Revolt over new federal mercury law

The state-led push could weaken the EPA's emissions-trading system, which is popular with industry.

Facing a mandate to slash toxic mercury emissions from coal-fired power plants, 23 states are thumbing their noses at a federal cleanup plan and are instead developing their own far tougher plans to deal with mercury.

But doing so has caused many of them to miss a federal Nov. 17 deadline to submit their plans to the Environmental Protection Agency. Now, the EPA is ratcheting up the pressure. This week, the agency is expected to publish names of more than 20 states that could have the federal plan imposed on them if they don't submit tougher plans by next spring.

What it all adds up to is a major state-led rebellion over mercury emissions that dwarfs, for example, an 11-state push to create regional greenhouse-gas reduction programs without federal support. If successful, the revolt could weaken a key element of the federal mercury rules: an emissions-trading system popular with the utility industry and already in place for air pollutants like nitrogen oxides.

"What we're seeing is a critical mass of states restricting trading in such a way that it really imposes a significant impact on EPA's national trading program," says S. William Becker, executive director of the National Association of Clean Air Agencies, a Washington trade group representing state and local air-quality agencies. "States are sending a strong message that mercury emissions trading is not, and should not be, a centerpiece of any federal mercury- control program."

EPA officials say they're not worried.

"Based on everything we know, we are confident there will be a robust and workable cap-and-trade system, given the number of states we believe are going to participate," says William Wehrum, acting assistant administrator of the EPA's Office of Air and Radiation.

The state plans include one or more fixes in three key areas. At least 20 states are proposing far larger cuts in mercury emissions than the EPA's new Clean Air Mercury Rule (CAMR) requires, according to a survey by the National Association of Clean Air Agencies. At the same time, 17 states are planning to require mercury reductions more rapidly than the federal government requires. At least 16 plan to opt out of, or severely restrict, emissions trading.

"We just felt that we could and should do more than EPA was asking on mercury," says Dean Van Orden, chief of the air information division of Pennsylvania's air-quality bureau. "We think it's significant so many other states are doing the same thing, including coal-producing states."

Pennsylvania's plan would cut mercury emissions 80 percent by 2010 in a first phase and 90 percent by 2015. By contrast, CAMR cuts 21 percent of mercury nationwide by 2010 and 70 percent by 2018. With costs of mercury-control technology falling sharply, tougher regulations were the right thing to do, some state officials say.

Pennsylvania and others are also not participating in emissions trading. While "cap and trade" systems worked for sulfur dioxide and other pollutants, many states argue that mercury is different because it is a toxin rather than a mere pollutant. Already, more than 3,200 health advisories warning of mercury contamination in fish from streams and lakes have been issued in 48 states.

And because mercury particles can begin dropping out of the air just a few miles from where they're emitted, state officials worry the trading system might create new mercury "hot spots" within their borders.

Illinois is another state taking a pass on CAMR, even though it's a major coal- producing state. "We are not doing CAMR or mercury trading – no trading," says Jim Ross, manager of the Illinois EPA's division of air-pollution control. "We have proposed our own mercury rule that requires greater reduction and is much faster than the federal rule."

US EPA officials say that states opting out of CAMR is no surprise.

"We always knew many states would want to do something different and that's fine," says Mr. Wehrum. "We also knew many would choose CAMR as a smart way to regulate that's economically efficient and easy to administrate."

Under the federal Clean Air Act, states can adopt clean-air plans that are stricter than a federal plan. But EPA has resisted state plans that try to limit mercury trading, going so far as threatening legal action in at least one instance, state officials say.

Montana and Michigan are among states still working on their own mercury plans. Both have felt EPA pressure to participate in trading mercury, even though they preferred restrictions on it.

"We did want some participation in CAMR trading, but not unlimited," says Charles Homer, supervisor of technical support for the Air Resources Management Bureau of the Montana Department of Environmental Quality. "But EPA told us any tampering with their trading system was not acceptable. We were either in, or out."

In the end, Montana ended up adopting EPA's trading program because coal development might have been compromised otherwise. But Mr. Homer isn't happy about it. "We were forced to participate," he says. Montana still plans deeper mercury emissions cuts than CAMR requires.

Michigan wants to trade mercury among utilities in the state, but not with utilities in the rest of the country.

"We have been in touch with the EPA and they've indicated verbally that if we prohibit interstate trading or do not submit a rule they find approvable they may take legal action," says Vinson Hellwig, chief of the air-quality division of the state's Department of Environmental Quality. "It was not a very friendly position."

Wehrum doesn't deny EPA has tried to be persuasive. But "I haven't threatened to sue anybody," he says. "That's silly."

At least 24 states – including West Virginia, Alabama, and Wyoming – are likely to embrace part or all of CAMR and its trading system. But Texas and others will do so because their state laws require it.

"The EPA could have made this a much better, tougher rule to begin with, making it less of a patchwork quilt for industry," Mr. Becker says. "They just thought states would blindly follow – and underestimated how many states would take action on their own to fill the gaps."