TVA Harnesses Big Power For Suit Against the EPA

TVA Harnesses Big Power
For Suit Against the EPA
Legal Battle Highlights Energy Authority's Unusual Status
By DAN MORGAN
Washington Post Staff Writer

Ever since Congress established the Tennessee Valley Authority in 1933 to build dams and tame rivers across seven states, the TVA has battled a host of adversaries, from private utility companies to conservative ideologues wary of giant government enterprises.

Now the TVA is taking on its creator and owner, the federal government, in a fight that may test the limits of its independence and influence the government's effort to reduce air pollution.

To block a multibillion-dollar clean-air action that the Environmental Protection Agency brought against it during the Clinton administration, the TVA has sued the agency, hired a pricey law firm and contributed $185,000 to an industry coalition that hired former Republican National Committee chairman Haley Barbour to lobby for it.

The lawsuit has infuriated environmental groups, which contend airborne pollution from TVA power plants causes hundreds of deaths and asthma attacks annually.

"It is very painful to see a federal agency doing this," said David Wooley, a lawyer for the Clean Air Task Force. "Part of TVA's mandate was to improve the economy and environment of the region. This looks like the behavior of a private electric utility."

Present and former TVA officials say they had little choice after the EPA adopted a hard-line position in negotiations in 2000 and even hinted that President Bill Clinton might dismiss the TVA's board of governors if it did not comply.

"We found it was impossible to work with them. It was a frustrating experience," said former TVA chairman Craven Crowell, a Clinton appointee.

At issue is the EPA's charge that the TVA and a dozen private utility companies illegally made major modifications to 51 aging, coal-fired power plants in the 1980s and 1990s without installing costly new pollution controls. In a 1999 enforcement action, the EPA threatened heavy fines on the utilities unless they spent tens of billions of dollars to more aggressively control sulfur, nitro- and mercury emissions.

The TVA, as a government entity, would not be to fines. But TVA officials have testified out EPA's orders would be expensive interrupt service for months. Moreover, and the private companies say that they meeting the Clean Air Act's emission require- and that the EPA overreached in 1999, rein- long-standing law.

The Bush administration is reviewing its policy on the issue. Meanwhile, the utility industry is closely watching the TVA lawsuit, due to be heard in May by a panel of federal appeals judges in Atlanta.

EPA Administrator Christine Todd Whitman told a Senate committee last month that the court's ruling in the TVA case could determine whether utilities facing similar enforcement action "come to the [negotiating] table or not."

If the TVA wins, other utilities might be encouraged to dig in their heels, jeopardizing one of the main clean-air initiatives of the Clinton administration. But if it loses, there could be a scramble by power companies to settle with the government on the best terms available.

The TVA's unusual legal battle with the government marks a new chapter in the history of a federal entity that has often defied definition. President Franklin D. Roosevelt, who viewed the TVA as a key component of his New Deal program to help Depression-stricken regions, acknowledged the hybrid nature of the enterprise. He called it "a corporation that is clothed with the power of government but possessed with the flexibility and initiative of a private enterprise."

"It was created to be a hybrid," said Crowell, now a private consultant. "It is a cross between government agency and private business, and that has always caused a natural conflict."

In recent years, the TVA's autonomy has grown. Congress ended federal appropriations for it in 1999, but indirect subsidies continue. Wall Street gives the TVA its highest bond rating, on the assumption that Washington would make good on any default. And the TVA, like other federal entities, is exempt from income taxes and antitrust laws.

The president appoints its three governing directors, and the TVA presents its budget to the White House, but federal leverage is limited.

The TVA's interests are guarded in Congress by a caucus of 14 senators and 37 House members. Over the years, it has had the patronage of such congressional powers as former Senate majority leader Howard H. Baker Jr. (R-Tenn.), the late House Appropriations Committee chairman Jamie L. Whitten (D-Miss.), and former vice president Al Gore, who also represented Tennessee in the House and the Senate.

"It is absolutely anomalous in U.S. economic history," said John Howes, director of TVA Exchange, a group of utilities on the TVA's borders that monitors the government-owned

The original TVA statute gave it the mission of controlling flooding along the Tennessee River, preventing soil erosion and reclaiming marginal land for agriculture and industrial development. But energy production—first from hydroelectric dams and later from coal-fired steam plants—became central to promoting economic development.

That role has made it one of the nation's largest power producers, providing electricity for 8.3 million people in nearly all of Tennessee and parts of six other states. But it has also thrust the TVA into conflicts with the federal government over environmental policy and electricity deregulation.

The TVA does not dispute that its coal-fired units contribute to haze in the Smoky Mountains and airborne particles in eastern cities. But its officials note that emissions of a major pollutant, sulfur dioxide, have declined from 1.2 million tons in 1993 to about 600,000 tons last year because of nearly $3 billion of investments.

Sulfur emissions are still well above the TVA's Clean Air Act cap of 420,000 tons a year, however. To stay within the law, the TVA has been using credits earned in the 1990s when it cut emissions more than required.

"It's legal, but a citizen who lives downwind isn't breathing easier," said an executive director of the group credits the TVA most a stronger utilities. But he criticizes its fight with the EPA.

Soon after the Bush administration took office, the TVA joined the Electric Reliability Coordinating Council, which hired Barbour to lobby against the enforcement action. TVA officials attended meetings of the council with top administration officials. Two council members—Atlanta-based Southern Co. and Charlotte-based Duke Energy Co.—have intervened on the TVA's side in its suit against the EPA.

Last July, 11 environmental groups wrote TVA officials condemning the use of ratepayer dollars "to support high-powered lobbyists in an attempt to gain influence with the Bush administration" and the hiring of Richmond law firm Hunton & Williams.

Like other government entities, the TVA cannot use appropriated funds for grass-roots lobbying, but it can communicate with members of Congress, and it has hired lobbyists in the past. "We term it getting strategic advice from consultants," said TVA spokesman John Moulton.

In December, the TVA quit the lobbying group, saying its goals had been "largely attained." Nonetheless, TVA officials make clear they will continue to press the lawsuit against the EPA.

In January, the Atlanta circuit court issued a 55-page opinion upholding the TVA's right to go to court, citing various precedents. "There have been at least two other incidents when TVA has sued another agency of government," said TVA attorney Greg Signer. "But it's not something we do lightly."