Mediation Techniques

1. Mediation Techniques The Brayton Point Coal Conversion

2. Introduction • This chapter considers what the mediator brings to the bargaining table that the parties cannot provide on their own. • Mediators are sometimes called interveners, neutrals, or third parties. • Mediators may be neutral, but also may have some degree of interest with an issue. • Mediators should not be confused with arbitrators.

3. Mediation • Relatively informal • Intervention between conflicting parties or viewpoints to promote reconciliation, settlement, compromise, or understanding. • Mechanism for facilitating agreement in a negotiation process.

4. Mediators • Assist parties by being creative and innovative in finding areas of agreement and compromise to reach a final resolution of the impasse. • They have procedural flexibility not available to judges or decision makers who function in a quasi-judicial capacity. • They may adopt procedures or methods to meet the needs of each situation or alter those procedures if the need arises. • They attempt to guide the parties to an outcome all can accept.

5. Case Study Introduction • Following the OPEC oil embargo in 1973, American public policy was torn between energy independence and environmental protection. • Two major sources of energy were coal and oil. • Coal was cheaper but yielded higher environmental costs, such as more mines, more air and water pollution, and disposal problems. • Congress passed the ESECA- The Energy Supply and Environmental Coordination Act of 1974.

6. ESECA • Gave the Federal Energy Administration (now the Department of Energy) the authority to prohibit the use of oil or natural gas in facilities capable of burning coal. • Also required that conversions comply with existing air pollution regulations. • Demanded cooperation between the FEA and the EPA and state air pollution control agencies.

7. Goals of the Agencies • FEA wanted to decrease consumption of foreign oil through rapid conversion. • EPA and state environmental protection agencies were concerned about the environmental effects of such conversion and wanted a slower approach to be taken.

8. After the ESECA was passed, the FEA began to compile a list of power plants currently burning oil or natural gas but capable of burning coal as a primary energy source. • June, 1975: thirty-two power plants (74 separate units) were issued prohibition orders requiring conversion to coal. • Brayton Point Generating Station in Somerset, Massachusetts, was among the recipients.

9. Brayton Point • New England’s largest fossil-fueled power plant. • Four separate generating units capable of a total output of 1600 megawatts. • Three of the boilers, units 1, 2, and 3, are capable of burning either oil or coal. • Unit 4, the newest of the boilers is capable of only oil combustion.

10. Brayton Point • Owned and operated by the New England Power Company, which is a wholly owned subsidiary of the New England Electric System. • Supplies electricity to over one million customers in MA., RI., and NH. • Participates in integrated dispatching system called the New England Power Pool, in which utilities in the pool purchase power from the utility that can produce it at the lowest cost.

11. Brayton Point • Fuel cost is a large fraction of operating cost, and therefore is a critical factor in determining both the output of the facility and the revenues of its owners. • Brayton Point is very efficient. • NEPCo. Management very concerned that the plant’s cost efficiency be maintained after conversion. • Efficiency determines its output, which determines the amount of revenues the plant generates for its owners.

12. Brayton Point • NEPCo. is opposed to any added expenses in either capital equipment that would decrease the relative cost efficiency of the plant. • The company did not want to be forced to convert by the FEA if the EPA was intent on imposing stern environmental controls.

13. Combustion Process • Both fuels are delivered by water; oil, by tankers; coal, by sea-going colliers or barges. • Max storage capacity is 600,000 tons, an 88 day supply. • Coal is ground by pulverizers, pumped in to the boilers, and ignited. • The heat generated creates high pressure steam, which passes through turbines to generate electricity.

14. Combustion Process • Some solid mater remains after coal is burned. • Bottom ash falls in to bins below. • Fly ash travels with the exhaust gases. • Most is collected by electrostatic precipitators. • Particles in the exhaust are negatively charged and are attracted to the positively charged precipitator plates.

15. Process Cont. • Emissions are also produced in the gas and oil combustion process, giving off sulfur dioxide which reacts chemically in the atmosphere to produce sulfates and sulfuric acid, as well as acid rain, which can cause damage to water quality, plants and property.

16. Combustion Process • Sulfur emissions can be controlled by using low sulfur fuel. • Low sulfur fuel can be more expensive than high sulfur fuel. • Scrubbering is the most common technology used for removing sulfur dioxide from exhaust gases, but it is very expensive.

17. Air Pollution Regulation • Brayton Point regulations derived from the Federal Clean Air Act of 1970. • Amendments require the EPA to establish national ambient air quality standards (NAAQS). • States are required to adopt state implementation plans (SIPs) that specify the manner in which the NAAQS will be achieved and maintained. • This gave the states room to choose the means to federally establish ends.

18. Air Pollution Control • After the 1970 Clean Air Act amendments but before the 1973 Oil Embargo, the environmental health division of the Massachusetts Department of Public Health submitted its SIP, which was approved by the EPA. • The SIP specified an allowable fuel sulfur content of .55lb of sulfur per million BTUs (.55lb/Mbtu) and a total suspended particulate emissions limit of .12lb/Mbtu for point sources in southeastern MA., including Brayton Point.

19. Control • All SIP’s were subject to review by the EPA, who would not allow any changes that it felt might cause violations of NAAQS. • It would not allow any air quality deteriorations in areas designated to be non-attainment areas following the 1977 Clean Air Act.

20. Brayton Point • Prior to the Oil Embargo, NEPCo. could easily attain fuel oil for Brayton Point. • Oil Embargo forces NEPCo. to search for cheaper coal sources in the United States in anticipation of rising oil costs. • Was allowed a variance for Unit 3 from May to December of 1974. • April, 1974: NEPCo. applies for a five year variance for Units 1 and 2, and is denied, because the EPA believed standards violations had been committed.

21. Oil Embargo • Congress adopts the Energy Supply and Environmental Coordination Act of 1974 (ESECA). • Intended to cut the nation’s dependence on imported oil. • Also gave the Federal Energy Administration authority to prohibit any power plant capable of conversion from burning natural gas or petroleum products.

22. Oil Embargo • FEA made a list of all oil consumers capable of burning coal. • Brayton Point was the largest of the five New England power plants on the list. • Under ESECA, there were three steps for mandated conversion : notice of intent, prohibition order, and a notice of effectiveness.

23. FEA • The FEA must issue a notice of effectiveness before prohibition can be enforced. • Must prepare an environmental impact statement. • Must attain approval form the EPA administrator. • Must get approval from the state governor.

24. In August, 1974, two months after ESECA was passed, and one month after MA. had denied NEPCo.’s latest variance request, the company applied to the EPA for an ESECA mandated temporary suspension of all fuel and emissions limitations in the MA. SIP.

25. The suspension also required an establishment of ambient air quality stations in the Fall River area. • The Brayton Point suspension ended in June 1975, with about 9 million dollars worth of coal in their storage area. • The Massachusetts legislature also passed chapter 494 of MA. general laws, which required that state regulations including SIP’s be revised periodically.

26. In response to chapter 494, the DEQE proposed a two year revision of the SIP, which was approved by the EPA but delayed for more difficult cases, such as Brayton Point.

27. Sulfur Dioxide Problems • Air quality monitors needed to be put in place. • NEPCo. contracted with Environmental Research and Technology Inc. to operate six monitors and the state DEQE to operate two of its own. • They would remain in operation following the conversion back to oil.

28. Sulfur Dioxide Problems • EPA notifies DEQE of the violations in March, 1977. • Southeastern MA. Air Pollution Control Region had been designated as a non-attainment region for particulates. • The DEQE was to evaluate their SIP for the TSP in order to attain federal standards.

29. Modeling • Data indicated a switch to high sulfur (either oil or coal) may cause a violation of the federal ambient sulfur dioxide standards. • Air pollution models are imprecise. • Computer run mathematical simulations. • They model a worst case scenario.

30. Coal Committee’s Conversion Plan • Federal Regional Council (FRC) created in 1972 to facilitate coordination of federal activities in New England. • Composed of ten principle federal agencies. • Focused on the problem of converting New England power plants to coal.

31. The Committee • Included personnel from FEA, EPA, Bureau of Mines, DEQE, MA. Energy Office, NEPCo., and a non-profit research organization called The Center for Energy Policy. • Issued a report in 1976 stating coal conversion was desirable but environmentally and economically costly. They suggested more testing.

32. John Kaslow • Vice President of NEPCo. • Offered to use Brayton Point’s units 1 or 2 for the test. • He anticipated significant fuel cost savings if allowed to burn coal instead of oil, and felt that additional pollution control equipment should not be required until proven necessary.

33. EPA • Objects to test proposals on three grounds. • Did not want NEPCo. to burn the existing high ash coal without controlling particulate emissions. • Believed that a test had already been done and that the data would not differ. • EPA suspected Brayton Point simply wanted to burn the existing coal in their stock pile.

34. EPA • Notified the DEQE that the southeastern MA. Air Pollution Control District had failed to meet NAAQS for particulates in 1976. • They would not issue a variance to an SIP that would cause increases in any pollutant in an area where the standards were not being met.

35. John McGlennon • Regional administrator for the EPA. • Sent a letter to Robert Mitchell from the EPA confirming there would be no test approval at Brayton Point. • NEPCo. would have to comply with the existing SIP limits.

36. David O’Connor • Believed that the letter was not to be interpreted as an end for all prospects of conversion. • He would later act as a mediator. • Considered the letter an invitation to negotiation. • Suggested all parties meet for negotiation.

37. Parties’ Incentives • NEPCo. profit margin was dependent upon its cost efficiency. • Wanted permission to burn the cheapest available fuel, coal, and did not want to convert to expensive pollution control equipment.

38. Federal Energy Administration • Their participation in the mediation would increase the likelihood of conversion at Brayton Point. • Wanted to remain loyal to the ESECA mandate.

39. EPA • First incentive was political, the national energy policy stressed the development of alternatives to continued importation of foreign oil. • Participation in mediation could promote good citizen image.

40. EPA • Second incentive was the association of two key individuals: John McGlennon and Robert Mitchell of the EPA. • Mitchell made clear his intentions to fulfill the EPA’s mandates to protect air quality and ensure compliance with primary and secondary ambient air quality standards.

41. MA. Dept. of Environmental Quality Engineering • Under statutory obligation chapter 494 to implement sulfur standards in an economically efficient manner. • Concerned with the issues involved in coal conversion at Brayton Point and wanted to partake in decision making process. • Feared that the conditions established might be unresponsive to the environmental needs of MA.

42. Mediation Begins • Began in April 1977. • Committee formed was the New England Energy Task Forces Coal Committee. • Organized under the Federal Regional Council.

43. David O’Connor • Center for Energy Policy. • Assumed an active role in the committee as a mediator. • Urged all involved to convene in April to discuss the issues. • Recently completed an American Arbitration Association Mediator Training Program.

44. Meetings • They agreed to meet 15 times over 5 months. • Mediation effort would cost 20 thousand dollars and would be divided equally among the four parties: the FEA, EPA, NEPCo., and the U.S. Bureau of Mines.

45. ESECA Process • FEA issues NEPCo. a notice of intent to pursue the mandatory ESECA process for the Brayton Point plant. • NEPCo. files a lawsuit to restrain FEA from holding the prohibition hearings. • Charged that the agency had not followed its own guidelines in developing its conversion plans. • The complaint stated no site-specific environmental impact statement had been prepared. • The suit was postponed pending progress of the negotiations.

46. The Meetings • May, 1977: all parties acknowledge participation to the press but that no communication of a substantive nature would be made without prior approval of the group. • Agreed O’Connor would convene the meetings, take notes, set agendas.

47. Meetings • No one knew exactly what form the resolution would take nor how discussions would proceed. • Had no preconceived notions about the order in which the issues would be tackled. • Summaries of the meetings were reviewed together and revisions would be approved by the group.

48. First Major Breakthrough • The EPA initiates a study of the primary particulate standard violations around Brayton Point. • This was a major concession because the EPA does not usually check air quality violations to determine their source. • The EPA tries to contain all the polluters in a non-attainment area.

49. Study by the EPA • EPA found that the particulate issue was most likely caused by road dust • NEPCO offered to buy street sweepers rather than electrostatic precipitators • Arguments finally irritated the EPA which made them decide to resolve the particulate dispute • EPA found that the particulates were mostly street sanding and road dust reentrainment not Brayton Point emissions

50. Impact Of Report • The chapter 494 variants proposed by the DEQE to allow the use of high sulfur fuel oil at Brayton Point had been upheld by the EPA • The report showed only a small positive correlation between ambient particulate and sulfur levels • EPA approves revision of the SIP