The Yale Law Journal

June 2003

Billboards and Big Utilities: Borrowing Land-Use Concepts To Regulate "Nonconforming" Sources Under the Clean Air Act

Deepa Varadarajan
112 Yale L.J. 2553 (2003)

I have suggested the incorporation of amortization provisions as a potential solution to the continued emissions problem posed by coal-burning electric utilities built prior to the original Clean Air Act. Thirty years after the Act's passage, these problematic sources have not, as the original framers of the Act hoped, died after a "natural life" of thirty or forty years. Instead, the Act's "old-new" division in pollution-control technology requirements has, perversely, conferred unforeseen economic advantages and extended the lives of these outdated plants. Although the New Source Review and Prevention of Significant Deterioration programs have had minor success in narrowing the old-new divide, the majority of old sources remain untouched by the dictates of increasingly stringent control technology requirements imposed upon their new source counterparts.

Today, the threat of an expanding old-new divide looms even larger. A broadening of the interpretation of "routine modification" proposed by the Bush Administration EPA would serve to further cement the grandfathered status of old electric utilities. Proponents of the rules change contend that owners of these utilities face a Hobson's choice, deterring them from modernizing their plants and making efficient changes for fear of triggering NSR/PSD pollution-control technology requirements. Indeed, the incentives for making efficient changes to grandfathered sources are perverse. It is a perversity that has evolved from trying to achieve un-grandfathering through the back door, so to speak. But, it is also a perversity that has arisen and been addressed in another context: the land-use context. Using the evolution of zoning law as a guide, a takings-friendly solution to this "Hobson's choice" becomes visible: the imposition of uniform amortization provisions.

The conceptual problem posed by old, coal-burning utilities in the context of air pollution regulation has proven highly analogous to the problem of nonconforming uses in the zoning context. Preexisting nonconforming uses in the land-use context could not be abolished outright without compensation due to the constitutional protection afforded property owners against unjust takings. In response to this problem, a pattern of land-use doctrine emerged that is remarkably similar to the evolution of air pollution regulation over the past thirty years. Namely, restrictions were put upon the ability of a nonconforming-use owner to make changes to her property. If the owner made any significant changes to the nonconforming use, the use would no longer be permitted to continue. Similarly, after the enactment of the NSR and PSD programs in the 1977 CAA Amendments, any "major modification" would render a grandfathered facility "good as new" for regulatory purposes. In both cases, these attempts to rein in old, nonconforming facilities proved insufficient. In the zoning context, however, the technique of amortization emerged as a way to eliminate nonconforming uses provided that the amortization period was reasonable. This technique was never incorporated into the air pollution context, and, in this Note, I contend that this omission was a mistake that should be remedied through immediate legislative action.

While the specifics of an amortization program, which would replace the NSR and PSD programs in dealing with the electric utilities built prior to the original CAA, are beyond the scope of this Note, I highlight one important guideline in the establishment of "reasonable" amortization periods--the use of full-time baselines, which would mandate that BACT requirements be met in a few years. Also, because old plants have been afforded unforeseen economic advantages as a result of the two-tiered framework established thirty years ago, the "amortization compensation equation," a vein of judicial reasoning that emerged in the billboard context, has particular relevance. Although the view of amortization as compensation due to the monopolistic position afforded the owners of a nonconforming use has decreased in popularity in the context of aesthetic billboard regulation, the shift is a result of a highly contentious and questionable amendment to the Highway Beautification Act. If ever a situation merited the legislative resuscitation of the amortization compensation equation, the problem posed by grandfathered electric utilities seems the ideal scenario. In this way, through the careful incorporation of amortization provisions mandating the imposition of best available control technology for old sources, the thirty- to forty-year un-grandfathering erroneously imagined by the original framers of the 1970 Clean Air Act can at last become a plausible, effective, and long awaited reality.