The Walter C. Beckjord Generating Station sits on the banks of the Ohio River, less than twenty miles southeast of Cincinnati, in Clermont County, Ohio. Beckjord offers a near-perfect case study of the costs of grandfathering. Construction of the plant was announced in November 1948, and its first 100-megawatt coal unit was operational by June 1952. Five additional units came online between 1953 and 1969. Because the units were constructed prior to 1971, all were exempt from the EPA’s New Source Performance Standards. For most of the 1970s, they also managed to avoid complying with any emission limitation under Ohio’s implementation plan for meeting the sulfur dioxide NAAQS, even though Ohio’s original plan, approved by the EPA in 1972, would have subjected Beckjord to a state emission standard—1.6 pounds of SO2 per million Btus of heat input—that was only 33 percent less stringent than the federal new-source standard of 1.2 lbs/MMBtu. In 1973, Ohio utilities convinced the U.S. Court of Appeals for the Sixth Circuit to invalidate the Ohio plan on procedural grounds. The court ordered the EPA to hold an additional hearing at which regulated plants could voice their objections, but before the agency could oblige, the governor of Ohio withdrew the plan from consideration. A year later, Ohio submitted a far less stringent proposal that would have allowed Beckjord to continue emitting at its uncontrolled level: 4.8 lbs/MMBtu. But that plan, too, was struck down on procedural grounds, this time by a state environmental review board. In 1976, after Ohio failed to offer any replacement for its second proposal, the EPA stepped in with a federal plan that would limit Beckjord’s emissions to 2.02 lbs/MMBtu. (This, according to the latest EPA computer modeling, was the level necessary for Ohio to attain the sulfur dioxide NAAQS.) After yet more litigation by Ohio utilities—including Beckjord’s owner, Cincinnati Gas & Electric—the bulk of the federal plan was upheld in 1978. (In rejecting the utilities’ challenge, the Sixth Circuit noted that Ohio was the only state in the country that still lacked an enforceable SO2 implementation plan.)
What Can We Learn from the Grand Policy Experiment? Lessons from SO2 Allowance Trading
