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Introduction

In its waning days after the 2000 election, the Clinton administration decided to initiate an expensive plan to regulate mercury emissions from power plants. The decision culminated a lengthy process that began with the 1990 Clean Air Act Amendments, which required the Environmental Protection Agency to evaluate mercury and other toxic emissions to determine if they warranted more stringent regulation.

The Clinton administration had earlier dragged its feet on completing that analysis. But after environmental groups filed suit over the inactivity, the administration agreed to make a determination on mercury regulation by December 15, 2000. In a settlement agreement, the administration stipulated that if mercury were to be regulated, a final rule would be issued by December 2004—a date that was later extended to March 2005.

This created a difficult situation for the incoming Bush administration. While there are thought to be some identifiable economic benefits from regulating mercury emissions, such as an increase in IQ levels in children, it is not clear that the benefits of regulation justify the cost. But even if the expected benefits fall far short of the expected costs, the Bush White House was under political pressure to formulate a concrete proposal for regulating emissions. Any decision to move away from regulating mercury would have to reverse the Clinton administration’s determination that such regulations are “appropriate and necessary.”

The 15-year saga that concluded with the Bush administration’s mercury rule offers insights into the politics and economics of environmental regulation. The mercury saga also illustrates several policy lessons for future regulation.

Rober W. Hahn is a resident scholar at AEI and the director of the AEI-Brookings Joint Center for Regulatory Studies. Ted Gayer is a visiting scholar at AEI.