Combating Climate Change Through Enforcement: EPA v. TVA

TVA Roosevelt_signing_TVA_Act_(1933)

President Roosevelt signs the TVA Act in 1933.

Summary: In a multi-billion dollar legal settlement with one of the nation’s largest coal-fired utilities, the Environmental Protection Agency took a major step toward cleaning up the nation’s air, saving lives, and reducing health care costs.

Since the Depression, the Tennessee Valley Authority has brought electricity to millions of Americans, a feat of modernization that unfortunately also resulted in the emission of tons of pollutants annually. The TVA is also one of the utilities that was subject to an enforcement action by the Environmental Protection Agency and the Department of Justice for violations of the Clean Air Act.  However, on April 14, 2011, the EPA reached a landmark settlement after nearly 12 years of litigation and negotiation with the TVA, one of the largest owners and operators of coal-fired power plants in the United States. The settlement resolved Clean Air Act violations at 11 of the TVA’s coal-fired plants.

In 1999, the EPA had issued the TVA an administrative compliance order alleging that the authority’s modifications of a number of coal-fired units violated new source review permitting requirements and new source performance standards. The settlement will bring the authority into compliance with the Clean Air Act as well as reduce the TVA’s reliance on coal-fired generation by shutting down 18 generators over the next six years and requiring an investment of $3 billion to $5 billion in clean and renewable energy technology.

The Clean Air Act distinguishes between old and new major sources of air pollutants. Old sources are not required to meet new source performance standards. The new source performance standards require new stationary sources or old stationary sources where major modifications occurred  to install state-of-the-art pollution control technology. Additionally, new or old modified stationary sources must comply with new source review, which requires pre-construction permit review. The distinction between new and existing stationary sources has been criticized as a loophole for older power plants because the EPA does not regulate them as stringently, even though they’re responsible for much of the nation’s air pollution. Nearly all of the coal-fired units the TVA agreed to retire do not have state-of-the-art pollution controls because they date to the 1950s. However, old sources that undergo major modifications are designated as “new sources” and are subject to new source review and new source performance standards, which require them to upgrade to the best available control technology at a minimum, and perhaps even the lowest achievable emissions rate if the source is in a non-attainment area.

In the history of the Clean Air Act, there was little to no enforcement of new source review and new source performance standards against old sources that underwent major modifications.  Under the Clinton administration, the Department of Justice and the EPA began robust enforcement. In November 1999, the DOJ and EPA filed civil suits against seven electric utilities operating coal-fired power plants for violations of new source review permitting requirements and new source performance standards. The suits resulted in a number of settlements between the EPA and utilities prior to the TVA’s recent settlement.

TVA-sites-map

TVA sites

The significance of the EPA’s settlement with the TVA will be a substantial decrease in harmful emissions and a resulting increase in environmental and human health benefits. The TVA’s commitment to close 18 coal-fired units represents the largest retirement commitment of any company to date, and will represent nearly one percent of the nation’s coal-fired power capacity. In addition to the closures, the settlement requires the authority to address 41 coal-fired plants, representing 92 percent of its coal-fired systems, between 2011 and 2018 by retrofitting them with state-of-the-art pollution controls or switching to renewable biomass.

The TVA’s commitment to closing and retrofitting its facilities is designed to reduce its emissions of nitrogen oxides by 69 percent and sulfur dioxide by 67 percent. Together, these pollutants cause a host of environmental problems, including smog, water quality deterioration, and acid rain. In addition, they are linked to heart and lung diseases that can lead to increased hospital admissions and premature death. By reducing the TVA’s emissions, the EPA estimates $11 billion to $27 billion per year in added health benefits.

The settlement also requires the TVA to spend $350 million on other projects that are expected to reduce greenhouse gases and other pollutants. The money will go toward energy efficiency projects, clean and renewable energy projects, and a clean diesel and electric vehicle project, as well as to fund improvement, protection, and rehabilitation of National Park Service and U.S. Forest Service lands damaged by the TVA’s emissions. Consequently, the settlement goes beyond reducing pollutants the authority emitted in violation of the Clean Air Act and may achieve more than what the EPA expected from a favorable trial verdict.

The mitigation projects are designed to reduce carbon dioxide emissions by 30 million tons.   The EPA currently does not regulate carbon dioxide emissions from stationary sources, either as a criteria pollutant or as a hazardous air pollutant. But in the settlement with the TVA, the EPA is creatively using this Clean Air Act enforcement process as a way to achieve carbon dioxide reductions. This suggests that in future cases, the EPA will look to obtain carbon dioxide reductions as one of the key settlement terms and conditions. Thus, the agency may achieve through enforcement what the United States has failed to do by legislation—meaningful carbon dioxide reductions from large emitters as a step toward combating climate change.