Reducing Red Tape, Not Energy Output

Reducing Red Tape, Not Energy Output

August 22, 2001

Lieberman Op-Ed in The Washington Times

Lieberman Op-Ed in The Washington Times

 

 

One of the more controversial elements in President Bush's energy policy is his decision to review the large number of pending federal lawsuits and enforcement actions against electric utilities and oil refineries. The Washington Post, Newsweek and other major publications have run articles essentially accusing the administration of attempting to get its corporate polluter friends off the hook under the guise of solving the nation's energy problems. In truth, Mr. Bush's review is smart policy, as these actions are on shaky legal grounds and are far more anti-energy than pro-environment. As with Bill Clinton's blizzard of midnight regulations, the 1999 enforcement blitz against more than 50 coal-fired power plants and oil refineries in the Midwest and South was a late-administration change in policy. Until midway into its second term, the Clinton EPA and Department of Justice accepted the longstanding distinction between routine maintenance and major modifications at industrial facilities. The former were exempt from the extensive procedural and substantive requirements under the Clean Air Act, while the latter must face the regulatory gauntlet known as New Source Review. Thus, by redefining as major modifications dozens of past power plant and refinery projects - most of which were known to EPA when they were performed and treated as routine maintenance at the time - the agency manufactured this noncompliance crisis. The Department of Justice, on behalf of the EPA, announced the first wave of lawsuits on Nov. 3, 1999, claiming a national threat to air quality and public health. "When children can't breathe because of pollution from a utility plant hundreds of miles away, something must be done," said then-Attorney General Janet Reno. Some of the alleged violations date back to the 1970s. In his energy plan, Mr. Bush requested that EPA take a second look at the merits of this enforcement initiative, particularly its impact on electricity and gasoline supplies in the areas served by the targeted facilities. The EPA is scheduled to complete its review on Aug. 17. Many reporters, politicians and activists have portrayed this issue as a fight between good-guy federal bureaucrats and greedy corporate polluters leveraging their soft-money contributions to the GOP into lax environmental enforcement. But one of the most vocal critics of EPA's new policy is not a publicly traded utility, but the federal government's own Tennessee Valley Authority. TVA is perplexed by what it sees as an ex post facto rewrite of the Clean Air Act, and is currently fighting EPA in federal court over this matter. "All of TVA's activities meet the Clean Air Act's requirements as EPA has historically interpreted it," notes Joe Bynum, executive vice president of the TVA Fossil Power Group. "Now, EPA is changing the rules," he adds. A close look at how EPA now defines major modifications demonstrates why this is such bad policy. The agency has not even attempted to target facility changes likely to result in actual emissions increases, or to avoid harassing those likely to cause reductions. Quite the contrary, EPA went out of its way to make such determinations nearly irrelevant. It has instead focused more on the purpose of these projects. EPA has, for example, singled out for extra scrutiny any activity the agency believes will result in "decreases in forced outages and curtailments attributable to break down of the component being replaced." In other words, actions taken to prevent downtime, previously considered routine maintenance, may now be categorized as major modifications. As such, they face months of red tape, and in some cases may be halted altogether. "If TVA must go through EPA's lengthy permitting processes and install more expensive controls each time it does routine maintenance, it cannot keep its fossil plants running," warns Mr. Bynum. In addition to reliability concerns, TVA predicts rate increases up to 14 percent, if EPA is successful. EPA has also gone after improvements in efficiency. In the past, like-kind replacements of old parts with new ones had fit squarely within the routine maintenance exclusion. For example, the periodic replacement of corroded turbine blades was done with a minimum of government interference. However, improvements in turbine blade design mean that new blades can generate several percent more electricity without any increase in fuel consumption or emissions. Government lawyers have pounced on this technological advance, and now argue that turbine blade replacement be treated as a major modification. Several targeted companies have chosen to settle with EPA, in order to avoid years of regulatory uncertainty, including delays of efforts to maintain reliability and improve efficiency. Others have continued to fight in federal court, but for them a final decision might take several years. In the meantime, the uncertainty is exerting a chilling effect on maintenance and repairs at other facilities. Rather than wait for the courts and the appeals process, the administration should put a quick end to this legally questionable and environmentally unnecessary contribution to the nation's energy problems. Ben Lieberman is a senior policy analyst with the Competitive Enterprise Institute.