Clean-air cops handcuffed

In the heat of this year's election campaign, Environmental Protection Agency chief Michael Leavitt was quick to share good news on the environment: "Today's air is the cleanest most Americans have ever breathed," he announced in September. "Now EPA is taking up the challenge to accelerate the pace of that progress into the future."

But whether it can accelerate progress may depend on resolving a fundamental question, observers say. Can a proposed market-based system for controlling air pollution make up for less rigid enforcement of current laws? Once a potent tiger, the EPA's clean-air enforcement looks increasingly toothless. The number of suits targeting big polluters - especially coal-fired power plants - has dropped dramatically. Former EPA officials complain such lawsuits are actively discouraged. At least one recent settlement allows a violating power plant to spew more pollution into the air, not less.

"There's clearly been a significant decrease in air-pollution enforcement by the EPA, especially regarding the electric utility industry," says Joel Mintz, a law professor at Nova Southeastern University Law Center who has studied the EPA's legal legacy.

The numbers tell the story. In its last three years, the Clinton administration filed 61 civil suits against alleged violators of clean-air laws. In its first three years, the Bush administration filed nine. Enforcement of the Clean Air Act, especially toward coal-fired plants, is "at a near standstill," concluded the Environmental Integrity Project, a watchdog group in Washington, which tallied the lawsuits in a report last month. Even though old lawsuits are being pursued, new lawsuits are not being filed, says Eric Schaeffer, director of the group.

That's why the Bush administration's market-based approach - in which the government sets overall pollution caps and companies decide how best to meet them - represents a significant departure from the past. Historically, lawsuits have been as important as new laws in cleaning up America's air. Since the Clean Air Act took effect in 1970, industrial emissions of six key pollutants - including sulfur dioxide (SO2), nitrogen oxide (NOx), carbon monoxide, and lead - have been cut in half: from 301 million tons to 147 million tons last year, EPA's Mr. Leavitt reported.

But complaints about the lack of enforcement are not only coming from environmentalists. A week after Leavitt touted cleaner air, the EPA's own inspector general released a report charging that changes last year to key air-pollution rules had "seriously hampered EPA settlement activities, existing enforcement cases," and the development of future cases.

In a forceful rebuttal, the EPA said the inspector general's report "misleads the public about Agency actions to reduce pollution from coal-fired power plants. We vigorously enforce the Clean Air Act and have an aggressive plan" to cut emissions.

Others disagree. A sea change in the agency began a year ago, culminating with the Bush administration ordering a halt to EPA lawsuits and investigations involving clean-air violations, critics say. "We were told to stop investigating," says Bruce Buckheit, former director of EPA's air-enforcement division, who says he resigned last year when it became clear there would be no aggressive enforcement. "My boss informed me. But the decision was made over his head.... It would have had to have been cleared by White House."

The EPA investigation started after Mr. Buckheit read a 1996 newspaper article about soaring coal sales. Coal-fired power plants represent the largest single source of regulated pollutants in the United States. At the time, Americans were consuming record amounts of coal, yet the EPA had received few applications from power-plant operators for permits to modify their plants to burn more coal. So where were those millions of tons of coal going? Buckheit wondered.

Before long, he and others at EPA had uncovered what he calls "massive violations involving about 70 percent" of the coal-power industry. In 1999 and 2000, the EPA initiated nine lawsuits against some of the largest power companies. As recently as last year, the EPA had about 75 active investigations of potential industry violations and another 22 legal cases at the Justice Department, but not yet filed in court. Companies alleged to be in violation were lining up to try to settle and clean up without going to court. Then the ax fell.

The signal came in the EPA's "reform" of an obscure rule called "new source review" (NSR), says John Suarez, a Bush appointee and the EPA's assistant administrator for enforcement and compliance assurance until he resigned in January. NSR requires that a company seek an EPA permit if it wishes to modify a factory in a way that increases emissions - and would then require new pollution controls.

"The goal of NSR reform was to prevent any enforcement case from going forward," Mr. Suarez is quoted as saying in a September article in the Environmental Law Review by Professor Mintz.

The EPA's Leavitt, however, says there is a better way than litigation: a market-based system where companies could trade pollution credits. Such a system would let power-plant operators "find the best ways, the fastest ways, the most innovative ways, and the most efficient ways to make the reductions," he said in a January speech. "The rule provides incentives to do more than is required, and there are serious market-imposed sanctions for those who do less."

Enforcement also remains vital, adds EPA spokesman John Millett. He cites 67 clean-air cases referred to the Justice Department in 2004, compared with 49 in 2003. He says that notices of violation - often a precursor to a settlement action or lawsuit - were filed with three more utilities this year, each involving NSR concerns. One NSR suit was filed.

The NSR rule change in August 2003 had an immediate effect. "We had, at one point, 20 different companies that were seriously interested in settling," Buckheit says. "But when they got the word that they weren't going to be prosecuted, they walked away from the table."

As a result, power plants pump at least 1.75 million tons of SO2 and 629,000 tons of NOx a year that would have been eliminated by settlements, says the inspector general's report. By contrast, the EPA on Monday noted its enforcement victories in the fiscal year, which included two major power-plant settlements that will remove more than 300,000 tons of SO2 and NOx.

But even in cases where the EPA recently declared victory, there are signs of softening, observers say. In September, it touted a settlement with Mirant Mid-Atlantic, which operates four power plants in Virginia and Maryland. Its Potomac River plant is a 55-year-old facility that is among the oldest and dirtiest in the nation.

Sitting just a few miles from the nation's capital, which has some of the worst summertime air in the US, the plant emitted 2,139 tons of NOx in summer 2003 - more than double the amount permitted by law. When caught by the state of Virginia, and subsequently cited by EPA, the company agreed to pay a $500,000 fine, spend $1 million on pollution controls at the Potomac River plant, and cut NOx emissions by 29,000 tons a year across all its plants in the region. Yet the new settlement with EPA allows the Potomac plant to emit 59 percent more NOx during summer 2005 than it was allowed in summer 2003.

"It's certainly ironic and ridiculous to reward this company for violating the law," says Mary Harris, a retiree from Virginia who lives in a 14th-floor condo 300 feet from the Potomac River plant. "The settlement actually allows this plant next door to me to emit a lot more NOx, not less, for the next five years. After that, who knows?"

But regionwide, NOx emissions will fall, says a Mirant spokesman. "This deal is enabling us to reduce our NOx by 65 percent over seven years from our four plants. It has enabled us to significantly reduce our emissions while allowing us to invest capital in the most efficient way."

Some critics see the Mirant case as a portent of future problems if enforcement continues to be weakened. Next year, the EPA plans to unveil its market-based cap-and-trade rules, similar to a successful market-based plan to curb acid rain.

"There's a real risk that if you just let the market rule, you can't enforce the law," Buckheit warns. "It's not clear that these things in future will be as painless as the administration says."