Testimony of
Eliot Spitzer,
Attorney General of the State of New York,
before the
United States Senate
Committee on Environment and Public Works
and
Committee on the Judiciary
Washington D.C.
July 16, 2002
Chairman
Leahy and Chairman Jeffords, Senator Schumer and Senator Clinton, and
distinguished members of the committees: Thank you for convening this hearing
and thank you for providing me with the opportunity to testify about the need
to maintain and enforce the New Source Review (NSR) provisions of the federal
Clean Air Act.
New York State has
been hard hit by air pollution from coal-burning power plants. Hundreds of lakes and ponds in the
Adirondack and Catskill Mountains have been ravaged by acid rain. Ground level ozone has triggered asthma
attacks and other respiratory diseases in every corner of our state,
particularly in New York City. In
addition, nitrate and sulfate particulates cause respiratory and cardiac
illness, lung cancer and thousands of deaths in the regions downwind from
polluting plants.
The New Source Review
provisions of the Clean Air Act constitute a powerful tool to reign in this
harmful pollution. For years, power
plants have been exploiting an exemption, added to the Clean Air Act in 1977,
which temporarily excused existing power plants from having to install modern
pollution control devices. This
exemption, however, was not intended to be permanent. Congress understood in 1977 -- twenty-five years ago -- that
existing plants could not operate indefinitely without having to undertake
expensive life extension projects. At
that time, Congress mandated, power plants would have to install
state-of-the-art pollution controls.
But now, decades later, many of these power plants continue to spew huge
quantities of air contaminants and operate with no pollution controls, in
blatant violation of the Clean Air Act.
The aim of the Clean
Air Act litigation brought by New York, other northeast states, the federal
Environmental Protection Agency (EPA) and various environmental organizations
is to address these harms by going to their source. In 1999, working in partnership with EPA and other Attorneys
General from the northeast, my office identified various power plants that were
in violation of the New Source Review requirements. These coal-burning power plants had undergone major multi-million
dollar improvements without installing NSR-dictated pollution controls. To date, I have filed lawsuits with respect
to 17 of these power plants -- which are located in Ohio, West Virginia,
Virginia and Indiana -- under the citizen suit provision of the Clean Air
Act. Each of these cases has been
joined by EPA and other states. The
plants involved emit tons of nitrogen oxides and sulfur dioxide every day,
harming New York’s air quality and damaging its natural resources.
My office also has
taken enforcement action against several power plants located in New York State
even though they are generally responsible for much less pollution than their
counterparts in the Midwestern and southern states. Working with the New York State Department of Environmental
Conservation, we have identified 7 power plants that were in violation within
New York, and we have filed a lawsuit against the owner of the two largest
plants. The Commissioner of the State
Department of Environmental Conservation and I are currently in negotiations
with the owners of the other five plants.1
Unfortunately,
however, our efforts to enforce the Clean Air Act have prompted the Bush
Administration to propose a set of illegal regulatory changes that would
essentially neutralize New Source Review as an enforcement mechanism and
deprive the public of the benefits of this laudably farsighted
legislation. The Administration’s
efforts to dismantle NSR must be defeated, and I will go to court, if
necessary, to stop them. I also urge
Congress to ensure that the proposed changes do not come to fruition. In the meantime, however, the
Administration’s retrenchment on clean air already has jeopardized all of the
existing NSR cases brought by the states and the federal government, and
threatens to thwart any future NSR enforcement efforts.
My testimony today
addresses four points. First, I explain
how the Administration’s proposed changes would, if enacted, illegally
contravene the Clean Air Act. I intend
to go to court to challenge these illegal changes if the Administration puts
them into effect. And I intend to
win. Second, I demonstrate that the
Administration’s plans to gut the NSR provisions are already – before the
changes even become effective – jeopardizing our existing enforcement cases and
depriving us of the millions of tons in pollution reductions that those cases would
yield. Third, I refute both the
Administration’s claim that the NSR program needs “clarification”and industry’s
contention that it was “unfairly surprised” by our enforcement cases. Finally,
I offer my recommendations as to how Congress should respond to the
Administration’s assault on the Clean Air Act.
I. The
Administration’s Proposed Changes are Illegal
The Administration’s proposed changes – so far as we know them through EPA’s press
statements – are illegal because they purport to amend the Clean Air Act. I will first explain the existing law, as
enacted and enforced under the prior Reagan and Bush administrations. I will then review the changes and explain
why they are illegal.
A. New
Source Review Law and Regulations
In 1977, Congress
created the Prevention of Significant Deterioration (PSD) program to ensure
that increased pollution from the construction of new emissions sources or the
modification of existing emission sources would be minimized, and to ensure
that construction activities would be consistent with air quality planning
requirements. This program only applied
to areas of the country where the air quality met or exceeded the national ambient
air quality standards. The non-attainment
New Source Review program, also created in 1977 contains virtually identical
requirements applicable to facilities in non-attainment areas. (I refer to both programs together as the
NSR program.)
Generally, the NSR
program requires such sources to obtain permits from the permitting authority before
the sources undertake construction projects if those projects will result
in an increase in pollution above a de minimis amount. In addition, the NSR regulations usually
require that sources install state-of-the-art controls to limit or eliminate
pollution. Congress required and fully
expected that those older existing sources would either incorporate the
required controls as they underwent “modifications,” or would instead be
allowed to “die” and be replaced with new, state-of-the-art units that fully
complied with pollution control requirements.
The Clean Air Act
defines “modification” as any physical change or change in the method of
operation that increases the amount of an air pollutant emitted by the
source. 42 U.S.C. § 7411(a). Courts for many years have interpreted the
Clean Air Act term “modification” broadly.
Alabama Power Co. v. Costle, 636 F.2d 323, 400 (D.C. Cir. 1979)
(the term “‘modification’ is nowhere limited to physical changes exceeding a
certain magnitude”); Wisconsin Electric Power Co. v. Reilly, 893 F.2d
901, 905 (7th Cir. 1990) (“WEPCO” (“[e]ven at first blush,
the potential reach of these modification provisions is apparent: the most trivial activities - the
replacement of leaky pipes, for example -- may trigger the modification
provisions if the change results in an increase in the emissions of a
facility.”) The WEPCO court
noted that Congress did not intend to provide “indefinite immunity [to
grandfathered facilities] from the provisions of [the Clean Air Act],” id.
at 909, and that “courts considering the modification provisions of [the Clean
Air Act] have assumed that ‘any physical change’ means precisely
that.” Id. at 908 (emphasis added) (citations omitted).
EPA recognized, however, that interpreting “modification”
to include literally “any physical change” could become administratively
unworkable (“the definition of physical or operational change in Section
111(a)(4) could, standing alone, encompass the most mundane activities at an
industrial facility (even the repair or replacement of a single leaky pipe, or
a change in the way that pipe is utilized)”).
57 Fed. Reg. 32,314, 32,316 (July 21, 1992). To exclude these trivial activities from the scope of the NSR provisions,
EPA regulations have exempted routine maintenance, repair, and replacement from
the definition of modification since 1977.
40 C.F.R. ' 52.21(b)(2)(iii).
EPA historically has
analyzed and applied the “routine maintenance” exemption to modification by
using a common sense test that assesses four primary factors, the (1) nature
and extent, (2) purpose, (3) frequency, and (4) cost of the proposed
work. See, e.g., Memorandum from Don R. Clay, EPA Acting
Assistant Administrator for Air and Radiation, to David A. Kee, Air and
Radiation Division, EPA Region V (Sept. 9, 1988). This approach was upheld by the U.S. Court of Appeals for the
Seventh Circuit in WEPCO, a case brought under the first President
Bush. Our cases follow these standards.
Although Congress did
not authorize EPA to create this “routine maintenance” exemption, the Court of
Appeals for the D.C. Circuit ruled, in a challenge to the exemption in the PSD
regulations for minor emission increases, recognized that EPA may exempt de
minimis activity from the scope of the modification provisions. Alabama Power Co. v. Costle, 636
F.2d at 360-61. See also Natural
Resources Defense Council v. Costle, 568 F.2d 1369 (D.C. Cir. 1977)
(similar holding regarding the Clean Water Act). Thus, as long as it is construed narrowly, the routine
maintenance exemption is legal.
Another change EPA
made over a decade ago was to limit the scope of the modification
provisions to those modifications that generate a significant increase
in pollution. This requirement is
essential when one considers the justifications offered by the present
Administration for its NSR “reforms.”
In announcing the NSR changes, EPA has claimed repeatedly that NSR
requirements have deterred emissions-reducing projects. In offering this justification, EPA appears
to have bought into one of the power industry’s favorite arguments against the
NSR program -- that the program somehow prevents companies from making
efficiency improvements that would benefit the environment. However, efficiency improvements that are
environmentally beneficial and reduce emissions do not trigger NSR: if
emissions decrease – or even increase only slightly -- existing NSR
requirements are inapplicable.2
B.
The Bush Administration’s
Proposals
The Bush
Administration proposed changes would sanction plant modifications that are far
from de minimis. For example,
EPA proposes to allow large facilities to operate under a single plant-wide
emissions cap (plant-wide applicability limit or PAL) for a period of 10 - 15
years. Unlike what some who support
plant-wide caps would require -- that the caps decline over time -- the
Administration would allow the caps to remain high. Emissions at such a plant would remain the same throughout the 10
- 15 year period, regardless of changes in air quality, technology, or air
quality standards. Because the plant’s
emissions are set for the duration of the PAL, states likely would be
prohibited from imposing emission reduction requirements beyond what the PAL
required, regardless of air quality needs.
Similarly, EPA
proposes that any unit that has installed “Best Available Control Technology”
(BACT) or BACT equivalent since 1990 would not be required to undergo NSR
review for a period of 10 - 15 years, unless “allowable” emissions
increase. Again, this limit on review
of the source’s emissions fails to consider evolving air quality needs, and may
prevent a state from imposing more stringent emission reduction requirements,
even if air quality considerations would justify such measures. Congress’s clear intention to have the Clean
Air Act stimulate technology improvement will be frustrated.
EPA also proposes
several significant revisions in the method by which NSR-triggering emissions
increases are calculated. For example,
EPA proposes that the baseline for measuring emissions (for facilities other
than power plants) become the highest emission level achieved over any two year
period during the last ten years. By
allowing a source to use a baseline that extends back 10 years, EPA is
proposing to permit inflation of the source’s baseline, because many
regulations in the last ten years have forced sources to reduce emissions. These required emission reductions,
however, may not be reflected in the source’s baseline generated under the
Administration’s proposal. Thus, a
source would actually be allowed to increase emissions from current
levels without any attendant pollution control upgrade.
The most alarming
revision proposed by EPA is the wholesale expansion of the Routine Repair and
Maintenance (RRM) exception.
Specifically, EPA is proposing to allow companies to treat multi-million
dollar once-in-a-lifetime projects as “routine maintenance,” even though, as
industry documents establish, power plant staff never considered the projects
routine. EPA is planning to forego
pollution control requirements for virtually limitless “like-kind” replacements
that would restore and perhaps expand an old plant’s capacity and dramatically
prolong its life. To accomplish this,
EPA proposes to include in the definition of RRM projects that are below a specified cost threshold (inflated to
reflect facility replacement cost, not original cost), and that involve
installation of replacement equipment that serves the same function and does
not alter basic design parameters. The
cost threshold test fails to consider air quality and places no limit on any
emissions increase the project might produce.
Thus, significant increases in emissions could occur with no attendant
pollution control requirement.
Similarly, the equipment replacement exemption could essentially allow a
company to rebuild a source without undergoing any governmental review and
without meeting pollution control requirements. Significant emission increases could result.
These impacts have
severe consequences for the American public and particularly for the
states. EPA’s proposal would severely
blunt one of the states’ most important anti-pollution tools, placing the
states in an extraordinarily difficult position regarding their
responsibilities under the Clean Air Act.
It is the states – not EPA, not the federal government – that have the
responsibility for insuring that National Ambient Air Quality Standards (NAAQS)
are met. 42 U.S.C. §§ 7404; 7410. Under EPA’s proposed revisions, the states
stand to lose flexibility in determining how best to achieve or maintain air
quality because the largest sources of
pollution – which generally are the most efficient to control – will essentially be exempted from regulation.
That
is not what the Administration proposes to do.
The Administration’s proposed changes are far from de minimis. EPA’s changes would have the effect of
essentially eliminating the applicability of New Source Review to
modifications, contrary to the express language of the statute. EPA’s announced changes will confer on
existing, dirty power plants indefinite immunity from the requirements of the
Clean Air Act, contrary to Congress’s clear intention when it enacted the NSR
provisions twenty-five years ago. This
is illegal and for that reason, I -- and I expect to be joined by may other
states -- intend to sue EPA if it carries out its plans.
II. The Proposed Changes and the
Administration’s Hostility to NSR are Already Jeopardizing the Enforcement
Cases
If enacted, the Administration’s proposed changes
would impermissibly undercut existing law and reduce the scope of the Clean Air
Act. Simply by signaling its hostility
to the NSR program, however, the Administration already has compromised our
existing enforcement cases. Indeed,
from the day administrations in Washington changed, industry has sought to
avail itself of its enhanced bargaining position.
A. The Administration is Overtly Hostile to NSR
Fifteen
months ago, the Administration released President Cheney’s “National Energy
Policy: A Report of the National Energy
Policy Development Group.” The report
directed Attorney General Ashcroft to “review existing enforcement actions
regarding NSR to ensure that the enforcement actions are consistent with the
Clean Air Act and its regulations.”
That directive immediately undercut the Department of Justice’s lawyers;
yet, on January 15, 2002, DOJ concluded
that the NSR cases were legally sound.
The
Vice President also directed the EPA “in consultation with the Secretary of
Energy and other relevant agencies, to review NSR regulations, including
administrative interpretations and implementation, and report to the President
within 90 days on the impact of the regulations on investment in new utility
and refinery generation capacity, energy efficiency, and environmental
protection.” Over a year later, EPA
finally announced its illegal, wholesale administrative rollback of NSR.
In
its press statements, EPA claims to be simply “clarifying” the existing
regulations and maintains that its proposed rewriting of the law will not
affect the filed cases. Indeed, on the
day of EPA’s announcement, Administrator Whitman explained that EPA would
continue its enforcement efforts against past violations, “because you can’t
get away with violating the law just because the law gets changed.” See June 14, 2002 Atlanta Journal and
Constitution article “Air Proposals Irk Environmentalists; Bush Plan a
‘Massive Gift’ to Energy Industry, Critics Say.”
Earlier,
on March 27, 2002, the Justice Department’s environmental chief, Thomas
Sansonetti, said that pursuing NSR cases was one of his top priorities. Quoted in the “Daily Environment Report,”
Mr. Sansonetti stated: “We’re going
full steam ahead. We’re actively
pursuing all cases. When companies
refuse to settle, DOJ will take them to trial.” He predicted that DOJ would prosecute two or three NSR cases in
court in the coming year. He also said
that DOJ had budgeted $3 million in the current fiscal year to pursue such
cases. I’d like to believe Mr.
Sansonetti; his attorneys at the Justice Department have done excellent work on
the pending cases and I want to continue our partnership. But his statements were made before EPA
announced its retrenchment. Since then,
DOJ has been silent as to its future intentions regarding NSR.
B. The Existing NSR Cases are in Jeopardy
Although
we agree with the Administration that any new regulations should not be
retroactive, it would be naive to believe that industry will not try to use the
“NSR reforms” in court to justify their past conduct. We are already seeing the effects of this Administration’s
misguided and illegal policy changes: settlements are stalled, judges are
wondering about the impact of the reforms on their cases, and industry lawyers
are already arguing in court that the cases should not go forward. Whether or not the rollback will affect the
existing cases is an issue of first impression for the courts because of the
unprecedented nature of EPA’s action.
Never before has EPA – or Congress, for that matter – undertaken such a
clear retreat on environmental protection.
Conducting such a rollback while enforcement cases under the old rules
are pending is not only unprecedented but was unimaginable, at least before
this Administration came to power.
Simply put, the existing NSR cases are in jeopardy and we are fooling
ourselves if we believe that the federal government will be filing more cases
after rewriting the regulations to legalize the conduct at issue.
I
would like to focus my comments now on three concrete examples of how the
Administration’s policies are adversely affecting our pending enforcement
cases.
1. Cinergy
and VEPCO
On
November 16, 2000, my office and the EPA reached a $1.2 billion dollar
settlement in principle covering eight coal-fired power plants run by the
Virginia Electric Power Company (VEPCO) -- one subject to New York’s pending
lawsuit and seven others that VEPCO brought into the settlement. The settlement would have reduced air
pollution by more than 270,000 tons annually.
VEPCO was to spend $1.2 billion over 12 years to reduce its sulfur
dioxide emissions by 70 percent and its nitrous oxides emissions by 71 percent from pre-existing levels. Further, VEPCO was to pay $5.3 million in
penalties to the federal government and an additional $13.9 million to fund
environmental benefit projects, with a portion going to New York State. The intent at the time was to finalize the
agreement within 60-90 days. Eighteen
months later, this agreement remains unexecuted. My staff has spent countless hours in meetings with VEPCO and the
federal government, but the regulatory uncertainty has prevented any final
agreement. This is a terrible loss for the people of this nation, who expect,
and deserve, cleaner air.
Similar
delay has beset our effort to reach a final agreement with the Ohio-based
utility Cinergy. In December 2000, I
joined the federal government and the States of Connecticut and New Jersey in
reaching a settlement in principle covering ten of Cinergy’s coal-fired power
plants (one subject to New York’s lawsuit and nine others). We were to see over
300,000 tons in emission reductions, and $30 million in penalties and
environmental projects. Like VEPCO, the
Cinergy agreement remains in limbo.
After tolerating two years of settlement discussions, the Cinergy court
has placed the case back on the litigation track. Although DOJ advised the court that it intended to file an
amended complaint by July 10, it has not yet done so, raising questions about
DOJ’s willingness to pursue NSR enforcement cases when its client, EPA, is in
the process of changing the rules.
Although
Cinergy and VEPCO have continued to express their interest in settlement, their
actions speak louder than words. As
might be expected, the softening of EPA’s regulatory posture has only hardened
Cinergy’s and VEPCO’s positions on the remaining issues to be worked out. I now see no way for these settlements to
become final unless the states and DOJ capitulate on the remaining issues,
something that I am not prepared to do.
2. Tennessee
Valley Authority case
In
2000, EPA issued a final determination that TVA had violated the NSR
requirements of the Act by undertaking enormous and expensive modification
projects at several of its power plants.
TVA appealed to the Eleventh Circuit, briefs were submitted and oral
argument was held this past May. Like
many others involved in these cases, I was hopeful that the Eleventh Circuit
would issue a quick decision, affirming EPA’s determinations. A decision from the Eleventh Circuit would
be an extremely important precedent for the other NSR cases.
Instead,
in the wake of EPA’s recent announcement on NSR “reform,” the Eleventh Circuit
took the extraordinary step of ordering
the parties to mediation.
Although we cannot be certain that this order was issued in direct
response to the EPA announcement, it is unlikely that the timing of the two
events is coincidental.
3. Niagara
Mohawk case
On
January 10, 2002, Governor Pataki and I filed a lawsuit in federal court
against Niagara Mohawk Power Corporation and NRG (the current owner of the power plants) for violating NSR at two
power plants in western New York. The
Dunkirk and Huntley coal-burning power plants account for more than 20 percent
of the nitrogen oxide emissions and 38 percent of the sulfur dioxide emissions
released by all power plants in New York State.
The
defendants filed a motion to dismiss all or portions of the case on
jurisdictional grounds. Briefing was
completed and my attorneys were preparing to argue the case. But shortly after EPA’s announcement, the
judge called us in to explain how the Administration’s announced intention to
change the NSR rules would affect the existing case. In its brief on this issue (see Exhibit 2), Niagara Mohawk has
described EPA as “reconsidering” its position on NSR and recommended that the
Court put the case on hold until EPA takes final action on the NSR changes:
In order to consider the
merits of the case, the Court would ultimately have to decide whether EPA’s
interpretation of the Act and regulations, as applied by DEC, is reasonable and
in accordance with law. The Court
cannot properly make that decision until the EPA decides finally what its
interpretation is.
* * *
In short, EPA has said that
its recommendations involve clarification of existing law and policy, and
definition of a regulatory concept (routine maintenance, repair and replacement)
that derives from EPA’s interpretation of the Clean Air Act. Accordingly, to the extent that EPA’s final
action follows its recommendations, its action may affect not only the State’s
request for prospective injunctive relief, but also its request for penalties
for alleged past violations.
Niagara
Mohawk also contends that even if the new rules were purely prospective, “they
would still affect the State’s request for injunctive relief.” We think this argument is wrong. When a business breaks the law -- no matter
how much influence it may now have inWashington -- the rule of law requires
courts to order compliance. However,
Niagara Mohawk’s argument evidences a practical problem that judges will face
if the Administration succeeds in implementing its “reforms.” We expect the courts to find with relative
ease that the utilities violated the law.
But when it comes time to select a remedy, will they require substantial
emission reductions even though the Administration’s proposed policy would not
require such reductions? Will a
practical judge require a company to spend millions of dollars on pollution
controls for actions that EPA is now saying do not require such controls? Indeed, now can EPA even ask for that relief
with a straight face? If any of these
cases go to trial, we might see the payment of some fines for past wrongdoing,
but we may be deprived of the emission reductions we so desperately need. More money in the state and federal coffers,
while welcomed, will not help us reverse the ravages of acid rain and
respiratory disease in New York State and elsewhere.
I
intend to continue to press forward on this important case. Niagara Mohawk violated the law and we need
the remedy of dramatic emission
reductions. Unless EPA tries to take
away the states’ authority to reject the regulatory changes – something I hear
may be in the works – New York can continue to implement the law as it has
existed for 25 years within New York.
But we enjoy no such comfort in our out-of-state cases, where it will be
difficult to proceed if EPA pulls the rug out from under us.
III. NSR
Needs No “Clarification”
The
power industry has always understood the scope of NSR and has never considered the
modifications at issue to be routine maintenance. These modifications were large-scale capital projects that
required significant advance planning and typically cost millions of dollars;
they were intended to fix problems that routine repair or replacement had been
unable to address. By contrast,
activities considered by industry to be
“routine” include relatively mundane actions, such as the day-to-day
repair of leaky or broken pipes. In
short, the record supplies no basis for the Administration’s claims that the
law was somehow unclear and that industry was somehow ambushed by our
enforcement cases.
A. Industry Officials Originally
Distinguished Routine Activities from Upgrades
Industry
documents establish that industry officials appreciated the potential
applicability of the NSR provisions to their power plant life extension
projects. Because of protective
orders entered in our various cases, I am unable to quote from most of these
documents in my testimony. However,
despite the utilities’ attempt to cloak their plant life extension projects in
secrecy, publicly available industry documents amply demonstrate industry’s
acknowledgment of the routine maintenance exemption’s limited scope. For example, the Babcock and Wilcox company,
in its definitive power plant treatise, Steam, Its Generation and
Use, distinguished some of the very plant life extension activities at
issue in our NSR cases from routine maintenance activities as follows: “Older
boilers represent important resources in meeting energy production needs. A strategic approach is required to optimize
and extend the life of these units. Initially, routine maintenance is sufficient to maintain high
availability. However, as the unit
matures and components wear, more significant steps become necessary to extend
equipment life.” Id.
at 46-1 (Exhibit 3). Our cases involve such “more significant,”
as opposed to the routine maintenance activities that the plants conduct on a
day-to-day basis.
Similarly,
the American Electric Power Company (AEP) explained to the Ohio Public
Utilities Commission that life extension activities go beyond routine
maintenance: “As time goes on, the
cumulative effects of operation affect more components, and affect those
components more severely. Finally, the
major subsystems and components reach a stage at which “normal” maintenance and
repair become inadequate to support satisfactory continued operation.” Direct Testimony of Myron Adams, AEP’s
Manager of Integrated Resource Planning, filed with the Public Utilities
Commission of Ohio on July 20, 1994 at 20 (Exhibit 4).
Publicly
available information likewise demonstrates the magnitude of the projects we
have cited in our cases. For example,
modifications performed by TVA include projects costing $57 million, $23
million, and $29 million. These
modifications required that the affected units be shut down for 13 months, 3
months and 6 months respectively.
Another TVA project costing $11 million required construction of a
railroad track and a monorail to facilitate the replacement of 44% of the
234,000 square feet of total boiler surface area. At Ohio Edison, the NSR violations include installation of an
entirely new and redesigned furnace and burner system – the core of any power
plant – at the W.H. Sammis plant, as described in the accompanying article
(Exhibit 5).
Documents
produced by Niagara Mohawk show that the company originally used the term
“routine maintenance” to apply to only a narrow category of work done at the
plant. (Exhibit 6 A). In another company document, Niagara Mohawk
made clear that work done at the plant for the purpose of extending the life of
an electric generating unit concerned “components that are not routinely
replaced.” (Exhibit 6 B). Indeed,
Niagara Mohawk requested that its contractor not include “maintenance” type
recommendations in a life extension report for one of the generating
units. (Exhibit 6 C).
Industry’s
complaint that EPA suddenly changed its interpretation of the NSR requirements
during the Clinton Administration is similarly contradicted by industry
documents dating from the 1980s, which cite particular plant life extension
projects as exceeding routine maintenance and therefore triggering the NSR
requirements. Thus, in 1984 -- seven
years after the enactment of the NSR requirements -- the Electric Power
Research Institute (EPRI) held a conference that included the topic of
extending the lives of old power plants
The conference literature explicitly recognized that “a fossil fuel
power plant is designed for a 30-year life,” meaning that all plants
existing when the NSR/PSD requirements were enacted would reach the end of
their useful lives by 2007. (Exhibit
7). Conference attendees then discussed
the life extension activities that would be needed. A Duke Power representative stated that keeping the old plants
running “necessitated us developing a different approach than routine
maintenance” which only keep “the plant in service until the end of its
design life.” (Exhibit 8).
Similarly,
at 1985 and 1986 EPRI conferences, industry representatives recognized that
life extension activities transcend routine maintenance:
If plant life extension serves
the balanced interests of stockholders and ratepayers, capital improvements and
increased attention to equipment above and beyond routine maintenance may be
warranted....
It is of primary importance to define the distinction between
plant life extension work and routine maintenance.
(Exhibit 9).
B. Industry was Fully Aware that Its Activities
were not Exempt from NSR
Not
only did industry recognize that plant life extension activities failed to
qualify as “routine maintenance,” industry also understood that NSR
requirements would likely be applicable.
For example, an article entitled “Regulatory Aspects of Power Plant
Life Extension” -- which was presented at a 1985 industry conference --
expressly discussed the circumstances under which life extension projects could
require NSR permits. (Exhibit 10). As a
result, EPRI recommended “that corporate counsel be consulted as a part of
life extension planning activities, particularly for the interpretation of
regulatory and environmental issues when such activities are clearly beyond the
scope of what might be considered typical maintenance.” (Exhibit 11)
Rather
than seeking EPA’s guidance, however, industry simply attempted to conceal its
activities. For example, a 1984 EPRI
workshop on life extension recommended that life extension projects be described
as maintenance activities in order to avoid triggering NSR requirements:
[T]here are a number of issues which
require clarification. Several of these
are: What is considered ‘routine’
repair, replacement, or maintenance for the purpose of qualifying for an
exemption to the NSPS modification provisions?
Some aspects of life extension projects may not be considered routine
repair/maintenance/replacement. To the
extent possible these projects should be identified as upgraded maintenance
programs....
Life extension projects will result in
increased regulatory agency sensitivity to facility retirement dates.... Regulatory agencies may contend that since
life extension projects will defer the need for new generation, additional
pollution control should be required for the older, higher emitting affected
plants.
It may be appropriate to downplay the
life extension aspects of these projects (and extended retirement dates) by
referring to them as plant restoration (reliability/availability improvement)
projects. To the extent possible, air
quality regulatory issues associated with these projects should be dealt with
at the state and local level and not elevated to the status of a national
environmental issue.
To the extent possible, project
elements should be stressed as maintenance related activities to maximize
chances for NSPS exemptions. Utility
accounting practices play a significant role here.
(Exhibit 12).
In
1988, EPA issued an applicability determination to the Wisconsin Electric Power
Company, or WEPCO, in which EPA determined that WEPCO’s multi-million dollar
life extension projects were not covered by the routine maintenance
exemption. The issuance of the WEPCO
interpretation conclusively disabused industry of any notion that it might
avoid compliance with NSR requirements.
Shortly after EPA issued its WEPCO
applicability determination concerning the life extension
projects at issue there, the Utility Air Regulatory Group (UARG), a leading
industry group, advised its members that “Life Extension is [now] an
unpopular term in the wake of WEPCO.”
(Exhibit 13, p. 2.). Consistent
with other industry missives at the time, the memo further recommended against
using “the term ‘life extension’ to describe any project.” Id., at 5. The same industry memorandum demonstrates that UARG and its
members fully understood EPA’s interpretation limiting the routine maintenance
exception:
According to UARG, EPA equates
‘routine’ with ‘frequent’ . . . . UARG
believes that under present EPA policy, in order to qualify for the routine
maintenance exemption, the activity would have to be:
* frequent,
* inexpensive,
* able to be accomplished at a
scheduled outage,
* will not extend the normal economic
life of the unit,
* be of standard industry design.
Id., at
4. UARG also advised its members that
if the WEPCO applicability determination were upheld by the courts, it “will
set a serious precedent if it is adverse.”
Id., at 5.
After
the WEPCO determination, one of Ohio Edison’s in house attorneys and one of the
lawyers at the law firm representing Ohio Edison wrote an article explaining
that, under the EPA interpretation reflected in WEPCO, Ohio Edison’s own plant
improvements would be subject to NSR, since: “[a]fter WEPCo, virtually any
physical change to an existing facility, even pollution abatement activities
and an unpredictable array of repair, replacement, and maintenance projects,
can trigger new source control obligations.” See June 18, 1990 letter from David Feltner, Senior
Attorney for Ohio Edison, to Ms. Cheryl Romo, with enclosed draft article
entitled “Is There Life Extension After WEPCo?.” (Exhibit 14). (I note that the authors of this article
overstate the reach of the NSR requirements by overlooking that the
requirements apply only if an emissions increase is projected.) Despite the opinions of its attorneys, Ohio
Edison continued to undertake expensive life extension activities at its plants
without applying for an NSR permit or otherwise notifying the permitting
authorities.4
IV. The Role of Congress
Congress
need not sit idly while the Administration unilaterally ignores its earlier
mandates and jeopardizes public health and the environment. As I’ve said, I will fight these changes; I
urge you to do so as well.
First,
while I can go to the courts, you have a greater ability to ensure this
rollback does not occur. Any litigation
I bring may take years to be resolved.
You can act strongly and quickly.
I urge you to pass specific legislation, this session, that would
expressly prohibit the Administration from proposing or finalizing any new
exemptions from NSR, including those that EPA has announced.
Second,
I urge you not to be seduced by the Administration’s claim that NSR can be
replaced by the Administration’s so-called “Clear Skies” initiative. That plan is an inadequate substitute for
existing law and a wholly unsatisfactory alternative to Senator Jeffords’s
“Clean Power Act.” At the outset, I
note that “Clear Skies” is still no more than a press release. Although months have elapsed since the
“Clear Skies” replacement for NSR was announced, no plan has even been
introduced in Congress. Many of us took
note of Administrator Whitman’s criticism of the “Clean Power Act,” which she
dismissed on the grounds that it is unlikely win Congressional approval. I would point out that Senator Jeffords’s legislation has
been introduced, and has passed the Senate Environment and Public Works
Committee -- so it is at least two steps ahead of “Clear Skies.”
Even
if the Administration were serious about “Clear Skies,” the pollution
reductions that program would offer are
too little, too late: the caps are too high and would not take affect
until the distant future.
To be
blunt, the “Clear Skies” caps are based on little more than politics. They do not guarantee compliance with air
quality standards. The caps certainly
are not based on sound science. Every
month, another study shows the need to reduce pollution more aggressively. For example, a recent study finds new links
between fine particulate matter (PM) and cancer.
Nor does technical feasibility stand in the way of
higher caps. More aggressive SO2 and
NOx cuts are clearly technically feasible even with existing technology. Nor is it a question of rates that
consumers must pay for power. The
Department of Energy itself determined that the country could cut NOx and SO2
by 60-80% by 2010 with virtually no rate impact. See Energy Information Administration, Analysis of
Strategies for Reducing Multiple Emissions from Power Plants: Sulfur Dioxide,
Nitrogen Oxides, and Carbon Dioxide (December 2000).
The
Administration tries to sell its plan by using faulty comparisons to current
emissions. Don’t be deceived. Even at their end point, the Bush pollution
caps would be 50% higher than, for example S.556, the Clean Power Act, or EPA’s
own initial proposal. This 50% is
roughly equivalent to all emissions produced within the State of Ohio, a
leading producer of emissions. This
difference alone could lead to hundreds, and perhaps thousands, of additional
deaths each year. Under the
Administration’s program, states will find it far more difficult, if not
impossible, to attain their mandated air quality standards.
Under
the Administration’s program, many dirty old plants will remain
uncontrolled. In 1977, when it enacted
the NSR provisions, Congress clearly expected that all plants would be
controlled by 2018 – over 40 years after the 1977 amendments made the NSR
requirements applicable to plant modifications. However, if all plants were controlled with “best available
control technology” by 2018, the SO2 cap would be below 2 million
tons, not 3 million tons as contemplated by “Clear Skies.”
Moreover,
the “Clear Skies” caps would not be fully phased in until the 2020's. Even EPA’s own graphs acknowledge that
pollution levels will not reach the cap level by the Administration’s announced
target dates. While EPA speaks instead
of incentives for early reductions, the flip side of early reductions is late
compliance. Under the Administration’s
program, any cuts now can be banked, ton-for-ton, to offset subsequent
emissions. We should insist on early
reduction and caps that are lower and take effect sooner.
Finally, the Administration’s claim
that the President’s plan achieves more reductions than current law is directly
contrary to what EPA and the Department of Energy found when they included the
emission reductions attributable to full enforcement of the New Source Review
provisions. See, e.g., Energy
information Administration, Analysis of Strategies for Reducing Multiple
Emissions from Power Plants: Sulfur Dioxide, Nitrogen Oxides, and Carbon
Dioxide (December 2000).
Furthermore, in its analysis, EPA ignores the emission reductions that
will result under current law from other programs, such as the regional haze rule,
the mercury Maximum Available Control Technology (MACT) requirements and the
new ozone and particulate matter standards.
Thus, the Administration is not comparing its proposal to the Clean Air
Act as it is now written and as it should be implemented and enforced. Comparing Clear Skies to a Clean Air Act
that is ignored or eviscerated is WorldCom-style math at best.
I
support the “Clean Power Act” because we need swift and significant reductions
in sulfur dioxide, nitrous oxides, mercury and carbon emissions. I am especially supportive of including
carbon in the four pollutant legislation and commend Senator Jeffords for
working so hard on this legislation.
The Administration finally admits that global climate change is
happening. Unlike the Administration,
however, Senator Jeffords has a plan of action. I urge you to pass the Jeffords “Clean Power Act.”
Conclusion
Allow
me, and others who are serious about environmental law enforcement, to continue
to use the Clean Air Act to reduce pollution. That is what Congress intended
when it adopted New Source Review twenty-five years ago. Don’t allow the most serious attack on the
Clean Air Act since it was adopted to succeed.
Don’t allow the product of 30-plus years of bi-partisan cooperation on clean
air to be cast aside.