04/13/2023 - Federal Policy - Power Plant Regulation

EPA’s Proposed Mercury and Air Toxics Standards (MATS) Residual Risk and Technology Review

by Carrie Jenks, Hannah Oakes Dobie

On April 5, 2023, the Environmental Protection Agency (EPA) released its proposed review of the residual risk and technology review for the Mercury and Air Toxics Standards (MATS), as well as a proposal to amend certain standards for coal- and oil-fired power plants. As part of this proposal, EPA reviewed the Trump administration’s 2020 analysis and determined it is necessary to update several standards and compliance requirements. To support this proposed action, EPA assessed whether there are any residual risks from such power plants and considered whether there are practices, processes, or control technologies that have occurred since the 2012 MATS standards were finalized that would require EPA to develop more stringent standards to “fulfill Congress’s direction to require the maximum degree of reduction of hazardous air pollutants (HAPs) taking into account the statutory factors.”[1]

We explain EPA’s proposed changes and the stakeholder feedback EPA is seeking to support a final rule anticipated for next year.

Background: Statutory Authority and Regulatory History

Under section 112 of the Clean Air Act (CAA), EPA must regulate major stationary sources that emit HAPs over a certain annual threshold.[2] For the electric sector, the CAA also requires EPA to determine whether it is “appropriate and necessary” to regulate electricity generating units (EGUs) under section 112. EPA recently reaffirmed this “appropriate and necessary” finding after it was withdrawn under President Trump. You can read more about EPA’s “appropriate and necessary” finding here: EPA Reaffirms it is Appropriate and Necessary to Limit HAPs from Power Plants.

Under section 112, once sources comply with applicable HAP standards,[3] the CAA requires EPA to assess the adequacy of those standards. First, eight years after setting the standards, EPA must conduct a “residual risk review” to assess whether more stringent standards are needed to address any remaining health risk associated with HAP emissions from the regulated sources.[4] Second, EPA must conduct a “technology review” and revise the standards as necessary to account for any new “developments in practices, processes, and control technologies”.[5] These two reviews are referred to as the “residual risk and technology review” or “RTR”.

For the power sector, EPA first promulgated technology-based standards for coal- and oil-fired power plants in 2012. These standards required existing regulated sources to fully comply by 2015.[6] In 2020, EPA withdrew its previous finding that regulating these sources was “appropriate and necessary,” and finalized its RTR concluding that the 2012 standards did not require updates. However, in 2022, EPA requested information on the cost and performance of new or improved technologies that control HAP emissions. Based on that review, EPA developed its more recent proposal to review the 2020 RTR and propose to revise certain standards and compliance requirements.

What is EPA proposing to require?

For its residual risk assessment, EPA reviewed chronic inhalation risks, acute risks, multi-pathway risk screening and site specific assessment, environmental risks, and facility-wide risks to conclude that there is a “low residual risk from the coal- and oil-fired EGU source category. Thus, EPA is proposing to reaffirm the Trump administration’s assessment for this first step of the review.  EPA, however, acknowledges that the “reviewed standards being proposed under the technology review . . . will likely reduce HAP exposures to affected populations.”[7]

As a result of its technology review, EPA is proposing more stringent emission limits for certain pollutants emitted by existing coal-fired and lignite-fired EGUs, as well as updates to certain compliance requirements. EPA proposes that the more stringent emission limits would apply within three years of the rule’s effective date.

Non-Mercury HAP Standards for Coal-Fired EGUs

EPA is proposing to tighten the emissions standards for non-mercury HAPs from coal-fired EGUs (referred to as the filterable PM [fPM] emission standard as a surrogate for non-mercury metals). In reviewing information that was not available during the 2020 RTR, EPA notes that most coal-fired EGUs are reporting fPM emissions well below the 2012 standard and at lower costs than assumed during promulgation of the 2012 standard.[8]

EPA explains that the 2012 emission limit is 0.031 lb/MMbtu, but found that 91 percent of coal-fired EGUs have demonstrated an emission rate of 0.010 lb/MMBtu or lower.[9] Given the overwhelming share of plants already achieving emissions much lower than the standard, EPA proposes to tighten the standard to 0.010 lb/MMBtu and does not anticipate most units will have to change their operation or emission control strategy. EPA states that “[o]f the over 9 GW of coal-fired capacity that the EPA estimates would require control improvements to achieve the proposed fPM rate, less than 5 GW is projected to be operational in 2028”.[10] Thus, under 5 GW of coal-fired EGUs are expected to need to reduce their emissions to achieve the proposed more stringent emission standard. And, EPA notes that “coal-fired EGUs have demonstrated an ability to meet these limits with existing control technology.”[11] Thus, given EPA’s statutory obligation to ensure plants achieve the maximum degree of reduction of HAP emissions, EPA’s proposed standard would not require significant changes by plants but ensure all plants achieve, and continue to achieve, a lower emission limit.

Alternatively, EPA also requests comment on a more stringent standard of 0.0060 lb/MMBtu or even lower. EPA explains that such a standard would achieve far more emission reductions than the proposed new standard and would also “ensure that the bottom lowest performing quarter of the fleet would have to improve their performance” to what is being demonstrated by 75 percent of the fleet. To meet such a standard, EPA estimates that 25 percent of units would need to install new equipment (e.g., fabric filters) or upgrade their existing controls. EPA includes cost estimates for such investments but also notes that market and policy developments could lower those costs, including the transition that is occuring by the power sector to lower-emitting generating resources, which EPA notes is accelerating due to the Inflation Reduction Act (IRA).

To demonstrate compliance with the revised proposed fPM standard, EPA proposes to require coal-fired EGUs to use particulate matter continuous emissions monitoring systems (PM CEMS). Under the current standard, such EGUs can monitor fPM emissions with quarterly testing, PM CEMS, or particulate matter continuous parameter monitoring systems (PM CPMS).[12] In its review, EPA found that PM CPMS are used by four EGUs at one site (less than 0.5 percent of EGUs), are more expensive than PM CEMS, provide less frequent emissions data than PM CEMS, and can be replaced by CEMS.[13] EPA also found that PM CEMS are more cost-effective than quarterly testing methods and can provide continuous measurement of the pollutants, which would otherwise go undetected until the next quarterly test.[14]

EPA also found that some EGUs have reported fPM emissions lower than the proposed standard (as low as 0.0002 lb/MMBtu), EPA believes that some PM CEMS may struggle to demonstrate compliance with an fPM emissions limit of 0.0006 lb/MMBtu or lower.[15] Thus, EPA is also seeking input from stakeholders on whether PM CEMS can measure a lower emission rate if EPA were to finalize a standard more stringent than it is proposing of 0.010 lb/MMBtu.[16]

Mercury Standards for Lignite-Fired EGUs

In its proposal, EPA explains that lignite-fired EGUs accounted for a disproportionate amount of the total mercury emissions in 2021,[17] and proposes to require lignite-fired EGUs to meet the same mercury emission standard as non-lignite-fired EGUs (i.e., 0.0000012lb/MMBtu).[18] In justifying its proposal to lower the standard, EPA explains that while there are challenges to capturing mercury emissions from lignite-fired EGUs, similar challenges exist for subbituminous coal-fired EGUs and those units, on average, are meeting a more stringent emission rate of 0.0000006 lb/MMBtu.[19]

For lignite-fired EGUs, EPA also explains that the cost of control technologies has declined since 2012 and EGUs’ operations are now more efficient. While EPA is not proposing to require lignite-fired EGUs to use a specific control technology to meet the proposed rate, EPA notes that EGUs can achieve the rate by injecting brominated activated carbon.[20]

Table 1 in the proposed rule lists the numerous EGU subcategories and associated emissions limits[21], of which EPA is proposing the following changes:

Subcategory 2012 Standard (lb/MMBtu) 2023 Proposal (lb/MMBtu) 2023 Alternative Proposal (lb/MMBtu)
fPM limit for Coal-Fired EGUs 0.030 0.010 0.0060 or lower
Mercury limit for Lignite-Fired EGUs 0.0000040 0.0000012
Proposed Changes to Startup Requirements

EPA proposes to change the definition for “startup” of EGUs to remove the alternative work practice standard from the rule.[22] EPA explains that making this change would be responsive to the DC Circuit’s remand of this provision.[23] EPA notes that the alternative work practice does “not represent what the best performers are able to do” and “few EGUs have chosen to use” the alternative work practice standard.[24] EPA estimates that in 2025 less than 0.4 percent of affected sources that are expected to be operating use the alternative work practice during startup periods.[25] EPA states this proposed change is consistent with the “emission standard setting requirement for using the average of the best performing 12 percent of sources” to establish standards. EPA also notes that the default startup requirements have less expensive recordkeeping and reporting requirements, so the change will not result in additional costs.[26]

What are the projected impacts of EPA’s proposal?

EPA proposes to require that affected EGUs comply with any new standards within three years of the final rule (approximately fall 2027).[27] However, EPA estimates that the proposed changes would have a small impact on the coal generation fleet.[28] EPA estimates that by 2030 the proposal would result in a 500 MW (0.6 percent) reduction of US coal generating capacity from the baseline and an average of less than 0.1 percent increase in retail electricity prices.[29]

In its regulatory impact analysis (RIA), EPA concludes that the benefits are greater than the estimated costs but also emphasizes that the quantitative estimates of benefits are underestimated because certain benefits, including reducing mercury and non-mercury HAPs, were not monetized.

In its “base case” EPA includes the power sector requirements from the Good Neighbor Rule (as proposed giving the timing of the two rules), the recently finalized 2020 Effluent Limitation Guidelines, the 2020 Coal Combustion Residuals rules, and relevant provisions of the IRA.[30] Based on its analysis, EPA concludes that the proposed rule would result in monetized health benefits of $1.9 billion (present value) and climate benefits of $1.4 billion (using a 3% discount rate).[31] By comparison, the present value costs associated with compliance with the proposed standards are projected to be approximately $330 million.[32]

Next Steps

Comments on this proposal will be due 60 days after publication in the Federal Register. We will track the EPA’s MATS activity on our MATS Regulatory Tracker page.

[1] Proposal, p. 32.

[2] 42 U.S.C. § 7412.

[3] The CAA requires such standards be based on the “maximum degree of reduction in emissions of the [HAP]…that the Administrator, taking into consideration the cost of achieving such emission reduction, and any non-air quality health and environmental impacts and energy requirements, determines is achievable”–often referred to as the MACT standards. For existing sources, the Act requires EPA to set this standard based on the average emission limitation achieved by the best performing 12 percent of sources.

[4] Id.

[5] Id.; see also Portland Cement Ass’n v. EPA, 665 F.3d177, 189 (DC Cir. 2011).

[6] Under the 2012 MATS, new sources must comply with the standards on the date of promulgation or startup and existing sources must comply within 3 years of the effective date of the standards, with an option for a 1-year extension under certain circumstances. 77 Fed. Reg. 9,304, 9,399 & 9,410 (Feb. 16, 2012).

[7] Proposal, p. 45.

[8] Id. at pp. 50–51.

[9] Id. at pp. 50, 52–53.

[10] Id. at p. 57.

[11] Id. at p. 58.

[12] Id. at p. 65.

[13] Id. at p. 113.

[14] Id. at p. 66–67, 69.

[15] Id. at p. 61.

[16] Id. Specifically, EPA solicits comment on: “the implications for the costs of measuring emissions to demonstrate compliance — whether through stack testing or PM CEMS — of alternate emission limits set at or below 6.0E-03 lb/MMBtu as compared to the proposed fPM emission limit of 1.0E-02 lb/MMBtu, including run durations, fPM detection levels, and random error calculations.”

[17] Id. at p. 80.

[18] Id. at p. 89.

[19] Id. at p. 95.

[20] Id. at p. 94. EPA notes that EGUs can achieve emission limitation at the same injection rates suggested in the beyond the floor memo from the 2012 MATS Final Rule.

[21] Id. at pp. 27–30.

[22] In 2014, EPA added an alternative work practice standard, which required use of clean fuels to the maximum extent possible, operation of control devices within 1 hour of primary fuel introduction, and adherence to the applicable emission standards within 4 hours of electricity generationProposal, p. 107.

[23] Environmental groups challenged this alternative work practice, and in Chesapeake Climate Action Network v. EPA, the DC Circuit remanded it to EPA for reconsideration. Id. at p. 108.

[24] Id.

[25] Id. at p. 109.

[26] Id. at p. 110.

[27] Id. at p. 114.

[28] Id. at p. 119.

[29] Id.; Regulatory Impact Analysis for the Proposed National Emission Standards for Hazardous Air pollutants: Coal- and Oil-Fired Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review, pp. 3–15 & 3–16.

[30] Regulatory Impact Analysis for the Proposed National Emission Standards for Hazardous Air pollutants: Coal- and Oil-Fired Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review, p. ES-4.

[31] Id. at ES-11.

[32] Id. at 3-13.