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Congress Vs. Responsibility
New Source Review problems are on Capitol Hill.


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A few days ago, another installment of the longest-running environmental soap opera in Washington hit the papers: the fight over an arcane regulatory standard known as “New Source Review” (NSR). To bring you up to date, lawyers in the EPA’s enforcement division have declared that the agency will no longer go after old midwestern coal-fired electricity plants that allegedly violated the Clinton-era pollution-control rules that applied to pre-1970 vintage boilers. Instead, EPA enforcers say they’ll only go after those that violate(d) the revised standards recently issued by the agency.

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The reaction has been predictable. Environmental activists and attorneys general in the northeast–a region that activists say is blanketed by pollution from midwestern smokestacks–rage that the new EPA policy is both a cave-in to polluters and a gutting of the Clean Air Act. The utilities, on the other hand, maintain that the old rules were based on a flawed interpretation of federal law and that the new policy corrects a miscarriage of justice. The mainstream press has given the political combatants center stage even though the EPA shift will have little effect on environmental quality one way or the other.

Curiously absent from the hue and cry has been any criticism of the Congress, which gave those plants a special pass from federal air-pollution rules in the first place. That’s too bad, because the real story isn’t “Bush vs. the Environment,” but “Congress vs. Responsibility.”

The origin of this squabble can be found in the (genuflect now) Clean Air Act of 1970, which set one standard for post-1970 facilities (so-called “new sources” under the act) while leaving the regulation of pre-1970 facilities (“old sources”) to the states–as long, that is, as the owners of old plants did not substantially modify their facilities, upon which they would be deemed “new sources” for regulatory purposes. Unfortunately, Congress never spelled out its definition of “substantial modification” and EPA provided few hard-and-fast rules on the matter, preferring instead to decide such things through informal negotiation with facility owners on a case-by-case basis.

Because many existing plants possessed a valuable asset–the right to pollute at 1970 levels–the plant’s owners have kept them online far longer than anyone in 1970 had anticipated. The EPA, moreover, offered few objections.

In 1994, EPA administrator Carol Browner–who shared the environmentalists’ frustration over the situation–decided to lower the boom. Enforcement responsibility for the New Source Review program (bureau-speak for the regulations governing when plant upgrades turn an “old source” into a “new source”) was transferred from the EPA divisions that drafted and implemented regulations to a dedicated enforcement unit. The enforcement division then turned around and retroactively sued a number of those “old sources,” charging that maintenance performed on those power plants over the years exceeded routine levels. Browner’s prosecutors argued that this made them subject to the stricter regulations governing “new sources” of pollution and, more ominously, criminal sanction for long-running violations of the Clean Air Act. This despite the fact that plant owners had received EPA promises that their now-suspect facility upgrades would not turn their “old sources” into “new sources” under the law.

Into this swirling legal chaos stepped the Bush administration. Their first step was to reduce the regulatory uncertainty surrounding the NSR program by ruling that an upgrade costing less than 20 percent of the value of a pre-1970 plant constituted routine maintenance under the Clean Air Act. Their second step came earlier this month in a ruling by the EPA enforcement division that the lawsuits initiated after 1994 would be dropped because those cases would not be prosecutable under the new definition of routine maintenance.

Now, there’s little doubt that the new Bush standards constitute a dubious definition of routine maintenance. In five years, for example, your pre-1970s plant can essentially become a brand-new, state-of-the-art facility, yet still escape tough EPA regulations for “new sources.” On the other hand, there’s also little doubt that there was something seriously wrong with a regime that failed to clearly demark what was and was not permissible and that allowed retroactive prosecution for actions given a green light at the time by EPA regulators.

Whatever your position, however, the real culprit isn’t EPA–it’s Congress, which required the EPA to treat new and existing pollution sources differently. And it was Congress that left the EPA little guidance regarding what constituted routine maintenance.

Why did Congress do that? The health effects of emissions from old plants, after all, are no different than the health effects of emissions from new plants. There were two reasons.

First, politicians want to have it both ways. Passing the Clean Air Act allowed politicians to take credit for establishing a goal of cleaner air. Leaving the actual rulemaking to the EPA allowed those same politicians to keep their fingerprints off the inevitable tradeoffs involved in securing that goal.

Second, politicians wanted to transform business opposition to the Clean Air Acts of 1970 and 1977 into business support by imposing the Acts’ costs on future competitors rather than existing firms. It had the same economic effect as allowing existing firms to collude and raise the costs of their future rivals without any of the political fallout and press scrutiny. But rather than calling the legislation “The Incumbent Industrial Collusion Act of 1970,” it is called “The Clean Air Act” and its supporters are on the side of the angels.

If Congress really wanted to settle this dispute, it could simply pass a bill establishing once and for all the rules of the road. After all, they’ve done it before. Just last September, a federal judge ruled that the Federal Trade Commission did not have the authority to administer a national list of people who did not want to receive unsolicited calls from telemarketers. Within a week, the Congress passed and President Bush signed legislation giving the FCC explicit authority.

The fact that Congress instead lets everyone sue the EPA to resolve the dispute tells us that politicians on both sides of the divide are unwilling to take responsibility for the economic or environmental costs of their positions. That–and not the EPA–is the real problem.

Peter Van Doren is editor of Regulation, the Cato Review of Business and Government. Jerry Taylor is director of natural-resource studies at the Cato Institute.



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