Court asked to clear the air

Court asked to clear the air
Appeals panel to decide coal plant issue after hearing TVA and EPA arguments

BY DAVE FLESSNER
BUSINESS EDITOR

ATLANTA — Federal regulators are improperly trying to enforce pollution control rules in a way that threatens the reliability and low cost of electricity in the Tennessee Valley, TVA officials said Tuesday.

But in a federal court hearing, attorneys for the U.S. Environmental Protection Agency argued that TVA and other utilities are skirting the Clean Air Act by extending the life of their oldest and dirtiest coal plants. Environmental groups said hundreds of deaths and thousands of asthma attacks could be avoided each year if TVA cleaned up its aging coal plants.

"TVA basically ignored the law, like most of the industry," said J. Steven Rogers, a Department of Justice lawyer representing EPA.

A three-judge panel for the 11th Circuit Court of Appeals now will have to decide whether EPA overstepped its authority or TVA failed to comply with air pollution laws.

At issue is whether the maintenance and modifications made at seven of TVA's 11 coal plants constitute new construction and thereby bring the plants under the stricter pollution requirements of new power plants. The Clean Air Acts of 1970 and 1977 grandfathered in existing coal plants under less stringent standards.

The case has emerged as one of the most important environmental lawsuits in the past decade and could affect nearly all U.S. utilities with coal plants.

"If EPA is successful in its reinterpretation of the law, it could be very costly for coal plants across the country," said Scott Segal, director of the Electric Reliability Coordinating Council, a coalition of utilities with coal plants.

Impact of EPA order on TVA:

• Immediate loss of power for 800,000 homes
• $3 billion cleanup
• Possible future loss of energy for 2.3 million homes
• Avoid up to 616 deaths linked to air pollution
• Improve air quality in Great Smoky Mountains

TVA's Widows Creek facility is one of the many coal-fired plants that may have to be upgraded to meet air quality standards.

"If EPA is successful in its reinterpretation of the law, it could be very costly for coal plants across the country."
— Scott Segal,
director of the Electric Reliability Coordinating Council

TVA estimates it will cost an extra $3 billion to install pollution controls on the older plants cited by EPA. The federal utility claims it would have to get a permit from EPA every time it replaces parts at its coal plants — a lengthy and costly procedure that could temporarily cut off 10 percent of TVA's coal-fired generation.

"We're committed to continuing to reduce our air emissions," said Joe Bynum, TVA's senior vice president in charge of fossil plants. "But we think we can do that in a more cost-effective manner over our entire program — and still maintain our reliability — if we are not subject to these changing, plant-specific requirements from EPA."

Nationwide, Mr. Segal estimates utilities may have to spend up to $70 million if modifications made at existing plants don't meet all of today's new source standards.

EPA sued TVA and eight other utilities in 1999, claiming modifications made at aging coal plants

Costs of coal plant cleanup
A federal appellate court Tuesday heard arguments over EPA's order that many old coal-fired power plants should be upgraded to meet today's stricter air standards.

Costs of meeting EPA order:

• Loss of more than 10 percent of TVA's coal plant production, or enough power for 800,000 homes in the Tennessee Valley, according to TVA.
• Cost utilities with coal plants up to $70 billion more nationwide, including another $3 billion for TVA.
• Lose potential power gains of between 6,000 and 12,000 megawatts of electricity annually, or enough power for 12 million homes, because such upgrades on old plants would no longer be "grandfathered" in under existing clean air laws.

Benefits of meeting EPA order:

• Reduce sulfur emissions from TVA plants by 93,509 tons
• Lower nitrogen oxide emissions, another ingredient in acid rain, by 52,448 tons
• Avoid between 388 and 616 deaths and up to 12,206 asthma attacks from power plant particulate matter from TVA plants.

TVA coal cleanup already under way:

• Installing five scrubbers to remove sulfur dioxide and other pollutants at total cost of $1.5 billion.
• Adding Selective Catalytic Reductions for nitrogen oxide emission controls at a cost of $1.2 billion.
• Low NOx burners and other emissions control equipment, valued at over $300 million.
• By 2005, TVA expects to have cut sulfur dioxide emissions and nitrogen oxide emissions by more than 75 percent from their peaks.

Plants included in EPA order:
Eight utilities and refinery owners, including TVA. The 13 coal plants owned by TVA and cited by EPA for illegal modifications include:

• Allen Plant Unit 3
• Paradise units 1,2 and 3
• Bull Run Unit 1
• Colbert Unit 5
• Cumberland units 1 and 2.
• John Sevier Unit 3
• Kingston Unit 6 and Unit 8.
• Shawnee Unit 1 and Unit 4
• Widows Creek Unit 5

TVA: Court will decide

"plants were illegally extending their useful lives indefinitely."

"TVA tried to make an end run on the Clean Air Act," said Stephen Smith, executive director of the Southern Alliance for Clean Energy. "They have profited from their pollution at the expense of our lungs and lives, and now it is time for them to clean it up."

The EPA action against TVA was upheld by an Environmental Appeals Board last year. But TVA has asked the 11th Circuit Court to stop EPA from enforcing its ruling.

TVA attorneys claim the 1999 order from EPA reversed more than 20 years of state and federal regulations that allowed TVA and other utilities to maintain their coal plants. Only if coal plants were expanded did they have to meet new source standards prior to 1999.

"They changed the rules long after the game had been played and didn't tell us that they changed the rules," said Harriet A. Cooper, an attorney for TVA. "EPA has an obligation to promulgate clear policy."

But EPA's clean air approach has been somewhat cloudy since the agency sued TVA and other utilities in the last year of President Clinton's term. The Bush White House subsequently ordered a 90-day review of the new source policy in spring 2001, but no decision has yet been announced. In March, EPA Administrator Christie Whitman suggested that utilities with coal plants will probably hold off settling lawsuits with EPA until the appellate court rules on the TVA case.

The court is expected to rule sometime this summer.

Since the EPA lawsuits were filed in 1999, attorneys general in eight states and environmental groups including the National Parks Conservation Organization have also sued to bring the older plants up to today's standards.

"You can't clean up the air in our national parks unless you clean up these old coal plants," said Don Barger, southeast coordinator for the National Parks Conservation Organization. "I drove down here today from the Smoky Mountains to breathe the clean urban air of Atlanta. Unfortunately on many days, the air is better in Atlanta than in the Great Smoky Mountains."

Summertime visibility in the Smokies has been reduced from 77 miles to 15 miles because of smog and acid rain problems linked with coal plants, Mr. Barger said.

TVA, which has already spent $2.5 billion to reduce pollutants from its plants, says it is already adding more control devices to further limit sulfur oxide, nitrogen oxide and other pollutants. By 2005, TVA projects it will have reduced sulfur and nitrogen oxide emissions by more than 75 percent from the peak levels in the 1970s.

TVA has projected the additional cleanup could cost as much as $3 billion, but would have more impact than the plant-specific upgrades sought by EPA.

The legal battle with EPA also is costing TVA.

Hunton and Williams, a law firm based in Washington, D.C., was hired to help TVA in August 1999 and has already been paid more than $1 million, TVA spokesman John Moulton said.

The outside counsel is the first used by TVA to supplement its own attorneys on an environmental matter. Hunton and Williams is also representing the Utility Air Regulatory Group, a coalition of utilities fighting the EPA order.

"For business reasons, Hunton and Williams has asked TVA not to provide its rates and charges under TVA's contract with them," TVA spokesman John Moulton said.