Washington (Platts)--16Feb2012/444 pm EST/2144 GMT

The Environmental Protection Agency's new rule to limit mercury emissions and air toxics from power plants nationwide attracted a push back Thursday from Capitol Hill and industry, which fears the mandate will drive up operating costs and compromise reliability.

The National Mining Association filed suit against EPA over its Mercury and Air Toxics Standards in the US Court of Appeals for the District of Columbia Circuit only hours after the rule was published in the Federal Register, initiating a 60-day period for opponents to file litigation and administrative petitions for reconsideration with the agency regarding concerns about the rule. The rule takes effect April 16.

Meanwhile, Republican Senator James Inhofe of Oklahoma filed a joint resolution of disapproval, S.J. Res. 37, under the Congressional Review Act, in an effort to stop the rule.

If passed by the Senate, the joint resolution would go the House of Representatives, which already supports legislation to block EPA from regulating the power industry. President Barack Obama, however, is unlikely to sign a resolution to hamper his administration's authority.

A similar resolution, S.J. Res. 27, to overturn another EPA rule to control interstate soot and smog, known as the Cross-State Air Pollution Rule, failed in the Senate last November with 56 lawmakers, including six Republicans, voting against it.

Democrats from states wary of EPA's rules on the power sector should support his resolution as a means to "stop this regulatory nightmare," Inhofe said.

"The failure of the United States Senate to rein in the Obama EPA is having a devastating impact on the pocketbooks of American families and threatens the jobs and livelihoods of millions of Americans," Inhofe said in a statement.

Rural cooperatives fear that the regulation will force them to buy alternative, low-emission power that will cost significantly more than coal-fired generation. Co-ops also face competing with large energy companies for the pollution control equipment and labor required to meet the rule, according to Glenn English, president of the National Rural Electric Cooperative Association.

Further, English said EPA used "flawed methodology" to determine the standards for existing power plants and sets "unachievable" emissions limits for new power plants.

The rule seeks to prevent 90% of the mercury emissions from coal- and oil-fired power plants through the use of "maximum achievable control technology." Current MACT for coal-fired power plants include scrubbers, baghouses and filters, equipment already commonly used to meet other federal and state air standards. In addition to mercury, the EPA rule sets numerical emission limits on the power sector for six air toxics.

EPA estimates that annual compliance with the rule will cost $9.6 billion beginning in 2016.

While the Clean Air Act allows three years for covered sources to meet a MACT rule, EPA is encouraging state authorities to grant a fourth year. The agency also provided guidance through its enforcement branch for units critical to grid reliability to obtain a fifth-year extension.

Still, English said "additional regulatory flexibility on the deadlines would help not-for-profit, member-owned cooperatives protect grid reliability while meeting their environmental obligations."

Inhofe, the senior Republican on the Senate Environment and Public Works Committee, said EPA rule "is designed to kill coal" as a fuel for electric generation and as a result will hike electricity bills and kill jobs nationwide. Health benefits from the rule "are virtually nonexistent," he said.

EPA, however, has said that the rule's pollution-control requirements to slash mercury, a neurotoxin, and other pollutants will further reduce sulfur dioxide and particulate matter and prevent thousands of premature deaths and respiratory illnesses.

EPA also said the mercury rule will result in 46,000 temporary construction jobs and 8,000 long-term jobs in the power sector. The agency estimates that "more than half of all coal-fired power plants already deploy pollution-control technologies that will help them meet the proposed standards."

Environmental advocates were pleased EPA was finally moving forward with rules to cut mercury from power plants. Frances Beinecke, president of the Natural Resources Defense Council, said the mercury standards "are likely to be among the Obama administration's most significant environmental accomplishments."

But the American Coalition for Clean Coal Electricity is pushing for Inhofe to succeed in derailing the regulations.

"Congressional action is essential to stop this heavy-handed new regulation by EPA that will needlessly drive up energy prices for all Americans and destroy jobs," Steve Miller, president and CEO of the coal lobby, said.

--Cathy Cash, cathy_cash@platts.com