COVER STORY

The World In Microcosm

The all-out war between power companies and EPA has become the symbol — and the center — of the national debate over the role of government.

WASHINGTON, DC - APRIL 21:  More than 1,200 students from across the US assemble a five-story globe on the National Mall in Washington 21 April. The globe is part of the festivities to mark the 25th anniversary of Earth Day which will be celebrated 22 April.    AFP PHOTO  (Photo credit should read JOYCE NALTCHAYAN/AFP/Getty Images)
JOYCE NALTCHAYAN/AFP/Getty Images
Coral Davenport
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Coral Davenport
Sept. 22, 2011, 1 p.m.

CLA­RI­FIC­A­TION: The En­vir­on­ment­al Pro­tec­tion Agency denies that it has delayed the rol­lout of car­bon rules as a con­ces­sion to in­dustry; in­stead, it cites the need for care­ful study to en­sure the rules are prop­erly writ­ten.

Spring and sum­mer 2009 was a great stretch for Pres­id­ent Obama’s en­ergy and en­vir­on­ment team. That May, the pres­id­ent struck a his­tor­ic deal with the na­tion’s auto in­dustry; after dec­ades of fight­ing, com­pan­ies like GM and Ford agreed to dra­mat­ic­ally ramp up their mileage stand­ards, slash­ing tailpipe pol­lu­tion and pav­ing the way for a new gen­er­a­tion of hy­brid and fuel-ef­fi­cient cars. In June, the House passed a his­tor­ic cap-and-trade bill to slow cli­mate change, cut­ting a slew of deals to get the grudging buy-in of coal-state law­makers and of power com­pan­ies. Its even­tu­al pas­sage in the Sen­ate seemed all but as­sured.

Mean­while, the head of the En­vir­on­ment­al Pro­tec­tion Agency, Lisa Jack­son, was pre­par­ing to roll out an un­pre­ced­en­ted num­ber of ma­jor new pol­lu­tion-con­trol reg­u­la­tions for the na­tion’s 600 coal-fired power plants — many of which had for dec­ades been spew­ing un­reg­u­lated tox­ins linked to lung dis­ease, birth de­fects, can­cer, asthma, and oth­er ma­jor ill­nesses. The new rules wer­en’t Jack­son’s or Obama’s idea. Most had been pil­ing up at EPA for nearly 20 years, and they would soon hit court-ordered dead­lines.

But Jack­son and Gina Mc­Carthy, the as­sist­ant ad­min­is­trat­or for clean air — both vet­er­ans of fed­er­al and state en­vir­on­ment­al work in the North­east — knew what polit­ic­al fury pol­lut­ing in­dus­tries can un­leash when con­fron­ted with new reg­u­la­tions. The two wo­men wanted to pree­mpt a re­volt if they could. So they in­vited top ex­ec­ut­ives from the biggest power com­pan­ies in the coun­try — among them Duke En­ergy, Con­stel­la­tion En­ergy, Amer­ic­an Elec­tric Power, South­ern Co., Ex­elon, NRG En­ergy, Domin­ion, and Pro­gress En­ergy — to in­form­al roundtable meet­ings at EPA’s Wash­ing­ton headquar­ters to let them know what to ex­pect and maybe even to reach some kind of grand bar­gain, sim­il­ar to the deal with auto­makers.

(PIC­TURES: Be­sides Solyn­dra, Who Else Be­ne­fits from the Obama Ad­min­is­tra­tion’s Green Loan Pro­gram?)

Mc­Carthy, a straight-talk­er with a crop of steel-colored hair, a thick South Bo­ston ac­cent, and a ready sense of hu­mor, quickly won the re­spect of the in­dustry ti­tans — even as some of them cringed at what they heard. “She did her best to tell us what was com­ing,” said Mike Mor­ris, CEO of Amer­ic­an Elec­tric Power. “That was fair. She said, “˜We’ve got court or­ders, and we’ve got to com­ply with them.’ She said, “˜This is go­ing to hap­pen. It’s com­ing. Don’t think it isn’t hap­pen­ing.’ And it was clear that they in­ten­ded to be ag­gress­ive. More ag­gress­ive than the EPA had ever been.”

“We were fi­nally be­gin­ning to grasp the mag­nitude of what they were go­ing to do.”—Amer­ic­an Elec­tric Power CEO Mike Mor­ris

Mc­Carthy showed the CEOs a timeline of the up­com­ing rules. By the end of 2009, EPA would pro­pose tough stand­ards on coal-plant emis­sions of ozone, a smog-caus­ing pol­lut­ant dir­ectly linked to asthma. In the first half of 2010, the agency would re­strict emis­sions of sul­fur di­ox­ide and ni­tro­gen ox­ide, tox­ic coal byproducts linked to asthma and lung dis­ease. The fol­low­ing year, it would im­ple­ment a “Good Neigh­bor” rule, for­cing coal plants to cut pol­lu­tion that con­trib­utes to health and en­vir­on­ment­al dam­age across state lines. It would fol­low, in Novem­ber 2011, with an or­der for coal-fired power plants to dis­charge 91 per­cent less mer­cury. A 2012 rule would lim­it blasts of par­tic­u­late mat­ter, the mi­cro­scop­ic chunks of soot that spew from coal plants’ smokestacks; the soot can lodge in the lungs and con­trib­ute to res­pir­at­ory sick­ness and pre­ma­ture death.

Slowly, said Mor­ris, “we were fi­nally be­gin­ning to grasp the mag­nitude of what they were go­ing to do.”

In­stead of gal­van­iz­ing the com­pan­ies to ink a col­lect­ive deal with EPA, the com­ing reg­u­la­tions split the in­dustry. The rules would hit own­ers of old coal-powered fleets hard­est, so util­it­ies that re­lied on clean­er sources of en­ergy — such as nuc­le­ar power and nat­ur­al gas, which to­geth­er gen­er­ate nearly 40 per­cent of the na­tion’s elec­tri­city but no dan­ger­ous pol­lut­ants — thought the new rules would give them a com­pet­it­ive edge. Mean­while, plenty of coal-burn­ing com­pan­ies had already in­ves­ted in the tech­no­logy to clean up their pol­lu­tion (some be­cause of state law, some be­cause they knew the fed­er­al rules would be com­ing some day). Why re­ward the strag­glers? By the end of 2009, it was clear that there would be no deal. Jack­son and Mc­Carthy pre­pared to roll out the rules without the co­oper­a­tion of the coal com­pan­ies.

At the same time EPA was crank­ing up its reg­u­lat­ory re­gime, Re­pub­lic­ans were ready­ing their own an­ti­reg­u­lat­ory agenda. By the middle of 2010, a tea party-fueled charge against gov­ern­ment reg­u­la­tion was roar­ing to­ward Wash­ing­ton — on a head­long col­li­sion course with the agency that would be­come the poster child for ex­pan­ded gov­ern­ment con­trol. The res­ult­ing clash re­ver­ber­ated throughout Wash­ing­ton and the na­tion — and the af­ter­shocks won’t stop for years to come.

Once they de­term­ined to fight the new rules, coal com­pan­ies ban­ded to­geth­er with the Re­pub­lic­an Party to strategize, and the 2010 midterm elec­tions offered the per­fect battle­ground. The com­pan­ies in­ves­ted heav­ily in cam­paigns to elect tea party can­did­ates cru­sad­ing against the role of Big Gov­ern­ment. In­dustry groups (like the U.S. Cham­ber of Com­merce), tea party groups with deep ties to pol­luters (like Amer­ic­ans for Prosper­ity), and so-called su­per PACs (like Karl Rove’s Amer­ic­an Cross­roads) spent re­cord amounts to help elect the new House Re­pub­lic­an ma­jor­ity.

The House fresh­men, the in­flu­en­tial su­per PACs, and now the 2012 pres­id­en­tial can­did­ates have all put EPA’s “job killing” reg­u­la­tions in their sights as part of an all-out polit­ic­al and le­gis­lat­ive of­fens­ive against the agency. “We have got to get reg­u­la­tions in Wash­ing­ton un­der con­trol. And EPA has be­come the stand­ard-bear­er for the [busi­ness] im­ped­i­ment that Wash­ing­ton has put in place,” House Ma­jor­ity Lead­er Eric Can­tor told Na­tion­al Journ­al in an in­ter­view.

The once-sleepy EPA was blas­ted to the front lines of the most par­tis­an polit­ic­al war in re­cent memory. Can­tor has as­sembled a fall agenda that brings a new bill at­tack­ing an EPA reg­u­la­tion to the House floor al­most every week — sup­ply­ing per­fect fod­der for cam­paign-ad sound bites and town-hall events. “Now you get ap­plause lines at home when you say you want to stop the EPA,” Can­tor said. Mean­while, Re­pub­lic­an pres­id­en­tial can­did­ates are play­ing of­fense. Front-run­ner Rick Perry slammed EPA as a “rogue agency” with an “act­iv­ist mind-set.” Michele Bach­mann fam­ously said she wants to lock up the agency and turn the lights out. In a Wash­ing­ton Times op-ed last week, Sen. Rand Paul of Ken­tucky flayed EPA as an “out-of-con­trol agency” that “vi­ol­ate[s] con­sti­tu­tion­al rights” and “turns every­day life in­to a fed­er­al crime.”

For bet­ter or for worse, the stan­doff between EPA and the coal-burn­ing power com­pan­ies has be­come a sym­bol of the fight between the gov­ern­ment and in­dustry — at a time when the polit­ic­al stakes couldn’t be high­er for either. EPA says these are long-over­due rules that will clean up the en­vir­on­ment, save the lives of Amer­ic­an chil­dren, and gen­er­ate many more eco­nom­ic be­ne­fits than costs. The in­dustry, its Re­pub­lic­an al­lies, and even some un­easy Demo­crats say that the agency has com­mit­ted massive reg­u­lat­ory over­reach that will boost en­ergy prices, kill jobs, and threaten re­li­able elec­tri­city, tip­ping a stag­nant eco­nomy in­to a free fall. Both mes­sages are power­ful, es­pe­cially in Mid­west­ern states — In­di­ana, Ohio, Pennsylvania, Mis­souri — where coal is cru­cial to the eco­nomy. As it hap­pens, these states are also cru­cial to the 2012 elec­tions.

THE BOT­TLE­NECK

When Lisa Jack­son ar­rived on the job in early 2009, she knew she would meet a massive back­log of pa­per­work — and she couldn’t have been hap­pi­er about it. Wait­ing for Obama’s new ad­min­is­trat­or was a stack of court-ordered en­vir­on­ment­al reg­u­la­tions, some dat­ing back 20 years. Many were stuck in leg­al limbo through the ad­min­is­tra­tions of George H.W. Bush, Bill Clin­ton, and George W. Bush.

Most people would groan at hav­ing to plow through an in-box like that. But Jack­son saw the pile of ready-to-go rules as the op­por­tun­ity of a life­time.

It’s not hard to see why her pre­de­cessors delayed rolling out the reg­u­la­tions: Un­leash­ing such a blitz of an­ti­pol­lu­tion rules would sub­ject polit­ic­ally power­ful corner­stones of in­dustry — first and fore­most, op­er­at­ors of coal-fired power plants, which provide half the na­tion’s elec­tri­city — to tough new op­er­at­ing stand­ards. The rules would dra­mat­ic­ally clean up tox­ic coal emis­sions that cause a host of ill­nesses. But they would do it by for­cing the na­tion’s biggest util­it­ies to in­stall ex­pens­ive pol­lu­tion-con­trol tech­no­logy on their old­est and dirti­est coal plants — and to take the very foulest of them off-line en­tirely.

Still, Jack­son felt more than ready: Com­ing off the heady 2008 vic­tory, it seemed like Obama’s en­vir­on­ment­al reg­u­lat­or could re­vital­ize the mis­sion of an agency that had lan­guished on the back burn­er for at least a dec­ade. And big, ser­i­ous, na­tion­al-level steps to save the en­vir­on­ment and im­prove pub­lic health ap­pealed es­pe­cially to Jack­son, whose 14-year-old son Bri­an suf­fers from asthma, a dis­ease dir­ectly linked to ex­pos­ure to coal pol­lu­tion.

“Right now, we have great­er op­por­tun­it­ies to pro­tect pub­lic health and the en­vir­on­ment than any oth­er time in the his­tory of the EPA,” she said in a speech to re­gion­al en­vir­on­ment­al ad­min­is­trat­ors, soon after tak­ing of­fice. “That mes­sage is that the EPA is back on the job”¦. We have much to do in restor­ing the coun­try’s faith in our abil­ity to pro­tect the air, wa­ter, and land — now and for fu­ture gen­er­a­tions.” Jack­son noted that Obama’s first budget re­quest to Con­gress gave EPA its highest level of fund­ing in the agency’s 39-year his­tory. “That also means that we have the highest level of ex­pect­a­tion that we have seen in our 39-year his­tory,” she said. Jack­son and her team stuck to that vis­ion, push­ing EPA to the most mus­cu­lar ex­er­cise of reg­u­lat­ory activ­ity in dec­ades, pos­sibly since it was cre­ated.

EF­FECTS AND CAUSES

Today’s Re­pub­lic­an res­ist­ance is plenty iron­ic. After all, a GOP pres­id­ent, Richard Nix­on, cre­ated EPA, and many of this year’s big rules were born dur­ing Re­pub­lic­an ad­min­is­tra­tions. Most of them date back to the land­mark 1990 Clean Air Act amend­ments, which Pres­id­ent George H.W. Bush hailed as a huge ac­com­plish­ment when he signed them in­to law.

The chief aim of the 1990 amend­ments was to clean up the tox­ic pol­lu­tion that had been spew­ing from the na­tion’s fleet of coal-fired power plants with al­most no reg­u­la­tion for more than 50 years. Burn­ing coal pro­duces a po­tent tox­ic stew; it is the lead­ing dis­char­ger of chem­ic­als like ar­sen­ic, mer­cury, and sul­fur di­ox­ide.

Stud­ies from the Cen­ters for Dis­ease Con­trol and Pre­ven­tion, Na­tion­al In­sti­tutes of Health, and Har­vard Med­ic­al School have tied coal emis­sions to heart dis­ease, pre­ma­ture death, lung dis­ease, birth de­fects, and asthma — es­pe­cially among the young, whose lungs are not fully de­veloped un­til they reach the age of 5, and the eld­erly.

When hu­man lungs are ex­posed to the mix of ni­tro­gen, ozone, and par­tic­u­late mat­ter from com­bust­ing coal, “it causes dir­ect in­flam­ma­tion to your air­ways,” ac­cord­ing to Dr. Mark R. Windt, a pul­mono­log­ist at the Uni­versity of New Hamp­shire who sits on the Amer­ic­an Thoracic So­ci­ety’s com­mit­tee on en­vir­on­ment­al health policy. (He also asked to be iden­ti­fied as a Re­pub­lic­an.) “This pro­duces swell­ing, mak­ing it dif­fi­cult to breathe. If you really want to know what it feels like, try breath­ing for a minute through a straw. Then you know what it feels like for those kids. It causes a change in the phys­ic­al con­struc­tion to the lungs, called re­mod­el­ing. The ac­tu­al lung struc­ture changes, with the growth of thick mem­branes of new cells, scar­ring the lungs. It makes it dif­fi­cult for oxy­gen to pass through and get to the blood.”

Sul­fur di­ox­ide, Windt ex­plains, is even worse: “Think of it as sun­burn in­side your lungs. When you in­hale it, there’s red­ness, swell­ing, and mu­cus is be­ing pro­duced in your lungs be­cause it’s re­act­ing to the in­flam­ma­tion. Lung cells start peel­ing off and block up your bron­chi­al tubes. This causes block­age and dif­fi­culty in breath­ing.”

Ex­pos­ure to mer­cury, mean­while, lowers an af­fected pop­u­la­tion’s IQ and is linked to at­ten­tion and be­ha­vi­or­al prob­lems. Mer­cury ac­cu­mu­lated in fish is tox­ic to the de­vel­op­ing brains of fetuses and young chil­dren; it can also lead to blind­ness, deaf­ness, and seizures.

Bush’s 1990 clean-air law took big steps to re­duce many of those emis­sions. Us­ing a cap-and-trade pro­gram, it put a lim­it on sul­fur-di­ox­ide emis­sions. (En­vir­on­ment­al­ists and eco­nom­ists have since hailed this as a ma­jor suc­cess. The first sen­at­or to push a ma­jor cli­mate-change bill, Re­pub­lic­an John Mc­Cain, hoped in 2005 to re­pro­duce it in ef­forts to cut green­house gases.) The law re­quired EPA to con­trol oth­er pol­lut­ants, too. But in 21 years, many of those rules have still not been im­ple­men­ted. A good ex­ample is the reg­u­la­tion for mer­cury emis­sions, which was man­dated by the 1990 law but worked its way through a pur­gat­ory of im­pact stud­ies and leg­al delays un­til fi­nally, in 2008, the D.C. Cir­cuit Court of Ap­peals found that EPA had to re­quire that plants meet “max­im­um achiev­able con­trol tech­no­logy” stand­ards for lower­ing mer­cury emis­sions. The fed­er­al court said that EPA must is­sue the rule by Nov. 16, 2011.

An­oth­er good ex­ample is a reg­u­la­tion some­times known as the Good Neigh­bor rule. That one was born dur­ing the ad­min­is­tra­tion of George W. Bush. In the dec­ade after the Clean Air Act amend­ments, sci­entif­ic re­search showed that sul­fur di­ox­ide was far more harm­ful to hu­man health than had pre­vi­ously been un­der­stood, and sci­ent­ists and eco­nom­ists urged Bush to re­vis­it his fath­er’s rules. Dur­ing his ad­min­is­tra­tion, EPA said that power plants that emit sul­fur di­ox­ide and oth­er pol­lu­tion in one state but cause health and en­vir­on­ment­al dam­age down­wind in an­oth­er state must clean up their act.

Fed­er­al courts found fault with the tech­nic­al lan­guage and later ordered EPA to re­is­sue it this year. But when Jack­son did so this sum­mer, she met with a fu­sil­lade of at­tacks. The coal gi­ant Amer­ic­an Elec­tric Power an­nounced that it would have to close three power plants, put­ting hun­dreds of work­ers out of jobs. Crit­ics of Obama said that the rule threatened elec­tri­city re­li­ab­il­ity.

To be sure, Jack­son took the man­date for a cross-state rule and ran with it. George W. Bush’s ori­gin­al reg­u­la­tion, for in­stance, had ex­cluded coal power plants in Texas (the na­tion’s biggest burn­er of coal) from the stand­ards. Obama’s ver­sion roped Texas back in­to the fold. On Sept. 20, Lu­min­ant, the biggest power pro­du­cer in Texas, said that the rule was for­cing it to shut down two coal boil­ers and three coal mines, cut­ting 500 jobs and pos­sibly lead­ing to rolling black­outs. The an­nounce­ment has poured ker­osene on Gov. Rick Perry’s at­tacks on Obama’s EPA.

ANA­TOMY OF A RE­VOLT

Privately, coal chiefs and Re­pub­lic­ans say they un­der­stand that Jack­son in­her­ited a stack of ob­lig­a­tions and had to act (a dis­tinc­tion that cer­tainly doesn’t come across in their cam­paign ads or fiery floor speeches). But they also say that she brought an en­vir­on­ment­al­ist’s zeal to the job — and that it seemed clear, even in the first meet­ings, that Jack­son and Mc­Carthy in­ten­ded to push the most ag­gress­ive in­ter­pret­a­tion of the rules at the fast­est pos­sible speed. They ap­pealed to their friends on Cap­it­ol Hill — and on polit­ic­al ac­tion com­mit­tees — for help. “We went to every­one and said, “˜These timelines are un­ac­cept­able,’ “ said Amer­ic­an Elec­tric Power’s Mor­ris.

To sell their mes­sage, they re-cre­ated a col­or­ful dia­gram based on the cal­en­dar Gina Mc­Carthy had de­scribed to them. It shows the rol­lout of reg­u­la­tions col­or-coded by pol­lut­ant and rule — black for ozone, red for sul­fur di­ox­ide, pink for the cross-state air rule, blue for sooty par­tic­u­late mat­ter, and or­ange for car­bon di­ox­ide — with 35 marks for points in the sched­ule between 2008 and 2016. The crowded, rain­bow-colored timeline cre­ates a sense that EPA is un­leash­ing a non­stop bar­rage of reg­u­lat­ory ob­lig­a­tions.

People in the coal lobby began call­ing the slide “the train wreck.” The name stuck, and the slide be­came a hit. By the middle of 2010, it was be­ing shown all over town. The train wreck was e-mailed to staffers, journ­al­ists, and lob­by­ists. It also went to the U.S. Cham­ber of Com­merce; to tea party groups like Amer­ic­ans for Prosper­ity, which has close links to Koch In­dus­tries; and to su­per PACs gear­ing up for the 2010 elec­tions.

In a rush of me­dia buys, Web cam­paigns, and town-hall events, those groups began to spread the word to voters angry about too much gov­ern­ment: EPA’s new rules could soon drive up their elec­tri­city prices and close down their power plants. The su­per PACs also began call­ing at­ten­tion to forth­com­ing EPA rules out­side the power sec­tor — cap­ping emis­sions from in­dus­tri­al boil­ers and ce­ment plants, for in­stance. In­dustry groups dom­in­ated the mes­saging; the cham­ber alone spent $33 mil­lion on ads and cam­paigns be­fore the midterm elec­tion. Sud­denly, av­er­age voters knew all about ob­scure pending EPA rules. “At a Labor Day parade last year, there were signs about boil­er MACT,” re­calls House fresh­man Mor­gan Grif­fith, R-Va., us­ing the ac­ronym for a rule that deals with in­dus­tri­al boil­ers.

As soon as they got to Wash­ing­ton in Janu­ary 2011, the tea party-backed fresh­men took the mes­sage to the GOP lead­er­ship. “In the caucus meet­ings, pri­or to rais­ing their hands and tak­ing the oath, the fresh­men made it clear they were here to do three things,” said Mi­chael McK­enna, a Re­pub­lic­an en­ergy strategist with close ties to House lead­er­ship. “We’re here to blow up “˜Obama­care,’ we’re here to do something about the budget, and we’re here to make sure EPA doesn’t kill jobs. The en­ergy right be­fore the elec­tion was about the budget and the EPA. And they took all that en­ergy with them.”

The House lead­ers listened. House Gov­ern­ment Over­sight Chair­man Darryl Issa sent let­ters to ex­ec­ut­ives ask­ing them to list the gov­ern­ment reg­u­la­tions that would most harm job growth. EPA reg­u­la­tions topped most lists. Plan­ning their agenda, Speak­er John Boehner and Can­tor de­cided that bills de­fund­ing and re­vers­ing EPA’s reg­u­lat­ory au­thor­ity would hit the floor early and of­ten. Even if few of them had a chance to be­come law, thanks to a Demo­crat­ic-con­trolled Sen­ate, they would be polit­ic­al win­ners.

House Re­pub­lic­ans worked closely with the U.S. Cham­ber of Com­merce. In a Janu­ary speech, cham­ber Chair­man Tom Dono­hue said that EPA reg­u­la­tions were ham­per­ing growth and put their re­peal at the top of his an­nu­al wish list. “Lit­er­ally from two days be­fore [the fresh­men] took their oath, we’ve been very act­ive on this,” said Bill Ko­vacs, who dir­ects the cham­ber’s en­vir­on­ment­al and reg­u­lat­ory-af­fairs pro­gram. “You name it, I can’t think of any piece of le­gis­la­tion that would roll back all of this that we haven’t been in­volved with.”

In Feb­ru­ary, a con­ser­vat­ive free-mar­ket group called the Amer­ic­an Le­gis­lat­ive Ex­change Coun­cil, whose “private en­ter­prise board” in­cludes ma­jor coal and oil com­pan­ies, turned Mc­Carthy’s in­fam­ous slide in­to a snappy book­let called “EPA’s Reg­u­lat­ory Train Wreck: Strategies for State Le­gis­lat­ors.” It said that the agency threatened loc­al eco­nom­ies, and it gave a handy blue­print for state le­gis­lat­ors who might want to in­tro­duce bills hand­cuff­ing the rules. In March, as the gov­ern­ment nearly shut down over the must-pass con­tinu­ing res­ol­u­tion, House Re­pub­lic­ans in­tro­duced over a dozen amend­ments try­ing to slash EPA fund­ing and gut its reg­u­lat­ory au­thor­ity. Throughout the spring and sum­mer, they used every le­gis­lat­ive op­por­tun­ity to at­tack EPA — not least when the agency’s an­nu­al fund­ing bill was on the floor. Last month, Can­tor cir­cu­lated a week-by-week fall agenda of bills aimed at “job-killing” reg­u­la­tions. Sev­en of 10 tar­geted EPA. The first of those, which is ex­pec­ted to pass on Sept. 23, cited the “train wreck” in its name: It was the Trans­par­ency in Reg­u­lat­ory Ana­lys­is of Im­pacts on the Na­tion (TRAIN) Act.

And while all the at­tacks keep com­ing, EPA keeps is­su­ing more rules — in­clud­ing those to tackle the most con­tro­ver­sial pol­lut­ant of all: the green­house gases that cause glob­al warm­ing. Un­til this year, the fed­er­al gov­ern­ment had nev­er reg­u­lated car­bon di­ox­ide and oth­er gases pro­duced by burn­ing coal and oil. But among the tasks wait­ing for Jack­son when she ar­rived on the job was a 2007 Su­preme Court de­cision, in Mas­sachu­setts v. EPA, which said that the agency was ob­lig­ated by the Clean Air Act to reg­u­late green­house gases if they qual­i­fied as pol­lut­ants that en­danger hu­man health. The Court had hugely ex­pan­ded EPA’s au­thor­ity.

EPA duly con­cluded that green­house gases are pol­lut­ants that en­danger hu­man health, and Jack­son made the an­nounce­ment in Decem­ber 2009, at the start of the U.N. cli­mate-change sum­mit in Copen­ha­gen. Now her agency was re­quired to reg­u­late car­bon di­ox­ide. Stra­tegic­ally, Obama and Jack­son hoped that this would prompt Con­gress, fear­ing EPA over­reach, to fi­nally pass the cap-and-trade cli­mate-change bill, pree­mpt­ing their need to is­sue rules. But in 2010, after Re­pub­lic­ans de­clared a war on what they called “cap and tax,” the bill died in the Sen­ate.

So this Janu­ary, just be­fore mem­bers of the new Con­gress took their oaths of of­fice, EPA began in­tro­du­cing rules that could ul­ti­mately af­fect every corner of the fossil-fuel in­dustry. Once again, the new rules co­in­cided with a power­ful op­pos­ing polit­ic­al force — the re­sur­gence of cli­mate-change deni­al­ism. As if they hadn’t already been de­term­ined enough, con­ser­vat­ive Re­pub­lic­ans doubled down to fight for the long haul.

COSTS AND BE­NE­FITS

In the trenches of the EPA wars, both sides agree on some things: These rules are long over­due, and they will have a big im­pact. They will dra­mat­ic­ally re­duce pol­lu­tion, im­prove pub­lic health, and help the en­vir­on­ment. They will also cost the com­pan­ies that have to im­ple­ment them a lot of money.

In coal-burn­ing plants, the pricey pro­cess of fol­low­ing the rules in­volves fit­ting smokestacks with gi­ant fil­ters — de­scribed by one ex­pert as “an enorm­ous va­cu­um-clean­er bag made out of Te­flon-level fab­rics” over the plant’s ducts — to trap mer­cury, par­tic­u­late mat­ter, ozone, and acid­ic gases. Plants will also need to in­stall what are known as “wet scrub­bers”: slurry walls of wa­ter and lime­stone that, when the coal smoke travels through them, pull out the sul­fur di­ox­ide. (The res­ult­ing sul­fur-di­ox­ide and lime­stone mix is then turned in­to dry­wall.)

In the case of the util­it­ies that own the na­tion’s 600 coal plants, many will have to in­vest between $200 mil­lion and $1 bil­lion per plant to ret­ro­fit the ma­chinery. Con­struc­tion will take two to five years, al­though the plants will be able to op­er­ate dur­ing most of that time.

Not every com­pany has to do all this. Ac­cord­ing to EPA, just over half of the na­tion’s coal plants already have the mer­cury fil­ters, and a grow­ing num­ber have already in­stalled wet scrub­bers, either be­cause state law re­quires it or be­cause they saw the rules com­ing. Jim Ro­gers is CEO of one of those com­pan­ies. Duke En­ergy provides elec­tri­city from coal and nuc­le­ar plants to con­sumers in five states. By fol­low­ing their pro­gress through Con­gress and the courts, Ro­gers knew that strin­gent new emis­sions caps would hit him soon­er or later, so he has spent the last dec­ade in­vest­ing $5 bil­lion to in­stall screens and scrub­bers. “We have not en­gaged like oth­ers have on costs and com­plain­ing about EPA — our point is that we have been pre­par­ing for many of these regs for years,” wrote Tom Wil­li­ams, Duke’s spokes­man, in an e-mail.

But when it comes to the na­tion’s old­est coal power plants — such as Vir­gin­ia’s Po­tom­ac River Gen­er­at­ing Sta­tion, built in 1946, or Pennsylvania’s Mitchell Plant, built in 1948 — that kind of in­vest­ment makes no eco­nom­ic sense. The cost of up­dat­ing them would be too high, and com­pan­ies will prob­ably have to close dozens of plants, cut­ting power gen­er­a­tion and jobs.

En­ergy eco­nom­ists say that it’s not hard to re­place the plants go­ing off-line with ones gen­er­at­ing power from the na­tion’s abund­ance of clean, cheap nat­ur­al gas. Stud­ies show that a newly dis­covered sup­ply of shale gas from the North­east would likely have led to the re­tire­ment of many old coal plants any­way. Moreover, com­pan­ies that spend money to in­stall screens and scrub­bers will ac­tu­ally be job cre­at­ors. A typ­ic­al power-plant ret­ro­fit can em­ploy, at the peak of the work, up to 1,000 en­gin­eers, con­struc­tion work­ers, and oth­er laborers.

But there is no ques­tion that the new rules will force some com­pan­ies to spend money, raise elec­tri­city rates, and lay off work­ers. A 2010 study by the North Amer­ic­an Elec­tric Re­li­ab­il­ity Corp., which works with the gov­ern­ment to pro­tect the na­tion’s elec­tric grid, warned that the re­tire­ment of old coal-burn­ing plants could jeop­ard­ize 10 per­cent to 20 per­cent of the na­tion’s coal-fired power. Philip Moeller, an Obama ap­pointee to the Fed­er­al En­ergy Reg­u­lat­ory Com­mis­sion, also told the House En­ergy and Com­merce Com­mit­tee that the rules made him worry about the grid’s re­li­ab­il­ity. “I re­main con­cerned that the timeline for elec­tric-util­ity plan­ning and im­ple­ment­a­tion is not com­pat­ible with the EPA timelines for its new reg­u­la­tions,” he said.

In­dustry groups make even stronger claims. A study com­mis­sioned by the Amer­ic­an Co­ali­tion for Clean Coal Elec­tri­city, a coal-lobby group, con­cluded that the Good Neigh­bor rule and mer­cury reg­u­la­tion alone would in­crease elec­tri­city costs by 12 per­cent to 24 per­cent an­nu­ally, while cost­ing 1.4 mil­lion jobs between 2013 and 2020.

At the same time, eco­nom­ic be­ne­fits to so­ci­ety writ large could off­set the cost to com­pan­ies. Peer-re­viewed stud­ies show that re­du­cing pol­lu­tion im­proves pub­lic health. In March, EPA re­leased a cost-be­ne­fit ana­lys­is of Pres­id­ent Bush’s 1990 Clean Air Act amend­ments. Pol­luters will have paid some $65 bil­lion an­nu­ally by 2020, but the cor­res­pond­ing re­duc­tion in pre­ma­ture death and ill­ness (not to men­tion the rise in work­er pro­ductiv­ity tied to that boon) will have saved $2 tril­lion an­nu­ally.

EPA has sim­il­ar es­tim­ates for the oth­er new rules. The Good Neigh­bor reg­u­la­tion will cost $2.4 bil­lion per year but save $280 bil­lion in health costs by pre­vent­ing up to 34,000 pre­ma­ture deaths; 15,000 non­fatal heart at­tacks; 19,000 cases of acute bron­chit­is; 400,000 cases of ag­grav­ated asthma; and 1.8 mil­lion sick days a year be­gin­ning in 2014. The mer­cury rule will cost up to $11 bil­lion an­nu­ally through 2013 (mostly for the in­stall­a­tion of scrub­bers and fil­ters), but it will yield $59 bil­lion to $140 bil­lion in an­nu­al be­ne­fits, mostly by avoid­ing 6,800 to 17,000 pre­ma­ture deaths each year. Oth­er be­ne­fits of the mer­cury rule — not all of which were giv­en dol­lar val­ues in the ana­lys­is — in­clude cut­ting 11,000 non­fatal heart at­tacks and 120,000 cases of ag­grav­ated asthma, as well as im­prov­ing de­vel­op­ment for young chil­dren by boost­ing IQ, learn­ing, and memory. The sul­fur-di­ox­ide rules are ex­pec­ted to cost $1.5 bil­lion an­nu­ally and yield eco­nom­ic be­ne­fits of $15 bil­lion to $37 bil­lion an­nu­ally.

A new re­port out this week by the non­par­tis­an Eco­nom­ic Policy In­sti­tute also con­cluded that, over­all, the be­ne­fits of Obama’s EPA rules ex­ceed the costs — al­though not by quite as large a mar­gin as the agency cal­cu­lates. The com­bined eco­nom­ic be­ne­fits of clean-air rules, not in­clud­ing the cross-state rule, will ex­ceed the com­bined cost by $10 bil­lion to $95 bil­lion a year, or by a ra­tio of 2-to-1 to 20—to-1. The net be­ne­fits from the cross-state rule could ex­ceed $100 bil­lion a year. The costs born by the com­pan­ies, the in­sti­tute said, amount to 0.13 per­cent of the eco­nomy.

THE ELEC­TION IS­SUE

For now, the polit­ic­al forces fight­ing EPA seem to be win­ning. En­vir­on­ment­al and pub­lic health groups are de­fend­ing the rules, but Re­pub­lic­ans and their al­lies ap­pear to have re­framed the fight as one about “en­vir­on­ment versus eco­nomy.” If that is the choice, they know how voters, trapped in a stag­nant eco­nomy with 9 per­cent un­em­ploy­ment, will choose.

Many en­ergy eco­nom­ists fa­mil­i­ar with EPA’s rules say that’s a false choice. But the White House es­sen­tially con­ceded it was los­ing the polit­ic­al de­bate on Sept. 2, when it delayed the sched­ule for im­ple­ment­ing a ma­jor ozone rule. Privately, seni­or White House staffers say they feared that the new rule would trig­ger fur­ther ac­cus­a­tions that EPA had put an un­due bur­den on the eco­nomy — par­tic­u­larly in Mid­west­ern states that rely on coal and are cru­cial for Obama’s reelec­tion. “I have con­tin­ued to un­der­score the im­port­ance of re­du­cing reg­u­lat­ory bur­dens and reg­u­lat­ory un­cer­tainty, par­tic­u­larly as our eco­nomy con­tin­ues to re­cov­er,” Obama said.

Last week, in what was viewed as an­oth­er con­ces­sion, Jack­son slowed — al­beit briefly, she said — the rol­lout of car­bon rules. “This short-term delay and a two-year pause in the ozone re­view is a ta­cit ad­mis­sion by this ad­min­is­tra­tion that its en­ergy and en­vir­on­ment­al reg­u­la­tions are drag­ging down an already flail­ing eco­nomy,” said Phil Ker­pen, a spokes­man for Amer­ic­ans for Prosper­ity, in a state­ment blas­ted to re­port­ers. “Af­ford­able, de­pend­able en­ergy is the back­bone of a mod­ern eco­nomy. The pres­id­ent should take every step to aban­don his ma­nip­u­la­tion of the en­ergy mar­kets through tax­pay­er-fun­ded fa­vor­it­ism of firms like Solyn­dra and per­man­ently call off his EPA reg­u­lat­ors.”

That’s the kind of mes­sage Demo­crats fear could res­on­ate bey­ond the tea party and in­to states de­pend­ent on coal min­ing or coal-fired elec­tri­city, such as In­di­ana, Mis­souri, Montana, Ohio, and Pennsylvania. The fight between coal and EPA could make the dif­fer­ence in who wins the White House in 2012.

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