New EPA rules to ease concerns of major energy companies

Mar 18, 2002 01:00 AM

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 favour 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 north-eastern 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'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 sulphur 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 Defence Council, US 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 mm tons of sulphur 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 multi-state 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 and Cinergy of Cincinnati agreed in principle to pay fines and spend $ 1.9 bn installing pollution-control equipment at aging coal plants. Cinergy and its affiliates agreed in principle to lower sulphur dioxide emissions by 35 % 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 the 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 ofEPA'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.

Source: The Washington Post Company
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