TVA Ruling Fails to Settle Clean Air Act Debate

ATLANTA, Georgia, June 27, 2003 (ENS) - The Tennessee Valley Authority can ignore the Environmental Protection Agency's orders to clean up pollution at nine of its coal-fired power plants, a federal appeals court ruled Wednesday. The ruling, made strictly on procedural grounds, did little to clarify the ongoing debate over the New Source Review provisions of the Clean Air Act, which the government alleged the federally owned power company had violated.

The agency's complaint with the Tennessee Valley Authority (TVA) stems back to 1999, when the U.S. Environmental Protection Agency (EPA) alleged that TVA violated the New Source Review provisions when it carried out 14 projects at nine of its coal fire plants between 1982 and 1996. TVA's coal-fired plants account for 63 percent of its power generation and it is the largest single utility buyer of coal in the United States.

The three judge panel ruled that the government should not have used an administrative order to address TVA's alleged violations of the New Source Review program.

The government must prove these violations in court, wrote 11th Circuit Judge Gerald Tjoflat on behalf of the court, and until it does TVA "is free to ignore" the order without risk of penalty.

Officials at the EPA say they are not yet sure what their next move - the agency could take TVA to court or appeal the 11th Circuit's ruling.

Coal-fired power plants are a leading source of air pollution in the United States, but also a key source of energy. (Photo courtesy New Mexico Solar Energy Association)

But as the court ruled on the procedure of the EPA's decision - not the merits of the alleged violations - the implications from this case are far from clear.

"They never got into the core issue of the case - which is whether TVA violated the Clean Air Act," said Frank O'Donnell, executive director of the Clean Air Trust. "They sidestepped the issue entirely."

Established in 1977, the New Source Review program requires that an air pollution source, such as a power plant or industrial complex, install the best pollution control equipment available when it builds a new facility or when it makes a major modification that increases emissions from an existing facility.

Routine maintenance of a plant is not subject to these provisions and the interpretation of this clause remains at the center of the debate over New Source Review.

As TVA is a federally owned power company, the EPA believed it did not have the authority to take the federal entity to court.

Instead, the agency issued an administrative compliance order in 1999 mandating TVA under compliance initiatives and brought the power company in front on the EPA's Environmental Appeals Board. TVA refuted the charges that it had violated the routine maintenance clause of New Source Review, refused to comply with the order and challenged the agency in federal appeals court.

The court determined that it had no jurisdiction over the matter because administrative compliance orders are "legally inconsequential and do not constitute final agency action."

The EPA "manufactured the procedures they employed on the fly," the court ruled, and should have treated TVA as a "it does any private energy company for enforcement purposes."

O'Donnell said he is confident the "merits of EPA's case" were right but acknowledged that the clarity the court has provided on how the EPA should act is helpful.

"The bad news is that TVA is continuing to pollute at high levels," O'Donnell said.

The ruling did not provide the industry with the clarity of routine maintenance that it wants either, but some industry representatives believe the court made some important and relevant points in the New Source Review debate.

The Tennessee Valley Authority is the largest electricity generator in the United States. (Photo courtesy Oak Ridge National Laboratory)

The industry has long complained that provisions of the New Source Review program are unclear and arbitrary, and are generally supportive of the Bush administration's efforts to reform the New Source Review program.

The administration is pushing forward with reforms to New Source Review on three fronts, but all three are encountering resistance.

The combined reforms will affect regulation of air pollution from the nation's 17,000 industrial facilities, which emit the majority of nitrogen oxide and sulphur dioxide emitted by the United States.

These pollutants are leading contributors to smog, soot, haze and acid rain.

On December 31, 2002, the administration put out a final EPA to change how emissions increases are measures and to exempt some plant activities from the New Source Review program - this rule is being challenged in court by nine Northeastern states as well as by environmental and public health organizations.

Second, the administration's Clear Skies initiative relaxes New Source Review provisions. Congressional deliberations are in the early stages, but the bill has drawn sharp criticism from Congressional Democrats and some Republicans.

Third, its proposed rule for clarifying the definition of "routine maintenance" under New Source Review - for many the most contentious issue in the debate - has drawn the ire of environmentalists and state pollution control officials.

Critics of Bush administration proposals believe they will undermine the New Source Review program and led to increased pollution. (Photo courtesy Harvard University's Kennedy School of Government)

Critics say the proposal guts the law and industry groups are concerned the administration has not offered a solid definition, rather more suggestions on how to redefine "routine maintenance."

Maisano said the industry welcomes the intent of the proposed rule but is "disappointed that they did not come out and offer a definition and declaration of routine maintenance."

It is uncertainty that is causing lawsuits from both sides, Maisano says, and the TVA case could have implications for future cases.

The fact that the court devoted some 53 pages to "chastising and criticizing" the EPA's procedures and did not even get to the routine maintenance definition "underscores the need for clarity," Maisano said.

"And that is the essential reason why the administration should continue forward with its efforts," Maisano added.