The United State's 1,100 coal-burning power plants emit about 48 tons of mercury each year, the largest unregulated US source.

In a review of the mercury rules proposed by the EPA last year, EPA Inspector General Nikki Tinsley concluded that its planned standard "likely understates the average amount of mercury emissions reductions achieved by the top performing 12 percent of utilities."

That average sets the so-called maximum achievable control technology (MACT) standard, the basis for EPA finding that utilities should reduce mercury emissions by 70 percent by 2018.

EPA senior managers instructed EPA staff to develop a standard based on a target maximum emission of 34 tons per year, even though data showed lower levels were possible, the report said.

Tinsley said the EPA should reexamine its standards before issuing its final rule by March 15 as required by legal deadline.

In a response included in the inspector general's report, EPA Assistant Administrator Jeffrey Holmstead said it "rings hollow" because the agency has not finalized its rules. He said Tinsley's investigation exaggerated the human impact of mercury from power plants and improperly described the way the EPA calculated its standard.

Utility lobbyists said deeper cuts in mercury emissions are not technically feasible and accused Tinsley of playing politics.

"This is the continuing saga of the EPA's inspector general becoming the agency's new policy office," said Frank Maisano at the Electric Reliability Coordinating Council.

Environmental groups and lawmakers said the new investigative report showed that the EPA caved to utility pressure to soften its rules.

"This report is further evidence that the Bush administration's environmental policies are written for K Street (lobbyists), not Main Street," said Sen. James Jeffords, a Vermont independent.

"Political operatives at the Bush administration have cooked the books to undermine Clean Air Safeguards," said Angela Ledford at Clear the Air.