New York State Attorney General Eliot Spitzer

Spitzer v. Dirty Air

Crusade against utilities that cause
acid rain is threatened by Bush policies

By Paul Grondahl and Phil Brown
Explorer Writers

New York State Attorney General Eliot Spitzer is an unlikely protector of the Adirondack Mountains. His roots are in Manhattan, and he’s more comfortable in a tailored suit and black dress shoes than in Gore-Tex and hiking boots.

Sure, he went canoe camping on Follensby Clear Pond last summer with his wife and three daughters. Sure, he enjoyed it. But he still called the office on his cell phone.

“I’m not going to pretend he’s a great outdoorsman. He’s really a city guy,” said Marc Violette, Spitzer’s spokesman.

Nevertheless, Spitzer has earned a reputation as an environmental champion by going after coal-burning power plants whose pollution leads to the acid rain that falls in the wilds of the Adirondacks, damaging forests and rendering lakes inhospitable to fish and other aquatic life. The pollutants behind acid rain—sulfur dioxide (SO2) and nitrogen oxides (NOx)—also cause soot and smog in urban areas, exacerbating asthma and other health problems.

After taking office in January 1999, Spitzer hired Judith Enck, a longtime environmental activist, as a policy adviser and assembled an environmental legal team headed by Peter Lehner, a former senior attorney for the Natural Resources Defense Council. That April, the lawyers began investigating power plants suspected of violating the Clean Air Act. In September, Spitzer announced he would sue 17 power plants in five Midwest and Mid-Atlantic states.

Spitzer also has worked with the state Department of Environmental Conservation (DEC) to crack down on New York utilities. Last year, he filed suit against two large coal-fired plants near Buffalo. He has begun “enforcement actions”—which are less drastic and usually less adversarial than lawsuits—against other in-state utilities. And this past May, Spitzer went international in his battle, filing a complaint with Canada over three major power plants in Ontario whose emissions waft across New York state.

All told, Spitzer is taking action against more than 20 plants in New York, Ohio, Virginia and Indiana. So far, two utilities have reached settlements rather than fight it out in court. This April, Dominion Virginia Power agreed to spend $1.2 billion on pollution controls to reduce acid-rain emissions from eight power plants by 70%. In June, Mirant New York Inc. agreed to cut NOx emissions at least 75% and SO2 emissions at least 40% at its plant in the Hudson Valley.

But the most significant victory came this August when a federal judge ruled that Ohio Edison violated the law by failing to upgrade pollution controls on a large coal-fired plant along the Ohio River. “The other utilities that have raised the same legal objections will realize that their legal arguments will not prevail,” Spitzer told the New York Times after the verdict.

Environmental activists cannot praise Spitzer enough for his clean-air crusade. “Spitzer has done a terrific job,” said Neil Woodworth, lawyer for the Adirondack Mountain Club (ADK). “The legal actions he’s taken have been the most effective single tool in reducing the amount of acid-rain deposition in the Adirondacks.”

But Woodworth and others say the Bush administration’s efforts to rewrite Clean Air Act rules threaten to undermine Spitzer’s work. At the heart of the debate are regulations known as New Source Review (NSR)—the legal basis for the actions against all the utilities except those in Canada.

Most of the acid-rain pollution in the Adirondacks comes from 60 or so old coal-burning plants that lack modern pollution controls. In the 1970s, Congress exempted these and other old plants from emissions standards because it was assumed the plants would soon be retired. But that hasn’t happened. “The grandfather clause was ill-considered, and we’ve been paying for it for 30 years now,” said John Sheehan, a spokesman for the Adirondack Council.

Environmentalists contend that the plants have managed to keep on operating by breaking the law. Under NSR, an existing plant that undergoes major modifications that could lead to increased emissions must be outfitted with up-to-date pollution equipment. Spitzer’s lawsuits allege that utilities have renovated their older plants, extending their lives and increasing their output, without installing new controls.

Judith Enck, Spitzer’s adviser, said the legal team spent weeks analyzing the plants’ financial records, capital projects, emissions data and generating capacities. “It’s like convicting Al Capone on tax fraud,” she said. “We’re getting them with their own records. Our biggest weapons are good calculators and reading glasses.”

Soon after Spitzer announced his intention to sue in 1999, the U.S. Environmental Protection Agency used the same legal theory in filing lawsuits against several utilities. The EPA had begun investigating the utilities a few years earlier, and in fact New York officials relied partly on the agency’s spadework. Eventually, Spitzer and the EPA joined forces, and attorneys general from other Northeast states signed on as well.

“We were in good company,” Violette said. “The feds and states walked into court together and said, ‘This is wrong; we’re going to enforce the law.’”

The feds’ view of NSR changed after George W. Bush entered the White House. Four months after Bush’s inauguration in 2001, an energy task forced headed by Vice President Richard Cheney called for the Justice Department to review the lawsuits and for the EPA to review NSR regulations. The following year the EPA issued the proposals now under consideration.

While the utility industry supports the changes, critics say the proposals will allow old, dirty plants to continue to operate without installing costly pollution controls. “They are changing the Clean Air Act to such a degree that they are violating the intent of Congress,” Violette said.

Under the existing regulations, “routine maintenance” does not trigger NSR, but the EPA now contends the boundary between maintenance and major work is blurry. The EPA proposes, among other changes, that the replacement of any equipment with “functionally equivalent new equipment” be regarded as routine.

At a hearing in Albany this spring, the EPA plan was criticized by state officials from both political parties: Erin Crotty, the state’s environmental commissioner (representing Republican Gov. George Pataki), and Peter Lehner, the chief of Spitzer’s Environmental Protection Bureau (whose boss is a Democrat).

“This proposal specifically allows a dirty power plant to be rebuilt, piece by piece, so long as each piece performs the same function as the piece being replaced,” Lehner said. “It’s hard to imagine a larger loophole.”

“This proposal essentially ratifies industry’s prior illegality,” Lehner said. “This is the equivalent of addressing the Enron scandal by easing accounting rules.”

Photo by Gary Randorff

Acid rain kills spruce at high elevations.

Bill Harnett, director of EPA’s Information Transfer and Program Integration Division, countered that the confusion over New Source Review has discouraged plants from undertaking necessary repairs—even repairs that would increase efficiency and reduce pollution. Harnett also said that NSR is “not the right mechanism” for decreasing emissions on a broad scale. “NSR operates differently from other Clean Air Act programs designed to decrease emissions,” he said. “NSR, by definition, only applies when emissions increase.”

Spitzer has vowed to sue the agency if the proposed changes are adopted. In fact, he and the attorneys general in eight other Eastern states have already filed suit against EPA over NSR changes enacted last November. In a news release, the attorneys general called those changes a “major weakening” of the Clean Air Act. The first round of changes applies largely to other polluters, such as automakers and drug manufacturers.

Pat Hemlepp, a spokesman for American Electric Power, another Ohio utility sued by Spitzer, argues that the pending changes in New Source Review are necessary to clarify the regulations in the light of conflicting interpretations. “The type of work that is now being called into question would have been considered routine maintenance in the past,” he said.

In effect, Hemlepp said, Spitzer et al. want to change the rules in the middle of the game. But Anne Reynolds of Environmental Advocates, an Albany lobbying group, contends that the attorney general is merely enforcing the rules after years of violations that had been ignored by EPA.

“His lawsuits have put the pressure on very old and outdated plants to clean up,” Reynolds said. “Unfortunately, he’s been so effective that the utilities got energized in getting the Bush administration to try to repeal substantial portions of the Clean Air Act.”

Reynolds and other critics contend that the administration is overhauling New Source Review to placate the energy industry, which contributed heavily to Bush and the Republicans during the 2000 campaign. The EPA notes the first round of NSR changes, those adopted in November, were proposed during the Clinton administration. The second round of changes, those dealing with utilities, were drafted after Bush took office.

The EPA had started looking into NSR violations during the mid-1990s and filed the first lawsuits in November 1999, about a year before Clinton left office. Although the EPA now regards the regulations lying at the heart of those suits as confusing and cumbersome, the agency says it will continue to prosecute the cases.

Yet Spitzer contends that the Bush administration’s hostility toward NSR is undermining the enforcement actions. Testifying before a U.S. Senate committe last year, he pointed out that Cinergy Corp. agreed to a tentative settlement in December 2000 but later balked at signing a final agreement. About 1€ years later, Spitzer and the EPA filed suit against the Ohio company. “Conducting such a rollback while enforcement cases under the old rules are pending is not only unprecedented but was unimaginable, at least before this administration came to power,” Spitzer said.

The decision in August by U.S. District Judge Edmund Sargus Jr. could provide fresh impetus to the NSR cases. The Ohio Edison trial, the first of its kind, was an almost total victory for the government. The judge disputed the notion that New Source Review is overly complicated, and he took the EPA to task for overlooking violations in years past.

“While the law has always been clear, the enforcement strategies of the EPA have not,” Sargus wrote. “It is clear to this court that at various times since 1970 officials of the EPA have been remiss in enforcing the law and clarifying its application to specific projects.”
In March, Sargus will hold another trial to determine the penalty against Ohio Edison and what steps the utility must take to reduce its pollution. Ohio Edison has not decided yet whether to appeal the verdict.

Despite Sargus’s decision, Hemlepp said American Electric Power has no intention of settling out of court with Spitzer or the EPA unless offered “a reasonable solution”—one that provides regulatory certainty while allowing the utility to maintain its plants. “You can’t be in a situation where if something breaks you have to run to the agency and wait four or five months for approval to fix it and meanwhile people are waiting for power,” he said.

Hemlepp also argues that forcing only a few utilities to install pollution controls puts those companies at a competitive disadvantage. American Electric Power spent $600 million on a pollution scrubber at its mammoth Gavin plant along the Ohio River, he said. The scrubber occupies 18 acres. “It’s like putting a chemical plant on top of a power plant,” he said. “It’s not an inexpensive piece of equipment.”

In many respects, the argument over New Source Review mirrors the debate over the Clear Skies Initiative, the president’s proposal to amend the Clean Air Act. The White House says Clear Skies will solve the acid-rain problem and greatly improve the air quality in cities. Environmentalists argue that greater pollution cuts could be made under existing law if it were strictly enforced.

When it comes to Clear Skies, however, the Adirondack Council splits from other environmental groups. The council agrees with Bush that Clear Skies would reduce acid rain more than the current Clean Air Act. John Sheehan, the council’s spokesman, contends that the debate over NSR will be moot if Congress adopts Clear Skies or something like it. Nevertheless, Sheehan criticized Bush for changing NSR while Clear Skies remains just a proposal.

“Until we have a new program in place we need the safety net of the old one,” Sheehan said. “Until we have nationwide caps on sulfur and nitrogen emissions, we need to be able go after upwind polluters.”
Sheehan praised Spitzer for pursuing the utilities, but he said lawsuits are an expensive and inefficient way to stop acid rain. He noted that there are about 400 coal-fired plants scattered around the nation. “That’s a lot of power plants to sue,” he said. “We’d be better off with nationwide caps that require cuts in pollution.”

Spitzer has no immediate plans to bring suits against other utilities, according to Violette. He said the lawyers have their hands full prosecuting the existing lawsuits and enforcement actions, petitioning the Canadian government for pollution cuts and fighting the Bush administration over NSR. He also said Spitzer already has gone after most of the major utilities fouling New York’s skies.

Neil Woodworth, ADK’s lawyer, believes that more Spitzer victories in court will prompt other utilities, not just those sued, to cut pollution. “If we just rigorously enforce the law, then we would essentially solve the acid-deposition problem in the Northeast,” he said.

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Judges Ruling Blasts EPA

On Aug. 7, U.S. District Court Judge Edmund Sargus Jr. ruled that Ohio Edison violated the Clean Air Act by refurbishing its coal-burning Sammis Plant without upgrading pollution controls. In the opening pages of the opinion, he lambasted the U.S. Environmental Protection Agency for failing to enforce the law in the past. Following are excerpts:

Judge Sargus

“This case highlights an abysmal breakdown in the administrative process following the passage of the landmark Clean Air Act in 1970. For thirty-three years, various administrations have wrestled with and, to a great extent, have avoided a fundamental issue addressed in the Clean Air Act, that is at what point plants built before 1970 must comply with new air pollution standards. . . .

“By any standard, the enforcement of the Clean Air Act with regard to the Sammis Plant has been disastrous. From a public health perspective, thirty-three years after passage of the Act, the plant to this day emits on an annual basis 145,000 tons of sulphur dioxide, a pollutant injurious to the public health. . . .

“This Court takes note of the fact that three decades after passage of the Clean Air Act the EPA finally moved, through this and several other lawsuits, to finally resolve this fundamental issue under the Act. While the law has always been clear, the enforcement strategies of the EPA have not. It is clear to this Court that at various times since 1970 officials of the EPA have been remiss in enforcing the law and clarifying its application to specific projects. . . .

“It is also evident from the record in this case that various electric utilities and industry organizations have sought within legal bounds to influence the conduct of the EPA. Given the enormous cost of retrofitting an older electric power plant with new pollution control devices, this strategy should not be unexpected in the democratic and administrative process. What should be unexpected and condemned, however, is an agency unwilling to enforce a clear statutory mandate set forth in an act of Congress.”

To read the ruling in its entirety visit: www.ohsd.uscourts.gov.

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