The Environmental Protection Agency proposal would ease limits envisioned by the Clinton administration, while requiring immediate action in some cases.
In a related measure, EPA proposed that power plants in 30 states cut smog- and soot-forming chemicals from their smokestacks. EPA estimates the industry will pay at least $5 billion to comply with both programs.
"These actions represent the largest air reductions of any kind not specifically mandated by Congress," Mike Leavitt, the new EPA administrator, said Monday. "We are calling for the largest single industry investment in any clean air program in U.S. history."
In 2001, EPA estimated that mercury could be cut by as much as 90 percent, to 5.5 tons, by 2008 if the best available technology were used as the Clinton EPA had hoped, according to EPA documents obtained by advocacy group National Environmental Trust.
But the White House and EPA want to let utilities meet mercury pollution limits the first six years using the benefits of controls installed for other pollutants that cause smog and acid rain.
The Clinton administration listed mercury as a "hazardous air pollutant." The Bush administration would undo that by placing mercury into a less strict category of the Clean Air Act, which will allow companies to buy and sell pollution rights with other plants.
This approach, EPA says, would eliminate about 14 tons a year of mercury emissions from the currently unregulated 48 tons a year generated by coal-fired power plants. Such plants account for about 40 percent of the nation's mercury pollution.
After that, the pollution-trading proposal would cut an additional 19 tons a year of mercury emissions, EPA says. The result would be a 70 percent reduction — from 48 tons to 15 tons — by 2018, the agency says.
"What we're trying to do is to maximize the total reduction of pollution from power plants," said Jeffrey Holmstead, head of EPA's air office. He said an interim cap on tons of mercury pollution would be set between "the high 20s to low 30s" by 2010. That cap would then gradually shift downward.
Cap-and-trade programs set a national limit on emissions and then allow companies to choose whether to reduce emissions or buy credits from plants that do. This rewards firms that innovate first and imposes costs on those that do not.
Supporters say the system allows the market to pick the most cost-effective way to reduce pollution.
Proponents frequently point to the acid rain trading program begun in 1990 as the model for using market forces to reward companies that surpass their pollution reduction targets. But it would mean the toughest mercury requirements would not take force until 2018.
EPA's regulation for cutting smog and soot would require power plants in 30 states to cut sulfur dioxide emissions, which contain soot and lead to acid rain, to 3.2 million tons by 2015 from current levels of about 10 million tons a year. It also would require cutting smog-forming nitrogen oxides to 1.7 million tons from current levels of 4 million tons.
The move comes a week after scientists told the Food and Drug Administration that it should issue stronger warnings to pregnant women and young children about mercury levels in fish, particularly tuna. White, or albacore, tuna has nearly three times as much mercury as cheaper "light" tuna.
Mercury pollution can taint fish once it enters water and turns into a more dangerous form, methyl mercury. In high levels, it can damage the growing brains of fetuses and young children.
In proposing the new rules, the administration is moving forward with changes to the Clean Air Act that Congress has balked at passing, The New York Times reported.
"The federal government is literally rewriting the clean air rules to give the worst actors a free pass to pollute in perpetuity," New Jersey Gov. James E. McGreevey, a Democrat, said.
The emissions trading program would be one of several changes the Bush administration has made — or is considering making — to pollution laws.
Already this year, the Bush administration revised the Clean Air rules to allow older factories to avoid mandatory pollution controls when they make limited capital improvements to their facilities. Twelve states and several Northeast cities sued the EPA this fall to block the new Clean Air rules, which they argue will weaken protections for the environment and public health.