Texas parties argue for stay of EPA regional haze plan for the state

Luminant Generation Co. LLC, Southwestern Public Service (SPS) and Coleto Creek Power LP told an appeals court in an April 18 brief that the U.S. Environmental Protection Agency’s newly-issued regional haze plan for Texas would cause irreparable harm to affected coal plants and must be stayed for now.

Various groups, including the power companies and the state of Texas, appealed the haze rule in March to the U.S. Fifth Circuit Court of Appeals. They have asked the court for a stay of the rule while arguments about the rule are made and while the court is mulling an EPA request for a change of venue to an appeals court in Washington DC.

Said the power companies in the April 18 brief: “Texas Energy Petitioners have demonstrated that EPA’s unprecedented and unlawful rule necessitates a stay pending judicial review. EPA ‘does not dispute’ that the rule will impose unrecoverable costs on Texas Energy Petitioners ‘in the near-term’, which Texas Energy Petitioners established to be at least $450 million.

“EPA does not dispute that the U.S. Supreme Court and other Courts of Appeals have granted stays of EPA Clean Air Act rules with the same compliance timelines (and indeed longer), yet in many cases involving less costs than the rule here.

“EPA, remarkably, concedes that it views as ‘meaningless’ the fact that the $2 billion of total costs imposed by the rule are not necessary to meet EPA’s progress goals (goals EPA concedes are already met). And EPA admits that it calculated its revised goals for Texas based on the assumption that emission controls ‘would be installed by the end of 2018,’ even though it now concedes that is not accurate. These concessions alone prove that the rule is unlawful, Petitioners suffer irreparable harm, and the public interest requires a stay.

“The remainder of EPA’s response seeks to distract from the issues at hand. EPA insinuates that Texas power plants have failed to make emission reductions ‘that plants elsewhere, including in Oklahoma,’ have made. But EPA both fails to explain that the Texas plants at issue here are already complying with an emission control program that EPA itself has found is ‘better than’ the program implemented on sources in Oklahoma and fails to mention that those Oklahoma limits were stayed by the Tenth Circuit.

“EPA further complains that a stay should be denied because its rule is ‘long-overdue.’ But the only delay here has been EPA’s five-year delay, and it fails to explain how a much shorter stay would cause harm to the environment or any protected resource.

“Finally, EPA asks the Court to ‘decline to consider the stay motions’ because it thinks the case should be transferred to the D.C. Circuit. But under the applicable statutory procedures, the correct order of decision is for the Court to first consider the stay motions and then address the issue of transfer. In any case, this Court is the proper forum.”

The power companies added that EPA dismisses the fact that the additional expense of the rule will likely force the closure of some of the affected coal-fired plants and result in the loss of jobs, claiming such harm would only occur after the rule is reviewed by the court. But the plants are already under significant economic pressure due to depressed power prices and that the incremental costs of the rule would make them uneconomic to operate at all. They added: “EPA’s admitted failure to consider the ‘substantial economic pressures’ affecting these plants in its own assessment of the costs of the rule is yet another flaw in the rule and basis for a stay.”

EPA argues that Southwestern Public Service’s ability to request recovery of costs from its customers through a state rate recovery process means it does not suffer irreparable harm. But, such rate recovery is not certain, the power companies said. As SPS explained, cost recovery is available from retail customers only after a lengthy process of review and approval of the costs by the appropriate state public utility commissions. Even then, it is not certain that full recovery of costs would be available.

Texas agencies also argue that a stay is needed

Also filing an April 18 brief were Texas state agencies, including the Public Utility Commission of Texas. They noted that the EPA decision rejects parts of the Clean Air Act State Implementation Plan (SIP) revision Texas submitted in 2009 to address regional haze during the ten-year planning period ending in 2018. Since the 2009 SIP submittal, visibility conditions in Texas’s Class I areas have improved and monitoring results show that these areas have achieved even better visibility than the “reasonable progress goal” EPA’s Final Rule establishes for 2018, said the state.

“Without a demonstration that the Final Rule would improve visibility during the relevant time period, the costs of the rule are irrational,” said the state. “To get around this problem, EPA contends that its approval or disapproval of these ten-year SIP revisions may be anchored in measures that extend beyond that period. But this approach cannot be squared with the CAA or EPA’s regulations, and is arbitrary and capricious. In addition to this temporal overreach, the Final Rule also exceeds EPA’s statutory authority by installing EPA’s preferred policies in place of compliant and well-reasoned State judgments. EPA’s overreach inflicts irreparable harm on Texas’s sovereignty and electric grid, for little to no public benefit.”

The state’s brief later added: “The Final Rule requires a substantial amount of Texas’s coal-fired power plants to install very expensive equipment in order to continue operations. These are costs that Luminant, Southwestern Public Service Company, and Coleto Creek Power Company do not expect to recover. EPA’s position that these costs do not harm the State fails to address Texas’s unique competitive market. As explained more fully in the declaration of Warren Lasher, Director of System Planning at ERCOT, Texas generation resources within ERCOT are developed by investors with the goal of receiving a return on capital. There is no governmental or regulatory authority that requires any generation owner to build new units to address reliability. Therefore, economic viability of units has a direct and important impact in the ERCOT market.”

In the EPA’s final haze decision, the final SO2 emissions limit (lbs/MMBtu) for Texas units with mandated SO2 scrubber upgrades are:

  • Sandow Unit 4 (Luminant), 0.20;
  • Martin Lake Unit 1 (Luminant), 0.12;
  • Martin Lake Unit 2 (Luminant), 0.12;
  • Martin Lake Unit 3 (Luminant), 0.11:
  • Monticello Unit 3 (Luminant), 0.06;
  • Limestone Unit 2 (NRG Energy), 0.08;
  • Limestone Unit 1 (NRG Energy), 0.08; and
  • San Miguel (San Miguel Electric Cooperative), 0.60;

The SO2 limits for plants/units subject to EPA-mandated scrubber retrofits are:

  • Big Brown Unit 1 (Luminant), 0.04;
  • Big Brown Unit 2 (Luminant), 0.04;
  • Monticello Unit 1 (Luminant), 0.04;
  • Monticello Unit 2 (Luminant), 0.04;
  • Coleto Creek Unit 1 (GDF Suez), 0.04;
  • Tolk Unit 172B, 0.06 (Xcel Energy/SPS); and
  • Tolk Unit 171B (Xcel Energy/SPS), 0.06.
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.