Revolt over New Federal Mercury Law ; the State-Led Push Could Weaken the EPA's Emissions-Trading System, Which Is Popular with Industry

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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. …