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<title>September 2001: Hard Green Machine</title>
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<p align="left"><font face="Arial"><strong><small>About The Author:<br>
<br>
</small></strong><span lang="X-NONE" style="color: black"><font size="2">
ROGER FELDMAN, Co-Chair of Andrews Kurth LLP Climate Change and Carbon
Markets Group has practiced law related to the finance of environmental and
energy projects and companies for 40 years. In particular, he has analyzed
and executed a wide variety and substantial value of project financings. He
chairs the American Bar Association’s Committee on Carbon Trading and
Finance, serves on the Board of the American Council for Renewable Energy,
and has been a senior official in the Federal Energy Administration. He is
a graduate of Brown University, Yale Law School and Harvard Business School.</font></span></font></p>
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<img src="../images/feldman.gif" alt="Washington Viewpoint by Roger Feldman" border="0" width="375" height="75"><p><b><u><br>
September 2001</u><br>
</b></p>
<p><font size="6">Hard Green Machine</font></p>
<p><strong>by Roger Feldman -- Bingham, Dana L.L.P.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
200</em>1/10/06)<br>
</font></p>
<p ALIGN="JUSTIFY">While center stage in the electric industry has been the
deregulation debate about delivery system rights, the really big stakes are
in the contest over what fuels will be used to produce the power delivered.
That contest is what traditionally has precipitated what euphemistically has
been termed "the clash between environmental policy and competition in
electric supply." The Administration allegedly has another title for this
phenomenon: "The Energy Crisis: Getting the Environmentalists the Hell Out
of the Way." Its opponents, never known for their reserve either, also
allegedly have a title for it: "Deregulation: Putting Dirty or Dangerous
Power into Defenseless Consumer Markets."</p>
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<p ALIGN="JUSTIFY"></p>
</font>
<p ALIGN="JUSTIFY">The Administration’s premise in this debate is presumably
that of Dr. Peter Huber, author of <i>Hard Green: Saving the Environment
from the Environmentalists</i>; no matter what the government does, society
will need more energy in total and individuals will want more power in
devices. The response is clear in the Cheney Energy Crisis Report ("EC" for
short): more coal, back to nukes, no more pusillanimous pussyfooting and
whimpering. (One really has to wonder who was in the secret sessions
crafting this EC beauty; could it have included the Peabody Coal interests,
said to have donated a total of $700,000 to the Bush campaign effort?) </p>
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<p ALIGN="JUSTIFY"></p>
</font>
<p ALIGN="JUSTIFY">While the implementation of the EC may roil around in
Congress for awhile, the Administration is not waiting; it is plucking at
the "regulatory constraints" to its proposed policy in ways described below,
and without what is delicately called "environmental sensitivity." The point
is not that the Administration is right or wrong, but that in doing so it is
bringing together the deregulation and the energy/environment debates –
possibly with the result of debilitating public acceptance of necessary
power industry reform, at least to the extent the public cares about
environmental issues. Here are the cases in point on the EC triad – coal,
nuclear and transmission – which may be expected to be in the Washington
limelight for awhile to come.</p>
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<p ALIGN="JUSTIFY"></p>
</font>
<p ALIGN="JUSTIFY">The poster child of the Administration’s environmental
policy was its pullback from campaign support for the Kyoto Treaty with
respect to CO2. This little "clarification" saved coal (which is used in
power plants that pump twice as much CO2 into the air as cars) from being an
atrophying fuel source, as gas-fired combined cycle merchant plants of ever
larger dimensions best rode the deregulating generation environment. Indeed,
while attention has focused on the latest generation of clean coal research
proposed by EC, the more important commercial developments are that private
power developers have begun to launch a significant number of coal plant
proposals (even waste coal reuse facilities are coming back to life) and
some coal States like Illinois have passed significant incentive
legislation.</p>
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<p ALIGN="JUSTIFY"></p>
</font>
<p ALIGN="JUSTIFY">EC also triggered a review by mid-August of the impact of
the Clean Air Act regulations (including the New Source Review Standards,
which were the basis of major Clinton Administration suits against ongoing
operations of upgraded, dirty old grandfathered plants). What a great
surprise that by late July, trial balloons of Administration plans to
"streamline" the paperwork on the Clean Air Act and act in a "less
intrusive" manner, ostensibly so utilities will be more willing to invest in
new power plants. (Guess it wasn’t the price caps that were the big problem
after all.) Plans center on using an enhanced pollutant trading system – not
necessarily a bad thing once caps, pollutants and program administration are
agreed to. Incidentally, however, plans are indicative of the intention to
possibly end New Source Review, <i>i.e.</i>, plant-by-plant review of
utility unit modifications completely and to exclude CO2 from any overall
caps. The mining industry has come to call coal "buried sunshine"; the
corollary seems to be: share the pollutant wealth. Maybe it will be picked
up in the Patient’s Bill of Rights . . .</p>
<p>The Clean Air Act is one that must be amended legislatively. Change will
be been hard-fought, glacial and cross-cutting in terms of the sorting out
of legislators’ interests. (In Los Angeles, for example, where the lights
were kept on steadily by LADWP, the power comes from large, out-of-state
coal plants that those socialist monopolists had shrewdly invested in.)</p>
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<p ALIGN="JUSTIFY"></p>
</font>
<p ALIGN="JUSTIFY">Meantime, the Administration has, of course, been forging
forward as well on its nuclear initiative. Several major merchant plant
owners have seized on the potential of acquiring and operating low energy
cost facilities in the deregulated environment. The issue here, besides the
hoary one of nuclear plant safety – perhaps spurious and perhaps responded
to by efficient new small reactor designs – is that of long-term waste
disposal as well as related, not insubstantial, transportation issues. The
battle of Yucca Flats, Nevada – already 12 years behind schedule – involves
nothing less than where the only place (other than outer space, on which Mr.
Rumsfeld has yet to weigh in) to put what even advocates of further study
would acknowledge are the potentially dangerous remains of the generation
process. (Does it tell us anything that the DOE spent $2 million to hire
some professors of semiotics to come up with signage that would last 10,000
years, warning our descendants to stay away from marked nuclear waste
depositories?) The news from Las Vegas is that, after spending 14 years and
$4.5 billion to figure out whether Yucca Mountain could entomb radioactive
waste for that long, the debate at DOE has now morphed into whether
protective storage materials can survive the natural environment at Yucca.
Something about the Mountain being wetter and the geology being more complex
than proponents thought.</p>
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<p ALIGN="JUSTIFY"></p>
</font>
<p ALIGN="JUSTIFY">Not to worry, there’s nothing in EC but thinking makes it
so. An interesting item on the Administration’s overall attitude – which
also could actually legally and legislatively impair its EC initiative –
came out recently. It seems that the same law firm, which has been advising
the DOE’s contractor on the agency’s application for an NRC license for
Yucca as a disposal site, also was lobbying the NRC on behalf of the
industry’s trade association as to the maximum radiation dose people living
near the site could be exposed to. The DOE publicly stated that it found no
conflict of interest. . . </p>
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</font>
<p ALIGN="JUSTIFY">The nuclear disposal debate will be one of the most
important of upcoming Congressional sessions.</p>
<p ALIGN="JUSTIFY">The third leg of the EC stool was the need for new
electricity transmission, Federally imposed through eminent domain, to
achieve currently unobtainable results and presumably better planning
consistency – certainly a necessary and commendable goal necessary for power
deregulation to work fairly, but one plagued in the past by the rogue dwarf
tribes called the NIMBY, which generally seem to congregate along potential
corridors of high voltage lines. Whether their grievances regarding the
potential effect of electromagnetic fields (EMF) exposures has merit is a
scientific one, as to which studies over the past 20 years have trended
toward rejected. This has not deterred guerilla resistance by packs of
NIMBYs in Minnesota, Colorado, and Florida. Most recently, however, their
voodoo ecology received support from a report authored by the California
Department of Health Services, which noted a much stronger correlation
between miscarriages and EMF exposure than previously thought: 40% of the
estimated 60,000 miscarriages might be attributable to exposure to maximum
EMF fields.</p>
<font FACE="Palatino" SIZE="2">
<p ALIGN="JUSTIFY"></p>
</font>
<p ALIGN="JUSTIFY">Now correlation is not the same thing as the causation.
And it is just a little curious that the report was released just prior to
the last-minute push by the forces of Gray Davis to buy the utility’s
transmission system and thereby save SCE from bankruptcy by socializing the
system. But it is pause-inducing to note that the entire DOE budget to
research EMF effects has been eliminated at a time when clearly much
existing transmission is aging, a substantial amount of seam-bridging new
transmission is necessary, and scientific uncertainty seems likely to crop
up in law suits. Maybe it’s not an environmental problem to exercise Federal
eminent domain whenever deemed necessary; or to vote for, in effect, State
rights over real property. But this also is the Congress that’s very steamed
over all other facets of family values.</p>
<font FACE="Palatino" SIZE="2">
<p ALIGN="JUSTIFY"></p>
</font>
<p ALIGN="JUSTIFY">A normally very astute energy observer suggested that the
main implication of deregulation for environmentalists and suppliers of
environmental energy was that now, instead of having to convince the
government of their views and have it impose its will on utilities serving
captive customers, all environmentalists had to do was sell their wares to
consumers. An easier task than when they had to rely on government-pressed,
hostile utilities as the implementers of green policy. That, however, is
Pollyanna pap when the Hard Green Machine is out to crunch your concerns.
Not their problem, may chortle the EC folks. But there is one possibility
that they may have forgotten: when EC calls home, the folks may not like
what they’re beginning to hear about what must be done in the second crusade
for energy independence – and that could burn their affinity for the power
deregulation agenda as well.</p>
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<p class="MsoBodyText" align="left" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:left"><font face="Arial" size="2">
<span lang="X-NONE" style="color: black">ROGER FELDMAN, Co-Chair of Andrews
Kurth LLP Climate Change and Carbon Markets Group has practiced law related
to the finance of environmental and energy projects and companies for 40
years. In particular, he has analyzed and executed a wide variety and
substantial value of project financings. He chairs the American Bar
Association’s Committee on Carbon Trading and Finance, serves on the Board
of the American Council for Renewable Energy, and has been a senior official
in the Federal Energy Administration. He is a graduate of Brown University,
Yale Law School and Harvard Business School.</span></font></p>
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