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A Billion-Dollar Industry Devoted to Stopping Progress

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Washington, DC -- This morning, the Justice Department announced that American Electric Power (AEP) -- one of the most recalcitrant operators of outmoded, dirty coal power plants in the country -- has agreed to spend $4.6 billion cleaning up its 46 dirty units in the Ohio Valley, including three of the nation's twenty dirtiest facilities. The settlement was the penalty for AEP violating the Clean Air Act requirement that plants be cleaned up when they are modernized. The case was initiated by the Sierra Club back in 1999 and was joined by other environmental groups and some of the effected downwind states. The Bush Administration attempted to undercut this action with the misleadingly named "Clear Skies" proposal, but when Congress rebuffed the White House, the Justice Department became involved.

This is a stunning victory, and it comes just one day after Illinois Senator Barack Obama significantly raised the bar in the presidential race by coming out in support of the idea that polluters should pay for the right to spew greenhouse gases. The candidate from Illinois proposes implementing a 100% auction of emission permits.

In other news this week, Standard and Poors issued a sharp warning that continued reliance on coal-fired power would make utilities a major credit risk. Forbes quotes said S&P credit analyst David Bodek:

We recognize that coal-fired assets meet the pressing need for economical baseload capacity, particularly after the long hiatus since utilities last added large quantities of this type capacity to their generation fleets. ... Yet, our evaluations must also recognize the financial impact that carbon emission constraints might have on coal operators in coming years.

But as I spent yesterday on Capitol Hill lobbying on pending energy legislation, it was clear that turning energy policy around in Congress will be a major struggle.

While both Majority Leader Reid and Speaker Pelosi are deeply committed to combining the best features of the House and Senate legislation -- better fuel economy standards, market access for renewable power, and ending some of the worst subsidies to the oil industry -- there is resistance on both sides of the aisle. Efforts, for example, to repeal the provisions of the 2005 Energy Bill that give the federal government the right to seize private property for the benefit of utilities, have failed to date in both the House and Senate -- and failed even though they have unpopular and unsupportable consequences: these National Interest Electric Transmission Corridors greatly expand the federal government's powers of eminent domain, override state/local control and federal environmental regulations, and are designed exclusively to allow utilities like AEP to ship cheap electricity from dirty, aging coal-fired power plants in the Ohio River Valley and Appalachia into high-rate electricity markets like New York City.

At a breakfast on Tuesday with Virginia Governor Tim Kaine, I had a chance to see firsthand the depth of local anger in Virginia at one of the proposed power lines; it has pushed Republican Congressman Frank Wolf into a virtual rebellion against public utility influence over his party.

Why is this happening? Well, one senior staffer I met with commented on the difference between Washington, where things are moving forward very slowly, and the states, where progress is steadily accelerating, and said, "You have to remember -- lobbying is a billion-dollar business in this town devoted to stopping progress, and the states don't have that kind of obstacle. Tom DeLay's K Street Project worked, and American business is getting its advice on federal policy from ideologues who really don't believe in the 21st century."