EPA Will Ease Coal Plant Rules

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http://www.washingtonpost.com/wp-dyn/articles/A42310-2002Mar17.html

 

EPA Will Ease Coal Plant Rules | Incentives to Replace Pollution Lawsuits

By Eric Pianin and Dan Morgan

Monday, March 18, 2002

 

The Environmental Protection Agency will begin announcing in the next several

weeks rule changes aimed at discouraging new government lawsuits against

operators of aging coal-fired power plants in favor of incentives for voluntary

reductions in toxic emissions, according to EPA officials.

 

After nearly a year of intense internal debate, the Bush administration has

decided to formally alter a clean-air enforcement initiative begun under

President Bill Clinton in 1999 that spawned dozens of lawsuits against some of

the nation's worst polluting power plants, agency and White House officials

said.

 

Currently, older power plants that expand or significantly modify their

operations can be sued for violating the Clean Air Act unless they agree to

install costly anti-pollution equipment.

 

The new rules would seek reduced emissions without threatening legal action in

most cases. Instead, the administration wants to encourage the plants to take

voluntary steps to reduce emissions, and is seeking legislation to force cuts in

pollution at plants that don't voluntarily cooperate, said sources familiar with

the administration's plans.

 

The changes could go a long way to resolving the concerns of major energy

companies, which argued that the Clinton approach was overly litigious and

economically burdensome. Some of the country's biggest energy companies,

including Atlanta-based Southern Co., have poured millions of dollars into

Republican political campaigns and launched a major lobbying effort to stop the

costly lawsuits.

 

But the policy shift will almost certainly anger environmentalists and officials

of several northeastern states concerned about airborne pollution from the aging

plants. The shift would also leave in limbo dozens of lawsuits brought by the

Clinton Justice Department under the Clean Air Act. White House and Justice

Department officials say they will continue to pursue the lawsuits filed in 1999

but clearly indicated a lack of enthusiasm.

 

" The [earlier] enforcement actions have created a realm of ambiguity that makes

it difficult for these folks in the utility industry to make decisions on

long-term capital investments, " a senior White House official said.

 

Environmental activists said the Bush administration posture is discouraging

settlements that could result in stepped-up efforts to limit toxic emissions.

Already, they noted, two major utilities were on the verge of agreements to pay

fines and install costly anti-pollution equipment before the regulatory ground

began to shift in the Bush administration.

 

" We need some serious muscle out of EPA to settle these cases, " said Jane

Kochersperger, field coordinator for Clean Air Task Force, an environmental

group. " We're looking at roughly 30,000 premature deaths per year related to old

coal-fired power plants. "

 

On environmental and energy matters, the public has focused largely on Enron

Corp.'s collapse, proposed arctic oil drilling and Vice President Cheney's

energy task force. But the stakes, in many respects, are higher on the question

of how the Bush administration interprets the Clean Air Act.

 

A strict interpretation could cost utilities tens of billions of dollars to

repair aging plants. Utility executives say that could ruin their companies. But

health and environmental groups say pollution from the plants, if unchecked,

could raise asthma and lung cancer death rates across the country.

 

The issue also has enormous political implications. Bush campaigned on a pledge

to boost coal production as one way to address long-term energy needs, and took

office indebted to the electoral votes of three major coal-producing swing

states -- Kentucky, Tennessee and West Virginia -- that could suffer

economically from tough emission rules.

 

Instead of litigation, Bush is promoting a clean air initiative, dubbed " Clear

Skies, " that mandates public and private efforts to reduce emissions of sulfur

dioxide, nitrogen oxide and mercury by more than two-thirds of current levels,

according to the administration. However, Senate Environment and Public Works

Committee Chairman James M. Jeffords (I-Vt.) said the plan doesn't go far enough

and is promoting a more aggressive proposal that includes reductions in carbon

emissions.

 

Administration officials say they are trying to balance the need to protect both

the environment and the economy. EPA Administrator Christine Todd Whitman, a

former New Jersey governor who once backed the lawsuits against power plants,

recently told a congressional committee: " We are not making the kinds of

advances we need to make " by suing utilities.

 

Energy giants, including Southern Co., have poured millions of dollars into

Republican political campaigns and a massive lobbying effort to stop the costly

lawsuits filed during Clinton's term. The chief lobbyist for a group of

utilities is former Republican National Committee chairman Haley Barbour.

Southern Co., a principal member of this group, contributed $540,000 to GOP

organizations during the 2000 election.

 

Thomas R. Kuhn, president of Edison Electric Institute, the utilities' trade

association, was a college classmate of Bush's and helped raise hundreds of

thousands of dollars for the president's 2000 election. Kuhn attended three of

the eight meetings that Deputy Energy Secretary Francis S. Blake held with

outside groups to discuss how the administration would proceed on enforcement,

according to a department document.

 

Meanwhile, environmental groups including the Natural Resources Defense Council,

U.S. Public Interest Research Group, Sierra Club and National Environmental

Trust have waged a media campaign to discredit the administration's planned

policy shift.

 

The controversy dates to the enactment of the 1977 Clean Air Act. The bill

exempted dozens of coal-fired plants and refineries from tough new pollution

controls, but made clear they could not perform major modifications to extend

their lives or hours of operation. Because such changes could increase harmful

emissions, they would trigger " New Source Review " -- a federal inspection that

could require appropriate pollution controls as a condition for continued

operation.

 

But when federal officials searched state regulators' records in the 1990s, they

found hundreds of instances of plants performing what seemed major

reconstruction without obtaining necessary permits.

 

The Clinton administration's lawsuits cited a major health risk from 7 million

tons of sulfur and nitrogen emissions. Reducing the pollution has become a top

priority of eastern mayors and governors, who face their own federal deadlines

for reducing ozone and smog caused in part by particles from the midwestern

plants.

 

Of the 51 power plants cited by EPA, 29 were owned by three companies: American

Electric Power, a multistate utility based in Columbus, Ohio; Southern Co.,

which serves a region from Georgia to Mississippi; and the Tennessee Valley

Authority, the government's own sprawling seven-state utility set up during the

New Deal.

 

In the waning weeks of the Clinton administration, Virginia Electric & Power Co.

and Cinergy Corp. of Cincinnati agreed in principle to pay fines and spend $1.9

billion installing pollution-control equipment at aging coal plants.

 

Cinergy and its affiliates agreed in principle to lower sulfur dioxide emissions

by 35 percent by 2013, install new scrubbers and replace some coal burners with

cleaner, gas-fired ones. In return, it could modify its plants as long as it

stuck to the new emissions caps.

 

But the negotiations ground to a halt when Bush became president and ordered a

review of the lawsuits. Last May, Cheney's energy task force ordered a 90-day

interagency review of New Source Review to see whether the policy should be

altered to reduce future litigation -- and whether some existing cases should be

dropped. The Justice Department announced in January that it would continue the

lawsuits filed during the Clinton administration. But today, negotiations with

Cinergy and VEPCO, once expected to take as little as three months to complete,

drag on.

 

Eric V. Schaeffer, who resigned this month as head of EPA's Office of Regulatory

Enforcement, said Cinergy officials were simply making the best of a bad

situation. He said, " They put their tons of pollution on the table, they shook

hands with us, " and then the regulatory landscape changed.