Clean Air Act gave bad utility actors carrots, not sticks, and why it matters
by Allen Best
In their new book, “Struggling for Air: Power Plants and the ‘War on Coal,’” Richard L. Revesz and Jack Lienke examine a relatively simple idea, the practice of regulatory grandfathering as it was used in the Clean Air Act.
The 1970 law passed by Congress exempted existing coal-fired power plants from new requirements intended to reduce harmful emissions. It seemed like a common-sense approach at the time. Power plants have a useful life and would soon enough be replaced by new plants, which would burn coal more efficiently. Why burden utilities with upgrading the old plants when they would soon be obsolete?
Many plants have in fact been replaced, but there was also an unintended consequence. Utilities continued to operate old plants much longer than anybody had expected. The presumption was that coal-fired plants had a useful life of 20, 30 or even 40 years. When the Clean Air Act was adopted, some of those plants were approaching that age.
Now, 45 years later, they’re still operating, still inefficiently spewing out nitrous oxides, sulphur oxides and mercury —plus, of course, carbon dioxide.
You should never “grandfather a grandfather,” said Revesz at a recent panel discussion sponsored by the University of Colorado Law School’s Getches-Wilkinson Center for Natural Resources, Energy and the Environment.
The lesson of the Clean Air Act, said Revesz, is that there must be a time limit on grandfathered uses.
“What you should never do is totally exempt the existing actors,” he said. “By giving them less stringent standards, existing sources become viable much longer.”
Some of those power plants exempted in 1970, he said, are now on their third lives. Because of the added cost of building compliant new plants, he said, companies have a financial incentive to retrofit the old ones, if imperfectly so.
“They took away all the sticks on all the old power plants,” he quipped. “They gave the bad actors the carrots.”
Cumulative impacts have been enormous. Had more efficient coal-fired power plants been built over time, said Revesz, the goals of the Clean Power Plan would have already been attained.
The cautionary lesson illustrated by the Clean Air Act should be considered now as we build infrastructure and legislation governing natural gas, said Sharon Jacobs, associate professor of law at the University of Colorado.
Revesz suggested that in fact we about to commit a serious mistake of grandfathering again. The Environmental Protection Agency’s proposed rules to limit emissions of methane would exempt existing infrastructure of extraction and distribution of natural gas, he said. Methane is a major component of natural gas.
Even before the triumph of shale gas extraction, natural gas began replacing coal-fired generation, for purely economic reasons. In Colorado, state legislation has pushed and pulled investor-owned utilities to replacing aging coal plans with natural gas. One of those older plants, 84-megawatt Valmont, located in Boulder, was put into operation in 1964 and will be replaced with a unit that burns gas in 2017. Conversion of the giant Cherokee Plant, located north of downtown Denver, has partially been completed, but the final conversion of a unit put on line to burn coal in 1962 will not be completed until 2017.
Panel members talked at length about the challenges, including the current furor about the Clean Power Plan.
Jacobs observed that the opposition of some people to clean air regulation makes sense, at least for them, even if the broader cost-benefit economics of pollution-limiting laws to society are clear. The example came from the Navajo Nation, which gets significant income from coal mining and power plants.
Revesz, now the director of the Institute for Policy Integrity at the New York University Institute of Law, said he’s not unsympathetic to the discomfort of economic location. His wife, he said, grew up in Naturita, Colo., a place that in the 1950s was booming along with the demand for uranium extracted from the sedimentary rocks of southwestern Colorado and eastern Utah.
“Some groups will suffer some pretty significant losses,” he added. “But at the end of the day we can’t have a regulatory regime that compensates every loser.”
Energy firebrand Leslie Glustrom, an audience member, suggested that sympathy for dislocated coal-miners should not extend into the political realm. She pointed out that her husband, a teacher, lost his job when the family had two teenaged children to bring up. “We didn’t go to politicians seeking help,” she said.
Glustrom, a founder of Clean Energy Action, a Boulder-based group, also made the case that the financial difficulties of coal companies have been blamed on government regulation, what some have called the “war on coal.” In reality, she said, it has nothing to do with the Clean Power Plan and everything to do with the difficulty of profitable mining of coal, given that the easily available coal has been mined. “It’s not about law,” she said. “It’s about geology.”
Panel members also grappled with the limitations of law. The Clean Air Act has been revised twice, said Revesz, and it has had three different definitions of what constitutes a stationary source.
Vickie Patton, general counsel for the Environmental Defense Fund, observed that more than just laws are needed to effectuate broad policy change. “We can’t get the kinds of changes we need without strong community and private actions, she said.
In a brief interview afterward, Patton was asked if she thought the legal challenge of the 24 states attorney general had any argument that might cause the Clean Power Plan to be remanded to the EPA to be trimmed. She said no, it’s legally viable—but suggested it’s not a matter of the legality so much as politics. Even if the Clean Power Plan is legally defensible, the Supreme Court might rule otherwise.
A story about the new book posted at the New York University Law School website points out that “Struggling for Air” lands at a critical time. Opponents argue that the Clean Power Plan represents an “unprecedented regulatory assault.”
But Lienke, a senior attorney at the Institute for Policy Integrity, says the book provides evidence that this and other claims lack context. “It’s easy to make something look unprecedented if you leave all the precedent out of your story, so we’re just trying to put these policies into a broader historical context,” he said.