Mercury trade capped 

Court frees Montana from controversial pollution market

Compared with other states, Montana wasn’t causing a whole lot of trouble for the Bush administration’s mercury cap-and-trade program.

The plan, as envisioned by the administration and the Environmental Protection Agency, would have allowed power plants exceeding 2005 federal mercury emission limits to purchase credits from power plants that produced emissions below the caps, allowing some states to release more of the toxin because others emitted less. A three-judge federal appeals panel in Washington, D.C., struck down the idea on Feb. 8, ruling it did not meet legal obligations under the Clean Air Act to protect the public’s health.

The EPA’s rationale, according to Chuck Homer, the Montana Department of Environmental Quality’s Air Permitting and Compliance Program Manager, was that the free market would encourage power plants to upgrade mercury controls once credits reached a certain price.

In the meantime, Homer says, the states that purchased mercury credits—and released more than the amounts established to be safe—would increase local exposures to the heavy metal, a potent neurotoxin that is especially dangerous to children and fetuses.

Montana was not interested in exceeding the caps, Homer says. The state only wanted to participate in selling credits and reducing emissions—not buying them. So Homer and the DEQ proposed only allowing cap-and-trade deals between power plants within Montana—not with other states—thus hoping to keep net mercury emissions at the same level statewide.

And that’s when Montana ran into the problems that ultimately led other states to take the EPA to court.

“EPA’s response, we believed, was trying to pressure us in a heavy-handed method of saying it was their way or no way,” Homer tells the Independent. “They told us any limitations [that Montana placed] on the ability to trade was not acceptable.” And if Montana insisted? “In that case the state program would not be approved and the trading program would go into effect with no state involvement,” Homer says.

E-mails obtained through the Freedom of Information Act by nonprofit group Environmental Defense corroborate Homer’s claims, and several other states have complained of the same treatment.

The EPA has publicly denied that it pressured the states in any way. Meanwhile, on the day before the court ruling against the cap-and-trade plan, the White House Office of Management and Budget approved a draft regulation that would have forced states to comply.

Until October 2006, the state of Montana had no mercury emission laws. The EPA, according to state officials, told the DEQ that if it didn’t agree to the cap-and-trade plan, it would be stripped of any control over the matter. Homer said the state decided not to officially submit its plan to cap and trade within the state because it was clear the EPA would reject it. “We didn’t feel that submitting a plan the EPA already told us was not going to be approved would be a prudent thing to do,” he says.

In the meantime, 17 other states facing similar problems took the EPA to court. And won.


Homer says he’s satisfied with what the state is left with, now that cap-and-trade has been struck down. “I believe that we’re in a good place for mercury emissions,” he says.

Vickie Patton, a lawyer for Environmental Defense, believes the ruling supports the rights of states like Montana to have emissions laws that are stricter than the federal standards.

“The EPA tried to turn common sense and the law on its head, because for well over 30 years it has been kind of a bedrock principal of the nation’s clean air laws that EPA sets the floor, and the states are free to protect human health and environment in a more precautionary way,” Patton says.

Not everyone agrees.

“We were certainly supportive of Montana’s participation in the nation’s [proposed] cap-and-trade program, and still maintain that that sort of system has to remain in order to help industries comply with an overall mercury standard and lower emissions,” says Mark Lambrecht, Manager of Regulatory Affairs for PPL Montana, which runs most of the state’s mercury emitting plants.

Cap-and-trade, Lambrecht says, would have allowed a little more time for the power industry to develop technology to meet stricter standards.

According to EPA spokesman Jonathan Shradar, the ruling is ultimately bad from an environmental standpoint. “Overall right now, there is no rule that’s reducing mercury emissions from power plants on the federal level, and so that’s the effect of the court ruling. It has reduced regulation of mercury emissions.”

But Shradar says the ruling was based primarily on a technicality and does not mean the end of mercury cap-and-trade programs.

“The court essentially said we chose the wrong section of the Clean Air Act,” Shradar said. “We used section 112 of the Clean Air Act, and they found that was not the right section. They did not take a stance on cap-and-trade as an approach.”

In the end, Shradar says, the administration stands by its plan. “Cap-and-trade, from an administration standpoint is still the policy.”
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