* Rules target large boilers commonly found at refineries
* Industry had complained about high cost of compliance
* Years in the making, had faced court challenges (Adds detail about revision, quote on cement rules)
By Valerie Volcovici
WASHINGTON, Dec 21 The U.S. Environmental Protection Agency has softened rules to curb pollution from industrial boilers and large incinerators, revising earlier versions to target only the largest polluters and give them more time to comply.
The agency on Friday formalized standards it initially released in March 2011 for reducing toxic air pollution, including mercury and particle pollution, known as soot, from boilers, solid waste incinerators and cement kilns.
Boilers, typically fired by coal, oil, natural gas and biomass, are used to power heavy machinery and provide heat for industrial processes.
The new rules target roughly 2,300 boilers, or less than 1 percent of the 1.5 million units operating in the United States, requiring them to meet numerical limits on their release of air toxins.
The agency said it had analyzed new data provided by industry groups and "additional information about real-world performance and conditions under which affected boilers and incinerators operate" in order to adjust the rule and propose more "targeted revised emission limits".
Large-source boilers, found mainly at refineries, chemical plants and other industrial facilities, will have three years to comply instead of one and can be granted a fourth year if needed to install controls, the EPA said.
The rule also targets 106 industrial solid waste incinerators, which have five years to comply with the EPA standards.
"The adjusted standards require only the largest and highest-emitting units to add pollution controls or take steps to reduce air pollution, making the standards affordable, protective and practical," according to an EPA factsheet.
Some environmental groups said the EPA's handling of the long-delayed boiler rules signaled that the agency's upcoming regulation would be more flexible to industry concerns.
"These watered-down rules suggest the Obama administration will collaborate more with industry in the second term," said Frank O'Donnell of Clean Air Watch.
The EPA first introduced the rule in 2005, but the U.S. Court of Appeals for the D.C. Circuit vacated it in 2007.
The rule was re-proposed in June 2010 but industry groups slammed that version, calling its set limits unachievable, prompting the EPA to relax and reintroduce the rule.
"After years of delays, the finalized Boiler MACT standard ends uncertainty and allows businesses to move forward with one standard that applies across the nation, leveling the playing field," said Howard Learner, executive director of the Environmental Law & Policy Center.
MACT is an acronym for Maximum Achievable Control Technology.
Another environmental group, the Natural Resources Defense Council, applauded the EPA's boiler rules for being stronger than previous versions but criticized the agency for going in the "wrong direction" in its standards for incinerators and cement kilns.
"The agency ... eased standards in their final rules for cement manufacturers, which is troubling and deserves further explanation."
Despite relaxing the rules, the EPA said the standards would prevent up to 8,100 premature deaths, 5,100 heart attacks and 52,000 asthma attacks.
The agency estimated that Americans would receive $13 to $29 in health benefits for every dollar spent to meet the final standards and that the rules would create a small net increase in jobs.
Some industry groups were still wary.
"Several billions of dollars in capital spending will be necessary to comply. This is a significant investment for an industry still recovering from the economic downturn, especially in light of the growing cumulative regulatory burden we face," the American Forest & Paper Association, the national lobby group of the forest products industry, said on Friday.
The National Association of Manufacturers, an opponent of EPA regulations, said in November that compliance costs for the agency's six air pollution rules, including the boiler rule, could total $111.2 billion by EPA estimates and up to $138.2 billion by industry estimates.
The lobby group said the boiler rule would cost covered sources $2.7 billion in annualized costs in 2013 and $14.3 billion in upfront capital spending - higher than EPA estimates of $1.9 billion in annualized costs in 2013 and $5.1 billion in capital spending.
Other groups that have opposed the rules include the Industrial Energy Consumers of America - representing the chemicals, cement, aluminum and other industries.
Bob Bessette, president of the Council of Industrial Boiler Owners, cautiously welcomed the revised rule but said it was still studying the economic impact.
"Hopefully, the changes EPA has made will decrease the economic and jobs impact on the still-struggling manufacturing, commercial, and institutional sectors and national economy," he said. (Reporting by Valerie Volcovici; Editing by Nick Zieminski, David Gregorio and Dale Hudson)