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As the Washington, D.C., region suffered through one blistering-hot, “Code Red” dirty-air day after another this summer, the debate over the best way to improve air quality heated up. While everyone from the president to Congress to industry and environmental advocates agrees that we need cleaner air, some proposals will actually get us there, while others are little more than smoke screens to hide pollution increases. Unfortunately, the latest plan from the Bush administration, advocated by Jonathan S. Martel in his recent commentary (“Clearing the Air”), falls into the smoke screen category. The issue is whether power plants that are a quarter-century old or older will ever have to meet modern pollution control standards. The Clean Air Act of 1977 required that all new plants install state-of-the-art pollution controls, but exempted plants already in operation. Congress grandfathered the older plants on the basis that it was not the best use of resources to force plants already nearing retirement age to bear the costs of new pollution controls. But Congress also created a mechanism to close the loophole for plants that did not, in fact, retire. This “New Source Review” provision requires that grandfathered plants install state-of-the-art emissions controls whenever they make major modifications that significantly increase air pollution. New Source Review represents a historic compromise between the clean air goals of all Americans and the economic needs of power producers. While post-1977 plants must operate more cleanly from opening day, older plants were given the flexibility to clean up over time. New pollution controls are required for only those pre-1977 plants that undertake capital expenditures that serve to significantly extend their useful lives, thereby making them “new sources” in the eyes of the law. Congress recognized that installing pollution controls would be most economically efficient at that point in the plant’s investment cycle. In theory, New Source Review is sound public policy. It gives industry the choice between sticking with the technological status quo or investing in state-of-the-art pollution controls when major capital investments are otherwise feasible. Yet it still drives improvements in air quality, as power plant and pollution control technologies evolve. In practice, however, New Source Review has been less effective than it should have been — but not for the reasons put forth by the Bush administration and regulated industries. They argue that New Source Review is a problem because it is unnecessarily complex and draconian, preventing plants from even “changing a light bulb” without triggering the requirement for expensive new technology. This, they say, prevents plants from making any efficiency improvements, leaving owners, who truly would like to clean up, with no choice but to operate dirty older plants. But this argument falls apart easily. Not only must a plant modification be “major” to trigger New Source Review, but it must also be accompanied by a significant increase in emissions. If owners only wanted to update their plants to operate more efficiently, new pollution controls could still be avoided. But the facts show that many plants are not simply improving efficiency — they are massively rebuilding, expanding, and increasing pollution while clinging to their grandfather exemption. The case of EPA v. the TVA et al. illustrates this point. Publicly available records in the government’s case against the Tennessee Valley Authority for New Source Review violations show that TVA plant modifications that claimed to be “routine maintenance,” and thus exempt from New Source Review, were anything but routine. For instance, the work on the TVA’s Allen Unit 3 involved cutting a 25-foot hole in the boiler wall at a spot 10 stories off the ground. The project required huge cranes, specially built monorail and trolley systems, and dozens of workers. In fact, at one time the project employed more than 60 welders. The cost of the Allen Unit 3 project in 1993 was $11 million, while the cost to initially construct Allen Unit 3 was $7.4 million in 1959. As a result of these major modifications, the Allen plant operated far longer than it otherwise would have been able to, and that, in turn, resulted in significant amounts of new air pollution. STILL POLLUTING The real problem with New Source Review is not that it applies too frequently to minor repairs, but that it is not applied often enough. And the reason is that industry has never truly accepted the terms of Congress’ 1977 compromise. Most tellingly, none of the electric power plants that were grandfathered in 1977 have retired, even though many were already several decades old. Nor have they installed modern pollution controls, even though most have undergone other substantial modernizations. Enforcement actions begun in the Clinton administration and continued by the Bush administration allege that dozens of these plants underwent major modifications that significantly increased air pollution, yet avoided installing new pollution controls as required by New Source Review. As a result of their failure to clean up, these grandfathered plants have gained a distinct competitive advantage over newer, cleaner sources of electricity, which must meet modern standards. This, in turn, has made the older plants the leading polluters in America, responsible for two-thirds of all sulfur dioxide pollution. Today, 25 years after the 1977 compromise, we don’t have the new, clean, modern industry that Congress expected. Instead, older, dirty, mostly coal-burning plants are locked in place as America’s leading providers of electricity. Operators of grandfathered power plants understandably don’t want to give up their lucrative loophole. They have fought hard to avoid cleaning up. Initially, they simply ignored New Source Review while rebuilding their plants and increasing emissions. Now, after several major utilities have been sued for avoiding the Clean Air Act requirements, they’ve turned to the Bush administration to rewrite the rules. ‘MAJOR’ MODIFICATION The Bush administration says that its proposed regulatory changes will only provide “greater flexibility” so that plants can “increase efficiency.” But even a cursory look shows that they will allow plants to make all kinds of changes that increase pollution without triggering the requirement for new pollution controls. For example, one of the changes put forward by the EPA would establish a cost threshold below which modifications would escape New Source Review. Although the EPA has not said what the threshold will be, in the past the agency has suggested numbers so high that no modification would ever trigger the requirement for new pollution controls. Such cost thresholds would effectively end New Source Review for large industrial facilities and create regulatory immortality for older power plants. While there is much disagreement over these proposed changes, one thing on which all parties seemingly agree is that New Source Review is not, by itself, the answer to all our air pollution woes. As Jonathan Martel noted in his commentary, a market-based “cap-and-trade” system, such as the acid rain program established under the Clean Air Act of 1990, can successfully reduce emissions. In fact, environmental and health groups have been strong advocates for such market-based approaches in the context of the proposed Clean Power Act, which recently passed the Senate Environment and Public Works Committee. But just as New Source Review isn’t the only answer, neither is cap-and-trade. While cap-and-trade is good at lowering overall pollution levels, it has no mechanism to clean up individual plants, which often cause serious local health and environmental damage. Congress recognized this in 1990 by leaving New Source Review in place, while layering the acid rain program on top. Thus, New Source Review and cap-and-trade have worked in tandem for more than a decade, each getting at an aspect of the larger problem. But now the Bush administration wants to upset that balance as well. Its cap-and-trade proposal, known as the Clear Skies Initiative, would eliminate New Source Review and a half-dozen other Clean Air Act protections. Even worse, the administration is moving ahead now with additional loopholes in New Source Review, with only the promise of cap-and-trade legislation in the future. Anyone with experience working on the 1990 Clean Air Act amendments should know that environmental legislation does not happen overnight. It could be years before we see new protections to make up for the weakening of New Source Review today. CODE RED Eliminating or significantly undermining New Source Review will likely cause an increase in air pollution and the health damage it causes. The EPA estimates that between 1997 and 1999, New Source Review resulted in emissions reductions of more than 4 million tons in areas of the country that currently meet clean air standards. In addition, a study by Abt Associates, the EPA’s main health damages consultant, estimates that if all power plants being sued for New Source Review violations were forced to clean up, we could avoid between 4,300 and 7,000 premature deaths each year from air pollution. Now is not the time to weaken clean air standards. According to the EPA, more than 120 million Americans live in areas with unhealthy air. That number is likely to increase as new, more protective national standards for ozone and particulate matter pollution begin to take effect. In the Washington, D.C., region, with still a month left in the hot-and-humid season, we’ve already had more bad air days than any other time in recent history. If the end goal — cleaner air — is one on which we all agree, then the means should not be as dubious as the weakening of programs that have worked and their replacement with little more than a promise of future pollution reductions. We should instead be strengthening programs like New Source Review, while continuing to pursue new protections, like the Clean Power Act. Regulatory relief for industry is a fine secondary goal, but let’s get on with the main business of cleaning up power plants and protecting public health. Mark Wenzler is environmental counsel for the National Environmental Trust, a nonprofit, nonpartisan group established to provide public education about environmental issues (www.environet.org).

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