Murray Energy Plans Array of Challenges to EPA Mercury Rule

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By Patrick Ambrosio

July 26 — Murray Energy Corp. intends to launch a wide-ranging challenge to the Environmental Protection Agency's reaffirmation that it is appropriate and necessary to regulate toxic air pollution from the utility sector, according to a court document ( Murray Energy Corp. v. EPA, D.C. Cir., No. 16-1127, statement of issues filed 7/25/16 ).

Murray Energy, one of the largest coal mining companies in the U.S., filed a July 25 statement with a federal appeals court that highlighted 18 different reasons why the company thinks the EPA's supplemental finding on power plant emissions is illegal. The agency issued the finding (RIN:2060-AS76) in April in response to a 2015 U.S. Supreme Court decision that held the EPA erred when it failed to consider cost in its threshold determination to regulate, a decision that ultimately led to promulgation of the mercury and air toxics standards ( Michigan v. EPA , 135 S. Ct. 2699, 2015 BL 207163, 80 ERC 1577 (2015)).

The mercury and air toxics standards, commonly known as MATS rule, were estimated by the EPA to cost the utility sector $9.6 billion per year. The EPA supplemental “appropriate and necessary” finding included an evaluation of four cost metrics, including a comparison of the utility sector's annual revenues with annual compliance costs and the projected effects of those compliance costs on retail electricity prices, to determine whether implementation of the mercury and air toxics standards would be reasonable for the power sector

The approach taken by the EPA “does not satisfy” the Supreme Court's direction for the agency to reasonably consider cost, Murray Energy said in its statement of issues to the U.S. Court of Appeals for the District of Columbia Circuit. The company described the agency's analysis as a “cursory examination of a limited amount of data.”

Co-Benefits Issue Raised

Murray Energy intends to attack the EPA cost analysis in a number of ways, including allegations that the EPA refused to consider a number relative factors. For example, the company alleged the EPA improperly refused to consider:

  •  alternatives to regulating power plant emissions under Section 112 of the Clean Air Act;
  •  whether regulations under Section 112 are a cost-effective way to regulate power plant emissions;
  •  costs of complying with the “remaining risk” provisions of Section 112, which require the EPA to issue health-based standards to further reduce hazardous emissions if the initial standards don't adequately protect public health; and
  •  costs imposed on state and local governments.

Murray Energy also alleged that a cost-benefit analysis cited by the EPA in its supplemental finding “improperly” relies on co-benefits, which are benefits linked to the reduction of pollutants that are not directly regulated. Attorneys and academics told Bloomberg BNA in March that they expected the EPA supplemental MATS finding to provide an avenue for industry and states to challenge the EPA's use of co-benefits when accounting for a rule's impact on public health.

The agency has touted many of its air rules, including the Clean Power Plan rule to curb carbon dioxide emissions from power plants, as providing billions in public health benefits from reductions in particulate matter and other pollutants that are not directly regulated.

Murray Energy said in its statement that the EPA improperly counted fine particulate matter reductions that “would have occurred anyway” under national standards for that pollutant to justify a conclusion that the cost of regulating mercury and other air toxics is appropriate.

Trade Group Focuses on Coal Refuse

Murray Energy isn't the only party that is challenging the MATS finding. Other petitioners that have filed lawsuits include a coalition of 15 states led by Michigan Attorney General Bill Schuette (R), Oak Grove Management Co. LLC and the power plant trade association ARIPPA.

ARIPPA, in a July 25 statement of issues , indicated its litigation will focus on the EPA's treatment of coal refuse power plants, which use waste coal as a fuel source. The trade association, which represents coal refuse plants, questioned whether the EPA acted illegally when it found it was “appropriate and necessary” to regulate all coal-combusting power plants without considering the “unique characteristics” of coal refuse and the boilers that use waste coal as a fuel source.

The D.C. Circuit also will be asked to consider whether the EPA should have addressed information in the record that ARIPPA said confirms that coal refuse-fired boilers have low emissions rates of hazardous air pollutants, according to the trade group's filing. The other issues ARIPPA intends to raise are the EPA's alleged failure to distinguish between traditional power plants and coal refuse plants when assessing compliance costs and an alleged failure to identify any feasible pollution control technology that coal refuse-fired boilers could use to meet the EPA's standards.

Murray Energy Corp. is represented by Geoffrey Barnes and three other attorneys at Squire Patton Boggs LLP. ARIPPA is represented by Bart Cassidy and Katherine Vaccaro of Manko, Gold, Katcher & Fox LLP.

To contact the reporter on this story: Patrick Ambrosio in Washington at pambrosio@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

For More Information

Murray Energy's statement of issues is available at http://src.bna.com/g7h .

ARIPPA's statement of issues is available at http://src.bna.com/g7i .

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