That's Amazing will be on hiatus from June 12 to July 20, 2004.

Send comments to stoner1@csus.edu

America the Beautiful: Not if W has His Way

While we are distracted by events overseas, W and company continue to sell the public to the highest campaign contributors. Clean air is a basic need for a healthy population. But little regulation and minimal capital outlays are the basic desires of the electricity generators. Make as much as possible by spending as little as possible on pollution controls.

Bruce Barcott's investigative piece on Bush, the EPA and the power industry is full of amazing facts. It's long, but well worth the read.

(Thanks, Becky for sending this along.)


Changing All the Rules

April 4, 2004
By BRUCE BARCOTT

President Bush doesn't talk about new-source review very
often. In fact, he has mentioned it in a speech to the
public only once, in remarks he delivered on Sept. 15,
2003, to a cheering crowd of power-plant workers and
executives in Monroe, Mich., about 35 miles south of
Detroit. It was an ideal audience for his chosen subject.
New-source review, or N.S.R., involves an obscure and
complex set of environmental rules and regulations that
most Americans have never heard of, but to people who work
in the power industry, few subjects are more crucial.

The Monroe plant, which is operated by Detroit Edison, is
one of the nation's top polluters. Its coal-fired
generators emit more mercury, a toxic chemical, than any
other power plant in the state. Until recently, power
plants like the one in Monroe were governed by N.S.R.
regulations, which required the plant's owners to install
new pollution-control devices if they made any significant
improvements to the plant. Those regulations now exist in
name only; they were effectively eliminated by a series of
rule changes that the Bush administration made out of the
public eye in 2002 and 2003. What the president was
celebrating in Monroe was the effective end of new-source
review.

''The old regulations,'' he said, speaking in front of a
huge American flag, ''undermined our goals for protecting
the environment and growing the economy.'' New-source
review just didn't work, he said. It dissuaded power
companies from updating old equipment. It kept power plants
from operating at full efficiency. ''Now we've issued new
rules that will allow utility companies, like this one
right here, to make routine repairs and upgrades without
enormous costs and endless disputes,'' the president said.
''We simplified the rules. We made them easy to understand.
We trust the people in this plant to make the right
decisions.'' The audience applauded.

Of the many environmental changes brought about by the Bush
White House, none illustrate the administration's modus
operandi better than the overhaul of new-source review. The
president has had little success in the past three years at
getting his environmental agenda through Congress. His
energy bill remains unpassed. His Clear Skies package of
clean-air laws is collecting dust on a committee shelf. The
Arctic National Wildlife Refuge remains closed to oil and
gas exploration.

But while its legislative initiatives have languished on
Capitol Hill, the administration has managed to effect a
radical transformation of the nation's environmental laws,
quietly and subtly, by means of regulatory changes and
bureaucratic directives. Overturning new-source review --
the phrase itself embodies the kind of dull, eye-glazing
bureaucrat-speak that distracts attention -- represents the most sweeping change, and among the least noticed. The changes to new-source review have been portrayed by the
president and his advisers as a compromise between the twin
goals of preserving the environment and enabling business,
based on a desire to make environmental regulations more
streamlined and effective. But a careful examination of the
process that led to the new policy reveals a very different
story, and a different motivation. I conducted months of
extensive interviews with those involved in the process,
including current and former government officials, industry
representatives, public health researchers and
environmental advocates. (Top environmental officials in
the Bush administration declined to comment for this
article.) Through those interviews and the review of
hundreds of pages of documents and transcripts, one thing
has become clear: the administration's real problem with
the new-source review program wasn't that it didn't work.
The problem was that it was about to work all too well --
in the way, finally, that it was designed to when it was
passed by Congress more than 25 years ago.

Having long flouted the new-source review law, many of the
nation's biggest power companies were facing, in the last
months of the 1990's, an expensive day of reckoning. E.P.A.
investigators had caught them breaking the law. To make
amends, the power companies were on the verge of signing
agreements to clean up their plants, which would have
delivered one of the greatest advances in clean air in the
nation's history. Then George W. Bush took office, and
everything changed.

II.

The Clean Air Act, adopted by Congress and signed by
President Nixon in 1970, required industrial polluters to
clean up their operations. The law forced power plants and
large factories to minimize their emissions of harmful
pollutants like sulfur dioxide and lead, and it established
national air-quality standards to be met by 1975. Congress
acknowledged, however, that forcing polluters to retrofit
every existing plant immediately would be tremendously
costly, potentially crippling entire industries. So in a
concession to industry, the lawmakers agreed to apply the
tough standards only to newly built facilities.

Seven years passed, and the national air-quality standards
went unmet. Instead of building new, cleaner plants, many
companies simply patched and upgraded their old, dirty
plants. So Congress updated the act in 1977, introducing a
regulation called new-source review to bring older plants
into compliance. Under N.S.R., a company could operate an
old factory as long as it wasn't substantially modified.
Eventually, it was assumed, the company would have to
update its equipment, at which point new-source rules
required the company to install the best available
pollution-control technology. It was a way to let companies
phase in the switch to cleaner factories over a number of
years instead of all at once.

The legislators who passed new-source review expected the
law to encourage electric utilities to replace old, heavily
polluting coal-fired plants with cleaner new ones. And
during the 80's and 90's, some power companies did replace
coal plants with cleaner ones that burned natural gas. But
many others retooled plants to keep them running long past
their expected life spans, and few were fitted with the
scrubbers and other equipment required under N.S.R.

The electric industry complained that N.S.R. rules were so
complicated and confusing that it was impossible for
utilities to determine the difference between ''routine''
maintenance, which wouldn't require an upgrade, and a
significant ''physical change,'' which would. An
examination of documents made public as a result of
lawsuits, however, makes it difficult to credit these
complaints. Beginning soon after N.S.R. was implemented,
E.P.A. officials issued frequent letters and bulletins
telling power companies exactly where the agency was
drawing the line. And in 1990, after a Wisconsin power
company lost a suit against the E.P.A. over N.S.R., Henry
Nickel, an attorney representing the Utility Air Regulatory
Group, an industry association, complained in a letter to
William Reilly, the head of the E.P.A. under the first
President Bush, that the court's decision meant that ''any
time a component breaks -- even a minor component -- and
repair is needed to maintain normal operations,''
new-source standards would ''be triggered unless the work
is found to be 'routine' by the E.P.A. staff.'' Nickel
seemed to understand clearly what the new-source rules said
-- but that didn't mean he and other industry
representatives liked them. Nickel said that the rules were
bad not only for utilities but also for clean air, because
power companies would be discouraged from updating their
plants with cleaner, more efficient technology.

Officials in the Clinton administration spent years trying
to make the N.S.R. program more palatable to industry
without sacrificing public health. Carol M. Browner,
President Clinton's E.P.A. administrator, floated new ideas
like plantwide applicability limits (P.A.L.'s), a program
to cap and reduce emissions on a plant-by-plant basis, but
chose not to pursue them when it became apparent that they
wouldn't reduce pollution faster than the existing
new-source regulations. Robert Perciasepe, Browner's
assistant administrator for air and radiation, kept the
flagging effort alive by bringing together industry
officials, state and local clean-air regulators,
environmental leaders and public health advocates in an
ad-hoc working group that struggled to find a mutually
acceptable way to implement N.S.R. regulations. But by the
end of 2000, Browner told me, the E.P.A.'s efforts to find
a compromise ''were essentially dead.''

When I spoke to him recently, Perciasepe, now C.E.O. of the
National Audubon Society, put the matter bluntly. The
reason new-source review did not get streamlined during the
Clinton years, he said, was that the energy companies,
utilities and other industries had no interest in any sort
of workable reforms. ''In hindsight, maybe we were going
after a sort of holy grail,'' he told me. ''You were not
going to reach agreement with some of these folks,'' he
said, referring to industry representatives, ''because what
they really wanted was to not have to do it.''

Oddly, while industry and government haggled fruitlessly
over potential rule changes, nobody was making sure that
companies were complying with the existing law. Mostly the
E.P.A. was leaving them alone. ''There were other things
that had to be done first,'' Browner explained. ''We looked
at where we could get the biggest bang for the buck in
terms of pollution reduction.'' Coal-fired power plants
didn't move to the top of the agency's list until late
1996, when Bruce Buckheit, a former Justice Department
lawyer who had recently joined the E.P.A. as director of
its air-enforcement division, happened to notice an article
in The Washington Post about proposed changes to the
ownership rules that govern the power industry. ''The story
predicted that deregulation would increase the use of
coal-fired power generation in the Midwest,'' Buckheit
recalled. ''So we thought, If they're going to have all
that expansion, they're going to have to pay attention to
new-source review rules.'' That led him to wonder, he said,
whether utilities had been paying attention to the rules at
all.

Buckheit and other E.P.A. officials began asking questions.
They found disturbing answers. Industry records indicated
that many power plants had upgraded their facilities to
burn more coal, which required new-source review permits,
but ''we started looking around for the permits,'' Buckheit
said, ''and there weren't any.'' Many of the nation's
biggest energy companies, E.P.A. officials found, had
updated their plants without putting in any new pollution
controls and were illegally releasing millions of tons of
harmful pollutants. ''Companies understood what was going
on, and a lot of them thought they could evade the law,''
recalled Sylvia Lowrance, who was the E.P.A.'s top official
for enforcement and compliance (and Buckheit's boss) from
1996 to 2002.

At the same time, a growing body of medical research
indicated that industrial air pollution was making a lot of
people sick. Power plants pump dozens of chemicals into the
air; among the most harmful are nitrogen oxides, sulfur
dioxide and mercury. Nitrogen oxides are major producers of
ground-level ozone, or smog, and they interact in the
atmosphere with sulfur dioxide, water and oxygen to form
acid rain. Mercury, a highly toxic chemical that is emitted
as a vapor when coal is burned, has been found to cause
brain disorders in developing fetuses and young children,
and unhealthy levels of it have recently been detected in
swordfish and tuna.
The most disturbing research, though, involved fine
particulates, the tiny particles of air pollution that spew
out of smokestacks and lodge deep within the lungs of
people nearby and even miles away. During the late 80's and
90's, medical researchers found that long-term exposure to
fine particulates caused asthma attacks in children and
raised the risk of chronic bronchitis in adults. Coal-fired
plants account for about 60 percent of the nation's sulfur
dioxide emissions and 40 percent of the mercury, and power
plants as a whole are the nation's second-largest source of
nitrogen-oxides pollution, after automobiles. Public health
researchers estimate that fine-particulate pollution from
power plants shortens the lives of more than 30,000
Americans every year. Pollution-controlling technology,
while costly, can make an enormous difference. A new
scrubber can cut emissions up to 95 percent.
Spurred on by that research, E.P.A. officials mounted a
campaign to clean up the illegally polluting coal-fired
power plants. E.P.A. agents began to go after suspected
Clean Air Act violators through the companies' own
accounting books. In any corporation, big capital
improvement projects usually leave a trail of documents.
Any department in a company that proposes a capital
improvement has to justify it to the company's higher-ups,
often by way of memos, briefing books, e-mail messages or
PowerPoint presentations. In 1997, the E.P.A. started
collecting such data, threatening subpoenas if companies
didn't comply. ''We got lists of capital projects, then
went after the internal justifications for those
projects,'' Buckheit said.

After two years of investigation, E.P.A. officials had
accumulated a daunting amount of evidence of wrongdoing by
the coal-burning power industry. ''This was the most
significant noncompliance pattern E.P.A. had ever found,''
Sylvia Lowrance said. ''It was the environmental equivalent
of the tobacco litigation.'' Records compiled by the
utilities themselves showed, according to former E.P.A.
officials, that companies industrywide had systematically
broken the law. If that was true, E.P.A. officials noted,
the agency might have enough legal leverage to force the
industry to install up-to-date pollution controls and
achieve something truly historic: not merely incremental
cuts in emissions but across-the-board reductions of 50
percent or more. ''On sulfur dioxide alone, we expected to
get several million tons per year out of the atmosphere,''
Buckheit said.

E.P.A. agents are sometimes portrayed as eco-cops, but they
function more like overworked and financially strapped
prosecutors. Big enforcement actions are rarely carried out
in courtrooms; instead, there's a lot of negotiating and
plea bargaining involved. From the E.P.A.'s perspective, at
least during the Clinton years, the point was not to hammer
violators with big fines but to get them to reduce the
amount of pollution they were creating. That strategy had
proved effective with the oil-refinery industry, which like
the utilities had systematically skirted the new-source
review law in the 80's and 90's: E.P.A. officials presented
their case, and many refinery executives agreed to pay
fines and install new pollution-control measures. Once the
agreements had been reached, some refinery officials even
embraced the changes. Tim Scruggs, the manager of BP's
Texas City refinery, the nation's largest, told Octane
Week, an industry publication, ''We are a society that can
afford a few cents per gallon to achieve cleaner air.''

Utility officials, however, weren't going to give in so
easily. In the summer of 1999, Buckheit and other E.P.A.
officials asked executives at the worst-offending power
companies to come to the agency's headquarters in
Washington. In a series of meetings, E.P.A. officials sat
down with representatives from each company, one by one,
and laid out their evidence. ''Is there something we're
missing?'' Buckheit said he asked them. Later, he gathered
all the executives together in one room and reiterated the
agency's suspicion that their companies had systematically
violated the Clean Air Act. ''Unless we're getting
something wrong here,'' Buckheit recalled saying, ''these
are violations of the law. Y'all want to step up to the
plate?'' No one did.

Months passed. Industry executives and lawyers refused to
address the E.P.A.'s complaints. Finally, in November 1999,
the agency decided to take the polluters to court. The
Justice Department, on behalf of the E.P.A., announced
lawsuits against seven electric utility companies in the
Midwest and South, charging that their power plants had
been illegally releasing enormous amounts of pollutants, in
some cases for 20 years or more. The companies included
FirstEnergy, American Electric Power and Cinergy, all
headquartered in Ohio; Southern Indiana Gas and Electric;
Illinois Power; Tampa Electric, in Florida; and Alabama
Power and Georgia Power, two subsidiaries of the
Atlanta-based Southern Company, the biggest power supplier
in the Southeast. The E.P.A. also issued a compliance order
to the Tennessee Valley Authority (T.V.A.), the nation's
largest public power company, charging T.V.A. with similar
violations at seven of its coal-fired plants in Kentucky,
Tennessee and Alabama. In addition, the E.P.A. put a number
of other utilities on notice, warning them that the Justice
Department would come after them next if they didn't clean
up their acts.

Taken together, the companies named in the suits emitted
more than 2 million tons of sulfur dioxide every year and
660,000 tons of nitrogen oxides. Attorney General Janet
Reno announced the suits herself. ''When children can't
breathe because of pollution from a utility plant hundreds
of miles away,'' she said, ''something must be done.''

III.

From the perspective of the utility industry, the
E.P.A. was changing the rules in the middle of the game.
Dan Riedinger, spokesman for the Edison Electric Institute,
the leading trade association for electric utilities, told
me that the lawsuits came as a surprise. ''For years we'd
asked the E.P.A. for guidance about how we should meet
N.S.R. requirements,'' Riedinger said. ''That guidance
never came. Instead, the agency just began suing power
plants.''

''I've heard that argument,'' Eric Schaeffer, a former
E.P.A. official, responded in an interview. ''And I've got
to say, that's completely hokey. I was in dozens of
conversations with company officials and their lawyers, and
the idea that we were enforcing regulations they were
unaware of -- that simply didn't come up.''

A statement issued by the Southern Company shortly after
the lawsuits were announced noted that the utility had
cooperated with the E.P.A.'s investigation by providing the
agency with more than 120,000 pages of documents. ''Our
goal throughout this process has been to cooperate with
E.P.A. and find a workable solution to this issue,'' the
statement said.

The amount of money at stake was enormous. Potential
penalties ran to $27,500 per plant for each day it had been
in violation. Since many of the violations the utilities
were charged with began in the 70's, they faced potential
fines of tens of millions of dollars. Cost estimates for
fitting power plants with new scrubbers and, in some cases,
reconfiguring entire plants to run on cleaner-burning
natural gas were estimated in the hundreds of millions of
dollars. The cost of installing new equipment was, of
course, the reason the companies had, according to the
E.P.A., skirted the new-source review rules in the first
place. (Still, the companies were not about to be put out
of business by complying with E.P.A. regulations. In 1999,
the Southern Company reported profits of $1.3 billion.)

The utility industry immediately turned to the
Republican-controlled Congress for relief from the
lawsuits. A few days after the suits were announced, power
companies and industry trade groups asked sympathetic House
members to attach a rider to an appropriations bill. The
rider would allow companies to perform ''routine
maintenance'' while the lawsuits were pending. In the
opinion of the rider's opponents, it would let power
companies perform more illegal retooling while the
industry's lawyers delayed the E.P.A.'s lawsuit in court.
But Representative C.W. Bill Young, a Tampa-area
Republican, unexpectedly turned a deaf ear to the overtures
of his local utility company, Tampa Electric, and refused
to put the rider on the bill. As chairman of the House
Appropriations Committee, Young had fought to keep House
members from sneaking special-interest riders onto spending
bills. He stood on principle, and the rider died.

Faced with Congressional rejection and mounting fines, some
utilities struck bargains with the federal government.
Tampa Electric, unable to make any headway with Young,
agreed in February 2000 to spend more than $1 billion on
new pollution controls and pay a $3.5 million civil
penalty. The agreement took 123,000 annual tons of
pollution out of the sky, and the civil penalty amounted to
a little less than 2 percent of Tampa Electric's profits
from 1999. Officials at some other utilities followed Tampa
Electric to the negotiating table.

But others took an alternate route: they started writing
checks to George W. Bush's presidential campaign fund. The
Bush campaign had a special title for contributors who
raised at least $100,000: Pioneers. Among the more than 200
Pioneers during the 2000 Bush election campaign were
FirstEnergy's president, Anthony Alexander; Reliant
Resources' C.E.O., Steve Letbetter; and Reliant's chairman,
Don Jordan. (MidAmerican Energy's C.E.O., David Sokol, has
joined the elite rank for the 2004 re-election campaign;
Southern Company's executive vice president Dwight Evans
has been named a Ranger, meaning he has raised more than
$200,000.) Each of these executives' companies was either
in litigation or was soon to be under investigation for
new-source review violations. Six other Pioneers were
lawyers or lobbyists for companies charged with N.S.R.
violations.

Even in the early stages of Bush's 2000 run, energy
executives understood what strong support of a winning
candidate could mean. Thomas R. Kuhn, a Yale classmate of
President Bush's and president of the Edison Electric
Institute, was a 2000 Pioneer and is a Pioneer for the 2004
campaign as well. On May 27, 1999, Kuhn sent
energy-industry executives a confidential memo, later made
public in the course of a lawsuit, advising them to bundle
their contributions to the Bush campaign under a tracking
number to ''ensure that our industry is credited'' for its
generosity.
After Bush eventually emerged as the winner of the 2000
election, industry leaders were upbeat about the prospect
of the coming four years. The president and the vice
president, Dick Cheney, were, after all, oilmen. The
coal-industry trade magazine Coal Age exulted in the
industry's ''high-level access to policymakers in the new
administration.'' Soon after Bush's inauguration, the
electric utilities sought relief from the E.P.A. and its
new-source review program. The problem was that most voters
-- including Republican voters -- opposed rollbacks. A
Gallup poll in 2001 found that 81 percent of Americans
supported stronger environmental standards for industry.
According to another 2001 poll, only 11 percent thought the
government was doing ''too much'' to protect the
environment.

Previous Republican leaders tried to enact a pro-industry
environmental agenda and met with only limited success. In
1981, President Reagan took office promising that in his
administration the E.P.A. would have ''leaders who know and
care about the coal industry.'' He appointed as head of the
E.P.A. Anne Gorsuch, an attorney who had fought the
E.P.A.'s enforcement of clean-air laws, and he named James
Watt, a staunch defender of private enterprise against
environmental regulation, as secretary of the interior.
Watt pushed to open up potential federal wilderness lands
to developers. Gorsuch took office under instructions from
the White House to make the E.P.A. more friendly to
industry. Within two years, they had become provocative
symbols of anti-environmentalism and were forced to resign
in separate scandals. Similarly, in 1994, Newt Gingrich and
his House Republicans rode into power determined to weaken
the Clean Water Act and the E.P.A.'s Superfund program.
Their bold frontal attacks galvanized environmental
activists and the Clinton administration, and Congress was
persuaded to leave the laws alone.

The Bush administration seemed determined not to repeat
those political mistakes. Taking a lesson from Reagan's
experience with Gorsuch and Watt, Bush officials realized
that it would be self-defeating to appoint to public
positions people with outspoken views on the environment,
so they found noncombative figures instead. They named as
head of the E.P.A. Christie Whitman, who was seen as a
moderate when she was appointed, in part because she had
participated in a clean-air lawsuit against a power company
as governor of New Jersey. Learning from the Gingrich
defeat, administration officials recognized that bills that
overtly attacked environmental protections stood little
chance of surviving in Congress. So they adopted a
two-track strategy. Publicly, the president asked Congress
to pass major environmental legislation like the Clear
Skies Initiative and a sweeping energy bill, which he knew
would face considerable opposition. Privately, the
president's political appointees at the Department of the
Interior, Environmental Protection Agency, Department of
Agriculture and Office of Management and Budget would carry
out those same policies less visibly, through closed-door
legal settlements and obscure rule changes.

One key element of the strategy was putting the right
people in under-the-radar positions. The Bush
administration appointed officials who came directly from
industry into these lower rungs of power -- deputy
secretaries and assistant administrators. These second-tier
appointees knew exactly which rules and regulations to
change because they had been trying to change them, on
behalf of their industries, for years. One appointee was
Jeffrey Holmstead, a lawyer and lobbyist for groups like
the Alliance for Constructive Air Policy, an electric
utility trade group that sought to weaken the Clean Air
Act. Holmstead stepped into the role of assistant E.P.A.
administrator for air and radiation, where he would oversee
changes to new-source review.

IV.

In the past, industry succeeded in blocking environmental
reforms by arguing that they would mean lost jobs. But the
jobs-versus-the-environment defense became less convincing
during the economic expansion of the 90's, which took place
under the relatively tough environmental restrictions of
the Clinton administration. The Bush administration needed
a different engine of necessity to propel environmental
rollbacks like the scuttling of new-source review. It found
one in the Cheney energy task force.

Nine days after his swearing in, President Bush created the
National Energy Policy Development Group, a task force
headed by Vice President Dick Cheney and charged with
developing a national energy policy. The timing of Bush's
ascendance to the presidency could not have been better for
the energy industry. When Bush came to office, the nation
was riveted by a bizarre energy crisis unfolding in
California. We now know that California's energy shock was
largely caused by market manipulation (by Enron, among
other companies) and regulatory breakdown, not by a drought
in supply. But we didn't know it then. A few days after he
created the energy task force, President Bush went on CNN
and blamed environmentalists for the crisis. ''If there's
any environmental regulation that's preventing California
from having 100 percent max output at their plants -- as I
understand there may be -- then we need to relax those
regulations,'' he said. California utility officials denied
that environmental rules had anything to do with the
crisis. But their protests didn't matter. The president had
forged the link.

Cheney's energy task force solicited suggestions from
various quarters, but few outside a tight circle of
industry insiders were able to make themselves heard.
Although the vice president continues to fight a lawsuit --
now before the Supreme Court -- that would require him to
divulge the names of industry executives consulted by his
task force, documents released in the course of the legal
battle reveal the tenor of the exchanges.

On March 18, 2001, Joseph Kelliher, a top assistant to
Energy Secretary Spencer Abraham, e-mailed Dana Contratto,
an energy-industry lobbyist. ''If you were King, or Il
Duce,'' Kelliher wrote, ''what would you include in a
national energy policy . . . ?'' Apparently that was one of
many e-mail messages to industry lobbyists, for Kelliher's
electronic mailbox was soon pinging with activity. A March
20, 2001, message from Jim Ford, lobbyist for the American
Petroleum Institute, a powerful oil-and-gas-industry trade
group, included a ready-made decree. ''The last document,''
Ford wrote, referring to one of 10 attachments, ''is a
suggested executive order to ensure that energy
implications are considered and acted on in rulemakings and
other executive actions.'' President Bush would issue a
very similar executive order two months later, the day
after the energy task force report was released.

Another Kelliher correspondent, Stephen Sayle, a Republican
Congressional aide, who is now an energy lobbyist, added a
somewhat abashed note to the end of his March 23, 2001,
wish list, which included a plea to stop enforcement of
new-source review. ''Obviously, this is a dream list,'' he
wrote. ''Not all will be done. But perhaps some of these
ideas could be floated and adopted.'' In fact, Sayle was
being needlessly pessimistic; most of the items on his
list, many of which dealt with new-source review, were
eventually adopted.

Many more wish lists arrived at the Energy Department, and
many of them led with the same idea: gutting new-source
review. In case the administration didn't get the message,
a consortium of energy companies hired Haley Barbour,
former chairman of the Republican National Committee, to
press their cause in a face-to-face meeting with Vice
President Cheney. According to a recent article by
Christopher Drew and Richard A. Oppel Jr. in The New York
Times, Barbour was accompanied in that meeting by Bush's
friend Marc Racicot, who is now chairman of the president's
re-election campaign.

Over at E.P.A., Whitman and other top officials tried to
resist the policy changes coming out of the Energy
Department. When a draft of the National Energy Policy
circulated in late April 2001, Tom Gibson, an associate
E.P.A. administrator appointed under President Bush, sent a
memo to the task force director arguing that one of the
president's, and the policy's, fundamental assumptions --
that environmental regulations had hamstrung American
domestic energy production -- was flat wrong. ''Costs of
compliance with environmental regulations are overstated,
several inaccurate statements and opinions are presented as
factual and no citations are provided for many of these
statements,'' Gibson wrote. He and other E.P.A. officials,
he continued, ''are very concerned that this language is
inaccurate and inappropriately implicates environmental
programs as a major cause of supply constraints. . . . Such
a conclusion, in our opinion, is overly simplistic and not
supported by the facts.''

Whitman, who was a member of Cheney's task force, often
found herself and Treasury Secretary Paul O'Neill acting as
the panel's only defenders of environmental protections. In
Ron Suskind's recent book ''The Price of Loyalty,'' O'Neill
recalls Whitman saying after one meeting: ''This is a
slaughter. It's 10 on 2, not counting White House people
and all the advisers to the group from the various
industries.'' (Whitman, who is co-chairman of President
Bush's re-election campaign in New Jersey, declined to
comment for this article. According to her spokesman, she
has criticized O'Neill's book as inaccurate in many of its
details.)

Whitman was in an especially tough position with respect to
new-source review. Thirteen months before she was named to
the Bush cabinet, when she was governor of New Jersey,
Whitman joined a lawsuit to force Ohio-based American
Electric Power to clean up its coal-fired plants, and now
that she was head of the E.P.A., American Electric was one
of the seven utilities the agency was suing for new-source
review violations. In the spring of 2001, as the energy
task force was completing its work and preparing its
report, Whitman understood that new-source review faced
effective elimination under industry pressure, and she
worried about the environmental and political implications
of such a move. In May 2001, less than two weeks before the
final energy report was released, Whitman sent a memo to
Cheney. ''As we discussed, the real issue for industry is
the enforcement cases,'' she wrote. ''We will pay a
terrible political price if we undercut or walk away from
the enforcement cases; it will be hard to refute the charge
that we are deciding not to enforce the Clean Air Act.''

President Bush's final National Energy Policy (N.E.P.) was
published on May 16, 2001. In its 170 well-designed,
color-illustrated pages lay the administration's vision of
the environmental future of the United States. The policy's
defining notion was simple: environmental regulations have
constrained America's domestic energy supply. In broad
strokes, the N.E.P. laid out the next three years of the
Bush administration's energy and environmental agenda: roll
back wilderness and wildlife protections to open up more
public land to oil and gas development; establish
fast-track hydropower permits; expand offshore oil and gas
drilling; and replace tough Clean Air Act rules, including
new-source review, with an industry-friendly market-based
pollution trading system. These weren't items on a wish
list. They were marching orders. Among the first to be
carried out was the mandate to overhaul new-source review.

To that end, the White House directed the Justice
Department to review its cases against the Southern
Company, American Electric and others to see if any of the
suits might be dropped outright. According to a senior
E.P.A. adviser supportive of the administration's policies,
who spoke on condition of anonymity, ''The administration
believed some of those cases were brought'' -- by the
Clinton Justice Department -- ''without regard to whether
they were really egregious violations of the Clean Air Act
worthy of enforcement.'' Certain lawsuits, he said, ''were
regarded as more punitive than designed to achieve
environmental goals.''

During the same period, Bush appointees at the E.P.A.
disbanded Robert Perciasepe's N.S.R. working group and, led
by Jeffrey Holmstead, the former industry lobbyist who had
become an assistant administrator at the E.P.A., started to
rewrite the rules. Publicly, the president ordered the
agency to conduct a 90-day review of its new-source rules,
and officials dutifully sat through four public hearings
during the summer of 2001 and took note of the hundreds of
comments regarding the policy. Privately, though, the
E.P.A. and the Energy Department were already moving to
undo new-source review. At a Senate hearing that July,
Whitman outlined a plan to replace the E.P.A.'s toughest
clean-air programs with a more flexible, industry-friendly
regimen. ''New-source review is certainly one of those
regulatory aspects that would no longer be necessary,'' she
said.

The Energy Department took an unusually active role in
drawing up the proposed new-source review changes. In
November 2001, D.O.E. officials circulated their proposed
changes among the E.P.A. staff for feedback. Officials at
the E.P.A.'s air-enforcement division were appalled. ''The
current draft report is highly biased and loaded with
emotionally charged code words,'' E.P.A. officials wrote in
an internal memo. ''It is drafted as a prelude to
recommendations to vitiate the N.S.R. program.'' The
agency's memo noted that the report ''contains only
comments by industry and ignores the comments of all other
stakeholders.''

In January 2002, the White House suffered a setback. The
Justice Department delivered its report on the legality of
the E.P.A.'s lawsuit against the Southern Company and other
N.S.R. violators. The department found that contrary to the
administration's hopes, all of the lawsuits were legal and
warranted. In fact, Justice's lawyers said they intended to
prosecute the cases ''vigorously.''

Shortly thereafter, White House officials decided it was
time to try the Congressional track. On Feb. 14, 2002,
President Bush unveiled his Clear Skies Initiative. The
president declared that his proposed legislation ''sets
tough new standards to dramatically reduce the three most
significant forms of pollution from power plants -- sulfur
dioxide, nitrogen oxides and mercury.''
It was true that the new standards, if enforced, would
reduce emissions from their current rate -- but the
president's formulation was somewhat misleading. Clear
Skies was to replace Clean Air Act regulations with a
cap-and-trade market system. On its face, that was not an
unreasonable proposition. Many Republicans and some
moderate Democrats embrace the general concept of
cap-and-trade, in which Washington sets pollution standards
for the entire country (the ''cap'') and then allows
companies that manage to reduce their emissions below the
standard to sell their extra pollution ''allowance'' to
companies that haven't met the standard (the ''trade'').
The key to cap-and-trade lies in the standard -- how low it
is set and how quickly it shrinks. And when President Bush
announced Clear Skies, the E.P.A. was already on track to
require deeper reductions in air pollution than his
cap-and-trade proposal would produce. So the air would
actually be dirtier under Clear Skies than if the president
allowed the E.P.A. to enforce the existing law. Clear Skies
allowed 50 percent more sulfur dioxide, nearly 40 percent
more nitrogen oxides and three times as much mercury as the
Clean Air Act -- rigorously enforced -- called for.

Because of this discrepancy, the legislation was not
greeted with much enthusiasm in Congress. Clear Skies
wasn't helped by the fact that a former top E.P.A. official
went on ABC's ''This Week'' to denounce the proposal two
weeks after it was introduced. ''We can do better under
current law than what they're putting on the table,'' Eric
Schaeffer told George Stephanopoulos. Schaeffer, the
E.P.A.'s head of civil enforcement from 1997 to 2002, had
worked on the new-source review lawsuits since their
inception. He left the E.P.A. in early 2002, tired, as he
said in his letter of resignation, of ''fighting a White
House that seems determined to weaken the rules we are
trying to enforce.''

Schaeffer's frustration stemmed from the collapse of talks
that had been leading, in his estimation, to the
elimination of more than four million tons of air pollution
annually. Officials at the power companies named in the
new-source review lawsuits, who had been negotiating with
E.P.A. officials, were well aware that White House
appointees were drafting new rules that would all but
scuttle N.S.R., and they lost their incentive to cut deals.
Beginning in 2001, soon after Bush took office,
negotiations began to break down. ''We were 80 percent of
the way done with seven or eight companies, and one by one
they just walked away,'' said Bruce Buckheit, who conducted
many of the negotiations himself. Even done deals fell
apart. In late 2000, E.P.A. officials reached an agreement
in principle with Cinergy that was designed to cut nearly
500,000 tons of the company's annual emissions. By 2002,
Cinergy had backed out.

Christie Whitman did little to help the negotiations. In
her testimony before the Senate Committee on Government
Affairs in March 2002, she described new-source review as
''a program that needs to be fixed,'' but assured the
committee that the E.P.A. would not eviscerate the program.
Later in her testimony, though, Whitman offered unsolicited
advice to the companies her agency was suing for N.S.R.
violations. At the time, the Tennessee Valley Authority,
which had refused to settle with the Justice Department,
had gone to court to challenge the E.P.A. over new-source
review. ''If I were a plaintiff's attorney,'' Whitman said,
''I would not settle anything until I knew what happened''
with the T.V.A. case. The message to the power industry,
critics charged, was clear: don't settle the cases; change
is coming.

V.

Meanwhile, Bush appointees at the E.P.A. and the Energy
Department continued to undo the longstanding N.S.R. rules.
There was one technical question that was very important to
both sides: where would the line be drawn between ''routine
maintenance'' of plants, meaning changes that did not
trigger N.S.R. pollution upgrades, and significant
overhauls that did. In the spring of 2002, Jeffrey
Holmstead, the E.P.A.'s assistant administrator, asked
Sylvia Lowrance, the E.P.A.'s deputy assistant
administrator for enforcement, to suggest a financial
threshold -- a percentage of the total value of each
generator that a utility would be permitted to spend on
renovations and still define them as routine. Lowrance, a
24-year veteran of the agency, had officials in her office
study years of data, looking at figures that came from
actual power plants, and on June 3, 2002, she wrote a memo
to Holmstead indicating that her office thought 0.75
percent was a reasonable figure. (The memo was later
released to reporters by a former E.P.A. official critical
of the administration's policies.) In other words, if the
total value of a generating unit was $1 billion, a power
company should be able to legitimately spend up to $7.5
million a year on routine repair and maintenance without
being required to install new pollution controls.

In a separate memo, Lowrance, Buckheit and Schaeffer warned
Holmstead that the proposed changes in new-source review
could seriously undermine the E.P.A.'s lawsuits against
N.S.R. violators. There were several proposed changes, they
wrote, ''that, if included in the final version of the
recommendations, could undercut ongoing enforcement
activities, including efforts to reach environmentally
beneficial settlements.'' Holmstead does not appear to have
worried much about the warning from his colleagues. A few
weeks later, on July 16, 2002, he went before Congress and
testified that officials at the E.P.A. ''do not believe
these changes'' -- to new-source review -- ''will have a
negative impact on the enforcement cases.''

Holmstead did not seem to believe in the very notion of
new-source review. Speaking at an energy-industry
conference in Washington in September 2002, Holmstead noted
that N.S.R. had spawned thousands of pages of guidance
documents, and, he said, ''we can't even say we've gotten
any emissions reductions from existing sources.'' The
E.P.A.'s own documents, however, show that from 1997 to
1999 alone, the program reduced emissions nationwide by a
total of more than four million tons. Holmstead's statement
also ignored the fact that the main reason the new-source
review law hadn't brought greater across-the-board
pollution reductions was that many power companies had
systematically violated it for 20 years. (Holmstead
declined to be interviewed for this article.)

Through the spring and into the summer of 2002, President
Bush's Clear Skies Initiative was stalled in Congress. The
bill's principal sponsor, Representative Joe Barton, a
Texas Republican, formally introduced it on the last Friday
in July 2002, just before the House adjourned for summer
vacation. That fall, an internal E.P.A. analysis, later
leaked to the media, found that a rival bill sponsored by
Senator Tom Carper, a Democrat from Delaware, would reduce
more emissions, on an earlier schedule and at a comparable
cost to consumers, than the president's Clear Skies plan.
If the Bush administration was going to bring about
changes, it was becoming clear that they would have to be
done administratively.

The E.P.A. revealed its overhaul of new-source review on
Friday, Nov. 22, 2002. For all the buildup, it was a
conspicuously low-key debut. President Bush issued no
statement about the new guidelines. Christie Whitman
declined to attend the news conference, which was run by
Jeffrey Holmstead. Cameras were not allowed at the event,
which seemed timed to hit the weekly news cycle at its
Friday night nadir.

''There will be emissions reductions as a result of the
final rules that we are adopting today,'' Holmstead said.
The new rules gave utilities much more maneuverability
under N.S.R. The E.P.A. adopted Carol Browner's old
''micro-cap'' idea -- but abandoned its critical component,
the gradual tightening of the cap. Utilities that installed
new pollution-control equipment were given 10-year
exemptions from further upgrades. An official with the
National Association of Manufacturers called the new rules
''a refreshingly flexible approach to regulation.'' The
usually staid American Lung Association, in a report issued
with a coalition of environmental groups, called the rule
changes ''the most harmful and unlawful air-pollution
initiative ever undertaken by the federal government.''

VI.

Bush's E.P.A. appointees left one crucial detail out
of the final report. They said they were still working on a
final revision of N.S.R. having to do with the often
contested definition of ''routine maintenance.'' The agency
published its proposed rule in the Federal Register but
left the crucial percentage -- the one Sylvia Lowrance and
the E.P.A.'s enforcement office had suggested setting at
0.75 percent -- unspecified.

In early 2003 -- before that important percentage was
arrived at -- the Bush changes were being challenged. The
attorneys general of nine states filed suit to stop the new
rules from taking effect. Attorney General Eliot Spitzer of
New York and his colleagues, almost all of whom were from
states in the Northeast, charged that the changes were so
sweeping and damaging that the E.P.A. could not make them
without Congressional approval. The lawsuit argued, in
effect, that the Bush administration's entire
administrative approach to undoing new-source review was
against the law. Administration officials brushed off the
suit as a political maneuver, noting that most of the
attorneys general were Democrats.

On Aug. 27, 2003, two days before Labor Day weekend, the
other N.S.R. shoe dropped. By then, Whitman was gone,
having announced her resignation in May. She said she was
tired of making the New Jersey-to-Washington commute and
wanted to spend more time with her husband. ''I'm not
leaving because of clashes with the White House,'' she said
in a television interview. ''In fact, I haven't had any.''
A number of career E.P.A. officials told me they suspected
that she'd had enough of the White House's dictating
policies with which she disagreed, but, if true, Whitman
never let on.

So it was Marianne Horinko, acting E.P.A. administrator,
who announced in August that the agency had finalized its
rule on routine maintenance. The new formula would not
adopt Lowrance's suggested threshold of 0.75 percent.
Instead, Horinko said, utilities would be allowed to spend
up to 20 percent of a generating unit's replacement cost,
per year, without tripping the N.S.R. threshold.

In other words, a company that operated a coal-fired power
plant could do just about anything it wanted to a $1
billion generating unit as long as the company didn't spend
more than $200 million a year on the unit. To E.P.A.
officials who had worked on N.S.R. enforcement, who had
pored over documents and knew what it cost to repair a
generator, the new threshold was absurd. ''What I don't
understand is why they were so greedy,'' said Eric
Schaeffer, the former E.P.A. official. ''Five percent would
have been too high, but 20? I don't think the industry
expected that in its wildest dreams.''
The framework of new-source review would remain, but the
new rules set thresholds so high that pollution-control
requirements would almost never come into effect. ''It's a
moron test for power companies,'' said Frank O'Donnell,
executive director of the Clean Air Trust, a nonprofit
watchdog group. ''It's such a huge loophole that only a
moron would trip over it and become subject to N.S.R.
requirements.''

The report from the American Lung Association and various
environmental groups estimated that compared with
enforcement of the old N.S.R. rules, the new rules would
result in emissions increases of 7 million tons of sulfur
dioxide and 2.4 million tons of nitrogen oxides per year by
2020. Had the new rules been in effect before 1999, the
lawsuits that the Justice Department filed against the
power companies would have been impossible: nearly every
illegal action the power companies were accused of back
then would have been legal under the new rules.

The announcement of the 20 percent limit had a devastating
effect on the E.P.A.'s enforcement division. ''Under the
new rules,'' Buckheit said, ''almost everything we worked
to achieve is wiped out.'' Two months after Horinko's
announcement, in November 2003, J.P. Suarez, the
Bush-appointed E.P.A. assistant administrator for
enforcement, informed staff members that the agency would
newly ''evaluate,'' and perhaps choose not to pursue,
existing N.S.R. investigations, except those cases that the
Justice Department had already taken to federal court.
Investigations into 70 companies suspected of violations of
the Clean Air Act were abandoned.

On Christmas Eve, 2003, two days before the new-source
review rules were to take effect, a federal appeals court
halted their implementation. The court ruled that the new
regulations could not go into effect until the lawsuit
brought by Eliot Spitzer and 14 other attorneys general (6
more had joined the suit since its inception) was heard.
The ruling meant that the new rules would be delayed for at
least a year and signaled the beginning of what could be a
years-long legal battle.

By the end of 2003, with new-source review all but dead,
the White House began moving on to other projects. Mike
Leavitt, the newly installed E.P.A. administrator, proposed
two new regulations. The first suggested new standards for
mercury emissions that would in the short term permit the
release of as much as seven times as much mercury as
current law allows. The second, known as the interstate
air-quality rule, set new national caps on sulfur dioxide
and nitrogen oxides, and was seen by many as the
administrative enactment of Bush's Clear Skies Initiative.
Supporters of the administration contend that the
interstate air-quality rule will accomplish all the goals
of new-source review in a more efficient and comprehensive
way. ''All the arguments about N.S.R. and the ability to
control pollution from power plants are made moot'' by the
new rule, according to the senior E.P.A. adviser who is a
supporter of the administration's policies and spoke on
condition of anonymity.

Yet the new rule set higher national limits for emissions
of dangerous chemicals like sulfur dioxide and nitrogen
oxides than Clear Skies, which in turn was considered by
critics to be weaker than the existing Clean Air Act.
Around that time, some longtime E.P.A. officials decided
they'd had enough. Bruce Buckheit and Rich Biondi,
Buckheit's deputy, took retirement buyouts and left the
agency. Buckheit and Biondi said they could no longer carry
out their jobs effectively, given the Bush administration's
attitude toward the Clean Air Act.

The White House's reversal of clean-air gains was
especially disturbing to Biondi, who joined the agency in
1971, six months after its inception under President Nixon.
The rule changes and the abandonment of the new-source
review investigations ''excuse decades of violations,'' he
said. ''We worked 30 years to develop a clean-air program
that is finally achieving our goals. It was frustrating to
see some of our significant advances taken away. I left
because I wanted to make a difference, and it became clear
that that was going to be difficult at the E.P.A.''

Bruce Barcott is a contributing editor at Outside magazine.
This is his first cover article for The Times Magazine.

MAGAZINE DESK | April 4, 2004, Sunday
Changing All the Rules

By Bruce Barcott (NYT) 8260 words
Late Edition - Final , Section 6 , Page 38 , Column 1

http://www.nytimes.com/2004/04/04/magazine/04BUSH.html?ex=1082188227&ei=1&en=033ce90c9c3f29cb

Copyright 2004 The New York Times Company

Send comments to stoner1@csus.edu