Energy Future Holdings mulls Supreme Court challenge to EPA

Energy Future Holdings is considering whether to try its luck at the U.S. Supreme Court after a recent loss at the appeals court level over a U.S. Environmental Protection Agency disapproval of a Texas air plan.

In September 2010, the EPA disapproved a portion of the State Implementation Plan under which the Texas Commission on Environmental Quality (TCEQ) implements its program to achieve the requirements of the Clean Air Act (CAA), Energy Future said in its May 2 Form 10-Q report. The EPA disapproved the Texas standard permit for pollution control projects.

Energy Future, which controls several coal-fired power plants in Texas, holds several permits issued under the TCEQ standard permit conditions for pollution control projects. The company challenged the EPA’s disapproval by filing a lawsuit in the U.S. Court of Appeals for the Fifth Circuit arguing that the TCEQ’s adoption of the standard permit conditions for pollution control projects was consistent with the CAA. In March 2012, the Fifth Circuit vacated the EPA’s disapproval of the Texas standard permit for pollution control projects and remanded the matter to the EPA for reconsideration. “We cannot predict the timing or outcome of the EPA’s reconsideration, including the financial effects, if any,” the Form 10-Q added.

In November 2010, the EPA disapproved a different portion of the SIP under which the TCEQ had been phasing out a long-standing exemption for certain emissions that unavoidably occur during startup, shutdown and maintenance, and replacing that exemption with a more limited affirmative defense that will itself be phased out and replaced by TCEQ-issued generation facility-specific permit conditions.

“We, like many other electricity generation facility operators in Texas, have asserted applicability of the exemption or affirmative defense, and the TCEQ has not objected to that assertion,” said Energy Future about this second EPA action. “We have also applied for and received the generation facility-specific permit amendments. We challenged the EPA’s disapproval by filing a lawsuit in the Fifth Circuit Court arguing that the TCEQ’s adoption of the affirmative defense and phase-out of that affirmative defense as permits are issued is consistent with the CAA. In July 2012, the Fifth Circuit Court denied our challenge and ruled that the EPA’s actions were in accordance with the CAA. In October 2012, the Fifth Circuit Court panel withdrew its opinion and issued a second, expanded opinion that again upheld the EPA’s disapproval.”

In November 2012, Energy Future filed a petition with the Fifth Circuit asking for review by the full Fifth Circuit of the panel’s second opinion. Other parties to the proceedings also filed a petition with the Fifth Circuit asking the panel to reconsider its decision. In March 2013, the Fifth Circuit panel withdrew its second opinion and issued a third opinion that again upheld the EPA’s actions. In April 2013, the Fifth Circuit also denied Energy Future’s November 2012 petition for rehearing of the panel’s second opinion and denied the request by other parties for the panel to reconsider its second decision. Following the issuance of the mandate, Energy Future filed a motion to recall the mandate, which was denied in a single-judge order.

“The parties to this proceeding have approximately 90 days to appeal the Fifth Circuit Court’s decision to the US Supreme Court,” said the Form 10-Q. “We cannot predict the timing or outcome of this proceeding, including the financial effects, if any, related to the EPA’s disapproval of this SIP provision.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.