com/books/about/Physical_and_Mental_Development_of_Child.html?id=pPBfAAAACAAJ.
 The reference dose translates into a maternal hair mercury concentration of 1.2 parts per billion (ppb). The average maternal hair mercury concentration in the Seychelles Island study was 5.9 ppb; the highest was 22 ppb. Gary J. Myers and Philip W. Davidson, “Does Methylmercury Have a Role in Causing Developmental Disabilities in Children?” Environmental Health Perspectives Vol 108, Supplement 3 June 2000, Table 1, p. 415, http://www.ncbi.nlm.nih.gov/pubmed/10852838.
 EPA, 77 FR 9306, National Emission Standards for Hazardous Air Pollutants From Coal and Oil-Fired Steam Electric Generating Units and Standards of Performance for Fossil-Fuel-Fired Electric Utility, Industrial-Commercial-Institutional, and Small Industrial-Commercial-Institutional Steam Generating Units, February 16, 2012 (i.e., MATS Rule), http://www.gpo.gov/fdsys/pkg/FR-2012-02-16/pdf/2012-806.pdf.
 EPA, Regulatory Impact Analysis for the Final Mercury and Air Toxics Standards, December 2011, p. 4-18 (hereafter RIA), http://www.epa.gov/ttn/ecas/regdata/RIAs/matsriafinal.pdf.
 EPA, RIA, pp. 4-3, 4-64, 4-67.
 EPA Fact Sheet: Mercury and Air Toxics Standards: Benefits and Costs of Cleaning Up Toxic Air Pollution from Power Plants, http://www.epa.gov/mats/pdfs/20111221MATSimpactsfs.pdf.
 Anne Smith, Testimony, Hearing on The American Energy Initiative—A Focus on What EPA’s Utility MACT Rule Will Cost U.S. Consumers—Subcommittee on Energy and Power, Committee on Energy and Commerce, U.S. House of Representatives, February 8, 2012, p. 17, http://www.nera.com/nera-files/PUB_Smith_Testimony_ECC_0212.pdf.
 EPA, Particulate Matter (PM) Standards -Table of Historical PM NAAQS, http://www.epa.gov/ttn/naaqs/standards/pm/s_pm_history.html.
 Smith, Testimony, p. 19.
 Smith, Testimony, p. 17.
 Douglas W. Dockery, C. Arden Pope, Xiping Xu, John D. Spengler, James H. Ware, Martha E. Fay, Benjamin G. Ferris, Jr., and Frank E. Speizer. “An Association between Air Pollution and Mortality in Six U.S. Cities.” N Engl J Med 1993; 329:1753-1759. December 9, 1993, http://www.nejm.org/doi/full/10.1056/NEJM199312093292401.
 C. Arden Pope III, Richard T. Burnett, Michael J. Thun, Eugenia E. Calle, Daniel Krewski, Kazuhiko Ito, and George D. Thurnston. “Lung Cancer, Cardiopulmonary Mortality, and Long-term Exposure to Fine Particulate Air Pollution,” Journal of the American Medical Association, March 6, 2002, Vol. 287, No. 9, http://www.epw.senate.gov/107th/Levy_1.pdf.
 Julie E. Goodman, Testimony, EPA’s Assessment of Health Benefits Associated with PM2.5 Reductions for the Final Mercury and Air Toxics Standards, Subcommittee on Energy and Power, Committee on Energy and Commerce, February 8, 2012, http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/Hearings/EP/20120208/HHRG-112-IF03-WState-JGoodman-20120208.pdf.
 Joel Schwartz, Where the Bodies Are Buried: How experts for N.C.’s Attorney General mislead the public about TVA air pollution risks, Policy Report, John Locke Foundation, June 2008, http://johnlocke.org/site-docs/research/schwartz-tva.pdf
 Green LC and Armstrong SR, “Particulate matter in ambient air and mortality: toxicologic perspectives,” Regul Toxicol Pharmacol. 2003 Dec, 38(3):326-35, http://www.ncbi.nlm.nih.gov/pubmed/14623483