WASHINGTON — The Environmental Protection Agency (EPA) distorted the analysis of its controversial proposal to regulate mercury pollution from power plants, making it appear that the Bush administration's market-based approach was superior to a competing plan supported by environmentalists, the nonpartisan Government Accountability Office said yesterday.

Rebuking the agency for a lack of "transparency," the report said the EPA had failed to document the toxic impact of mercury on brain development, learning disabilities and neurological disorders. The GAO urged that these problems be rectified before the EPA takes final action on the rule.

The analysis comes on the heels of a critical report by EPA's inspector general that suggested agency scientists had been pressured to back the approach preferred by industry.

"The administration is showing a blatant disregard for the health of children, the health of women of childbearing age, but they are also showing a blatant disregard for the law," said Sen. Patrick Leahy, D-Vt., who had asked GAO to conduct the analysis. "To not change would be the height of arrogant disregard."

EPA spokeswoman Cynthia Bergman said the agency was on track to issue the mercury rule by March 15. She said the final rule would provide the comparisons between competing options that the GAO said were missing.

"GAO has characterized the process as incomplete before the process has even finished," she said.

Cap and trade

The administration has publicly endorsed a cap-and-trade approach that would allow trading in pollution credits among power plants, rather than imposing limits on every plant. Environmental groups are so disenchanted with the trading proposal that they have stopped fighting it; they want the EPA to issue the rule so they can fight it in court.

At issue is a proposal the EPA issued in January 2004 to reduce the 48 tons of mercury emitted annually by U.S. power plants. The proposal offered two options, but the administration made clear it preferred the trading system, which would achieve a 29 percent reduction in mercury emissions by 2010 and a 70 percent reduction by 2018. This plan allows companies to trade pollution credits, creating financial incentives for companies to reduce pollution in the dirtiest plants.

The alternative was what the GAO called the "technology-based" approach: to cap pollution at every plant.

Scales tipped

The administration said the cap-and-trade plan would reduce pollution more, in part, because it would invite less litigation and blend nicely with another cap-and-trade proposal to control sulfur dioxide and nitrogen oxides, called the Clean Air Interstate Rule (CAIR).

But the GAO report said the EPA had tipped the scales to favor the market-based plan. For example, the EPA found that capping pollution at every plant would save $13 billion: the difference between the estimated savings in health costs and the pollution control costs.

The EPA said the cap-and-trade approach provided a much larger benefit of $55 billion to $68 billion, but the GAO said yesterday that this analysis included the benefits from the implementation of CAIR.

Also

Water utilities would have to conduct stricter testing for lead in drinking water and provide clearer warnings to the public under changes proposed yesterday by the EPA.

If adopted, the changes to the nation's Lead and Copper Rule would be the first to strengthen health protections since the rule was implemented in 1991 and would affect communities served by all 161,000 water systems in the country, EPA officials said.

Under the proposal, utilities would be required to give homeowners the results of water tests conducted at their homes and to notify state and federal regulators before making changes in water treatment.