Uncle Sam sues Uncle Sam over air pollution

Published July 1, 2000

Nearly every day, the U.S. Environmental Protection Agency (EPA) announces a new lawsuit or administrative action against an alleged industrial polluter. Many people, especially those in the media, instinctively side with the agency, assuming the government is protecting the public interest, while private industry is only out for itself.

But what happens when the alleged polluter is also a federal agency, and feels so wronged that it turns around and sues EPA? Such intragovernmental fighting makes clear that something is awry with federal enforcement of environmental laws.

Beginning last November, EPA initiated a wave of lawsuits and administrative enforcement actions against 44 electric power plants in the Midwest and South. EPA claims the coal-burning facilities have been flouting the Clean Air Act for decades, creating a swath of ozone smog that stretches all the way to the Northeast.

EPA’s enforcement initiative included seven administrative orders filed against the Tennessee Valley Authority (TVA), a federally owned utility headquartered in Knoxville, Tennessee that provides power throughout a seven-state region.

In April, TVA became the first of the targeted utilities to fire back, filing a petition for review of EPA’s actions with the U.S. Court of Appeals for the 11th Circuit. According to TVA spokeswoman Barbara Martocci, TVA “agrees with EPA on the need to reduce emissions, but we do not agree with EPA on the means they are requiring TVA to use.”

After months of failure to find a resolution acceptable to both agencies, TVA Chairman Craven Crowell says that “to protect the interests of our customers, we have resorted to the courts to ensure we are treated fairly as we continue to maintain our plants while supplying low-cost, reliable power.”

Both TVA and the investor-owned utilities targeted by EPA’s enforcement actions claim they are victims of an ex post facto rewrite of Clean Air Act rules. Under the Act, utilities must go through a lengthy permitting process and meet numerous strict standards before building a new facility or substantially modifying an existing one. Routine maintenance, on the other hand, does not trigger such tough requirements.

Through its new enforcement initiatives, the utilities say, EPA is essentially reinterpreting the law, arguing that dozens of facility changes plant managers thought were routine maintenance actually count as major modifications. “All of TVA’s activities meet the Clean Air Act’s requirements as EPA has historically interpreted it,” says Joe Bynum, executive vice president of the TVA Fossil Power Group. “Now, EPA is changing the rules,” he adds.

If TVA loses, EPA “could require TVA to spend up to $3 billion to comply,” says Bynum. If the investor-owned power plants lose, they will be subject to fines of up to $25,000 per day for violations that had gone on for many years, in addition to the substantial cost of bringing facilities into compliance with EPA’s newly defined requirements.

Ratepayers would eventually foot the bill. TVA predicts a price increase of up to 14 percent for its customers. In addition, an EPA victory would mean that many routine power plant repairs will in the future be delayed by months of red tape, hampering ongoing operations.

TVA and the other utilities are also concerned about the impact EPA’s actions may have on the reliability of the electricity supply, already a growing problem across the country. EPA has singled out for extra scrutiny facility maintenance projects the agency believes will result in “decreases in forced outages and curtailments attributable to breakdown of the component being replaced.” If EPA has its way, such projects would be delayed, if not prevented, potentially resulting in more frequent blackouts.

In the end, EPA’s enforcement actions may create problems greater than those they’re intended to solve. Ambient ozone levels are already declining, by more than 30 percent since 1970, according to EPA figures. Reduced power plant emissions have contributed to this trend, which is likely to continue regardless of the outcome of the agency’s latest crackdown.

“Smog has declined substantially over the past three decades and will continue to decline, even without these actions against coal-fired power plants,” says Dr. Kay Jones, former senior advisor on air quality to the President’s Council on Environmental Quality during the Ford and Carter administrations.

Moreover, EPA’s enforcement actions may actually harm the environment by discouraging plant upgrades likely to achieve emission reductions by replacing obsolete equipment and boosting efficiency. In “Clean Air — A Critical Disagreement,” published in the January 18 issue of TVA’s Inside TVA newsletter, the agency complains that EPA’s newly imposed requirements “will significantly discourage efficiency projects.”

All the usual arguments made against EPA enforcement actions–the alleged violations did not really occur, the proposed remedies will burden consumers and accomplish little or nothing for the environment–tend to be dismissed as cheap excuses when coming from private corporations. But they are often true, especially in recent years as the Clinton EPA has embarked on a number of aggressive enforcement efforts of questionable merit.

According to Jonathan Adler, author of a May 2000 study for the Reason Public Policy Institute, “Environmental Performance at the Bench: The EPA’s Record in Federal Court,” EPA now loses a substantial percentage of its legal challenges, due to its failure to follow the law.

The notion that federal environmental enforcement has veered badly off track is slowly gaining believers. And in the case of EPA’s latest attack on utilities, even the federal government itself has become one of them.

Ben Lieberman is a policy analyst with the Washington, DC-based Competitive Enterprise Institute. He can be reached by email at [email protected].