June 29, 2004

Public Interest Comment on the EPA's Proposed National Emissions Standards For Mercury

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Stated Purpose:

EPA is proposing a rule to regulate mercury emissions from coal-fired power plants.

Summary of RSP Comment:

In an effort to reduce human exposure to mercury, the Environmental Protection Agency (EPA) is proposing to regulate the amount of mercury emitted from electricity generating utility units (power plants). While mercury is clearly toxic to humans at high doses, EPA has not shown that (1) Americans face any health effects at current levels of exposure, or (2) the proposed rule will result in a decrease in human exposure to mercury. As a result, it is unable to quantify any benefits from the proposed rule.

EPA expects the alternative approaches proposed to reduce mercury emissions from utility units will cost American citizens $8.2 billion in capital costs, and an additional $1.6 billion to over $4.5 billion per year. Unable to quantify any benefits from reducing mercury levels, EPA relies instead on the ancillary reductions in another pollutant, particulate matter, to justify the proposal.

We recognize the problems EPA faces in addressing mercury risks, however, this approach is analytically incorrect, and misleads policy makers and the public as the to desirability of the proposal. The regulation of mercury emissions should stand on its own. To make Americans better off, the benefits of regulating mercury should outweigh the costs, as required by Executive Order 12866. EPA does not demonstrate that with this proposed rule.

EPA proposes some alternative approaches to achieve the proposed emission reductions, including a cap-and-trade system. While economic incentive mechanisms, such as cap-and-trade, can be more efficient at achieving environmental goals, they do not substitute for sound policy goals. If focused on the wrong metric (e.g., mercury emissions, when the health benefits are presumed to derive from particulate matter emissions) or on capping emissions (without scientific or economic justification), trading mechanisms alone cannot ensure socially desirable outcomes. Furthermore, depending on the structure of the trading system, rent seeking can cancel out the benefits for a cap-and-trade system.