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Attorney General Abbott Challenges EPAs Cross-State Air Pollution Rules

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September 22, 2011 | 3,713 views | 1 comment

The States legal action charges EPA with violating federal law, undermining the reliability of electric grid, and threatening jobs

AUSTIN Texas Attorney General Greg Abbott today took legal action against the Environmental Protection Agency and asked a federal court to impose a stay on new regulations that jeopardize the reliability of Texas electrical grid, threaten hard-working Texans jobs, and will burden Texas families with higher electricity prices.

In a motion for stay filed with the U.S. Court of Appeals for the D.C. Circuit, the Attorney General explained that, when the EPA issued its July 7, 2011, Cross State Air Pollution Rule (CSAPR), the Administrator failed to comply with federal laws that require federal agencies to inform the public of rule proposals in advance so that affected parties can participate in the rule-making process. Because the EPA opted not to include the State of Texas in key aspects of the proposed CSAPR regulations that it published in August, 2010and added Texas without notice to the final regulations earlier this yearthe rule violated federal law and should be stayed by the Court.

"The EPA's latest overreaching and unlawful regulations jeopardize the availability of reliable electricity in Texas, imperil hundreds of jobs for hard-working Texans, and violate federal law," Attorney General Abbott said. "Because of the lawless approach advanced by unelected bureaucrats at the EPA, the State's ability to prepare for dramatically reduced power generation was severely undermined--which is why Texas' electrical grid operator projects that the Administration's latest regulations could lead to rolling blackouts next summer. Inexplicably, the Administration is determined to advance its aggressive agenda despite the risk of power outages in heat of the Texas summer and unemployment for hard-working coal miners and power plant employees whose jobs are imperiled by the EPA."

"Because the EPA failed to provide Texas the advance notice that is required by federal law, the State and its electrical generators did not have an opportunity to prepare for--much less object--before these regulations were finalized. Power plant operators in East Texas have said that job losses could have been prevented if the EPA had simply complied with the law. But worse, Texas' last-minute inclusion in the EPA's job-killing cross-state regulations was based upon a single air quality monitor in Granite City, Illinois--which was fundamentally flawed not only because a nearby steel mill necessarily impacts that location's air quality, but because that very location actually satisfies federal air quality standards. With too many Texans' jobs and access to reliable electricity on the line, the Attorney General's Office is committed to pursuing all available legal options to overturn these regulations and holding the EPA accountable for violating federal law."

In the wake of the Obama Administrations decision to add Texas to the CSAPR regulations in July, multiple officials representing a broad array of constituencies from across the State identified significant concerns about the rules harmful impact on the State of Texaswhich was exacerbated by the EPAs failure to comply with federal notice and comment requirements. If the EPA continues with its plan to implement the new regulations, Texas faces the likelihood of power outages, job losses, decreased tax revenue for local communities, and higher energy prices, among other consequences.

Because the EPA violated federal law and relied upon flawed data to impose its CSAPR, the Texas Attorney Generals Office has challenged the unlawful rules in the U.S. Court of Appeals for the D.C. Circuitand has asked the federal court to impose a stay on the new regulations. Todays legal action follows a Sept. 8, 2011 action by the State of Texas requesting that EPA Administrator Lisa Jackson administratively stay the legally flawed rules, but the Administrator did not act on the States request.

The following state agencies are named plaintiffs in the States legal action against the EPA: The Texas Commission on Environmental Quality, the Public Utility Commission, the Railroad Commission, and the General Land Office.

Background on the States Legal Argument

Harmful Impact to the State of Texas

1. Rolling Blackouts

According to figures released by the EPA when its 1,300-page CSAPR regulations were issued in July, the rule will require that Texas-based coal power plants reduce their emissions by 45% effective January 1, 2013. Because of the EPAs drastic demandsand the mere five months notice the EPA provided to the States electricity generatorsthe States electrical grid operator has expressed concerns that Texas will face a shortage of generation necessary to keep the lights on. Worse, because the EPA did not include Texas in its Proposed Rules annual emissions limits, the State only has five months to prepare for the electricity production capacity decreases mandated by the Obama Administration.

The EPAs unlawful regulations were issued despite the fact that the demand for electricityboth during the hot summer months and the cold of winteris at an all-time high. According to ERCOT, Texas was just 300-400 megawatts away from experiencing rolling blackouts during the peak period last summer. Those near-blackouts followed the rolling outages that were imposed last February during a period of extreme cold.

Under ERCOTs best-case scenario, the EPAs new regulations will force a reduction of 1,200 1,400 megawatts of electricity during the peak summer monthswhich is more than three times the amount that would have forced rolling blackouts in the summer of 2011. As a result, court documents filed by ERCOT in support of the States legal challenge conclude: the capacity reductions caused by CSAPR would lead to unavoidable rotating outages, possibly even recurring events, which could occur in both peak and off-peak periods, through 2012 and beyond.

2. Job Losses

In order to comply with the EPAs new regulatory regime, the States largest electricity generator has already announced that it will have to shutter coal mines and power plants in East Texas. As a bipartisan coalition representing thirty-one members of the Texas Congressional delegation explained in a letter to the Obama Administrationwhich asked the White House to withdraw the CSAPRthe EPAs regulations are causing hundreds of hard-working Texans to lose their jobs.

These congressional concerns were echoed by the International Brotherhood of Electrical Workers, which warned that the CSAPR will directly jeopardize the jobs of approximately 1,500 IBEW members working at six different power plants across the State of Texas. The labor unions concerns were reiterated by the CEO of Luminantthe States largest electricity generatorwho sent a letter to the EPAs Deputy Administrator reminding the agency that EPAs own data and modeling reflects the elimination of over a thousand lignite mine jobs in Texas.

Although the State of Texas, Luminant, and thirty-one Texan Members of Congress have asked the Obama Administration to withdraw the new regulations and give the State time to prevent job losses and rolling blackouts, EPA has refused to back downdespite the rules consequences for Texas families.

3. Additional Harm to Texas Families & Communities

As the Motion for Stay that the State filed with the federal court explains, the EPAs determination to advance its radical agenda is not only harming hard-working Texans who will lose their jobsbut it is also imperiling local communities that depend upon power plants for tax revenue, causing budgeting shortfalls at cities, schools, and at least one hospital. According to Luminant CEO David Campbells testimony to a legislative committee: In addition to the loss of jobs, other negative consequences of CSAPRs short deadlines and drastic reductions include [l]oss of tax revenue in communities surrounding affected Luminant facilitiesrevenue that totaled more than $25 million in taxes last year.

During the same hearing before the Texas Senates Natural Resources Committee, the Luminant executive explained why Texas families will be negatively impacted by CSAPR: Increased electricity pricesthe reduced supply of generation will lead to higher wholesale electricity prices in Texas. And, of course, higher wholesale prices in ERCOT will drive up retail prices for consumers. The electrical workers union echoed those concerns when it warned the EPA that its regulations would result in significant increases in electricity rates.

These concerns were confirmed by Federal Energy Regulatory Commissioner (FERC) Philip D. Moeller, who recently testified during a congressional hearing that: removing any significant amount of generation from the nations supply of generators will almost surely have price-raising consequences for electric consumers. Although the Obama Administration has attempted to defend its unlawful regulations by citing the health and safety implications of reduced emissions, Commissioner Moellers testimony reveals that there are also directly related adverse implications associated with the EPAs rule: the fact that higher prices can impact public health and safety needs to be acknowledged.

The Petition for Reconsideration that the State filed with the EPA on Sept. 8, 2011, specifically raised health and safety concerns, explaining that CSAPR will result in substantial risks to the health, welfare, and lives of Texansvulnerable senior citizens and economically disadvantaged families in particular. When the EPA issued the very regulations that threaten rolling blackouts during future peak periods, Texas was just halfway through a summer that brought prolonged high temperatures and demanded unprecedented electricity consumption. Thus, the States legal pleadings cite National Oceanic and Atmospheric Administration datawhich indicates that heat is the number one cause of weather-related deaths in the United Statesto demonstrate that the rolling blackouts threatened by the EPA pose an imminent threat of significant harm to Texans.

The EPAs Regulations Violate Federal Law

Under the federal Clean Air Act, the EPA is empowere d to establish air quality standards that States are charged with meeting and enforcing within their borders. Because the state environmental regulators are required to ensure the territory under their jurisdiction meets these federal standards, the Clean Air Act attempts to prevent one states pollution from negatively impacting neighboring states ability to meet the EPAs standards. Thus, the EPAs Cross-State Air Pollution Rules were issued pursuant to the EPAs authority to regulate air pollution that moves from one state to another. However, because the EPA failed to comply with important provisions of the Clean Air Act and the Administrative Procedure Act, its CSAPR regulations violate federal lawand those violations form the basis of Texas legal action.

1. EPA Violated Public Notice & Comment Requirements

Under both the Clean Air Act and the Administrative Procedure Act, federal bureaucracies are prohibited from imposing regulationssuch as the CSAPRon the states or any other affected party unless the issuing agency first publishes a draft rule and provides the public an opportunity to comment on its proposed regulations. The very purpose of the laws public notice and comment requirements is to prevent unelected federal bureaucrats from imposing draconian regulations without warning the public in advance. These requirements are also intended to give affected parties an opportunity comment on rules before they are noticed, and therefore hopefully prevent agencies from inflicting harmful regulations such as the CSAPR.

When the draft CSAPR was first published for public notice and comment in August, 2010, Texas was not listed as one of the jurisdictions that met the threshold for annual SO2 emissions that significantly contributed to air quality violations in other states. As a result, neither the State of Texasnor its electricity generatorshad any notice that Texas would be subject to the EPAs cross-state air pollution regulations. Because the EPAs proposed rule determined that Texas did not contribute to pollution in downwind statesas thirty-one members of the Texas congressional delegation put it in their letter demanding that the Obama Administration reconsider its unlawful rulethe EPA explicitly proposed not to include Texas in those aspects of the annual program for NOx and SO2.

The EPAs failure to properly notify Texas not only violated federal law, it also created two significant problems. First, if Texas had been properly included in the Proposed Rule, the State could have objected to significant factual and legal flaws that EPA now cites in an attempt to justify Texas last-minute inclusion in the Final Rule. Second, because Texas was not included in the Proposed Rule, neither the State nor its electricity generators were given adequate time to prepare for the power generation reductions demanded by the EPA.

2. Altered Standards

Under the Clean Air Act provisions that govern interstate air pollution, the EPA is required to establish an objective, scientific standard for determining whether one state significantly contributes to a downwind states failure to satisfy federal air quality standards. The significance threshold established by the EPA for SO2 emissions was .15 micrograms per cubic meter. Thus, States that contribute less than .15 mcg/m3 are deemed not to significantly contribute to the SO2 in the downwind states airand states that exceeded the .15 threshold were deemed to significantly contribute SO2 to downwind states.

When the proposed rule was published in August, 2010, the EPA determined that Texas fell beneath the threshold for regulation under the cross-state air pollution ruleand therefore did not significantly contribute to downwind SO2 concentrationsbecause the agencys data showed that Texas accounted for .13 micrograms per cubic meter of SO2. Because the EPA found that Texas was not subject to CSAPR, the agency did not propose to impose SO2 emissions limits on the States electricity generation facilities.

However, when the final CSAPR was published on July 7, 2011, the EPA suddenlyand without noticedetermined that Texas was subject to CSAPR and therefore imposed emissions reductions on the State. Under the EPAs regulations, these SO2 reductions are applied via an annual emissions budget established by the EPA. But because Texas was not included in the draft rule, the State was not only deprived an opportunity to challenge the EPAs methodologyTexas was also prevented from objecting to its emissions budget.

As the Texas Congressional delegation recognized, until the Administration singled out Texas for disparate treatment under CSAPR: EPA has never included a state in a final rule for one of its major interstate transport programs without first providing a budget for that state in the proposed rule. Thus, while EPA is now demanding that Texas endure job losses and the threat of rolling blackouts in order to decrease its SO2 emission by 45%it was not even afforded its statutorily guaranteed opportunity to analyze and comment upon the CSAPRs impact on Texas power grid, workforce, or consumers.

In addition to imposing an emissions budget without providing the notice to which Texas was legally entitled, the EPA relied upon flawed data about the ERCOT grids capacity when it evaluated the States ability to absorb the emissions reductions demanded by the federal government. Because of the erroneous conclusions in the EPAs electric reliability analysis, the EPA failed to recognize the actual magnitudeand therefore the severityof the CSAPR regulations.

According to court documents filed by ERCOT, the EPA incorrectly assumed that the States electric grid would have 90,405 megawatts of capacity in 2014. However, that assumption was improperly predicated upon flawed capacity data. Court documents reveal that the EPA overestimated ERCOTs projected 2014 capacity by 14,438 megawatts.

First, the EPA incorrectly included 5,784 megawatts associated with retired generation facilities. Another 2,644 megawatts from mothballed facilities were also improperly included in the EPAs projections. Additionally, the EPA incorrectly assumed that Texas 9,452 megawatts in wind generating capacity would actually yield that amount of electricityas if wind generation units were like ordinary power plants. However, because wind generation varies based upon whether the wind blows, the amount of electricity that wind powers creates is variable and therefore yields only 8.7% of its total capacity. Because of its failure to properly calculate the States wind generation capacity, EPA improperly assumed Texas would have another 8,630 megawatts that are not actually available.

3. EPA Relied Upon Just One Downwind SiteWhich was in Compliance

The basis for EPAs decision to increase Texas cross-state SO2 contribution rating from .13 to .18 was fundamentally flawed. Yet, the State had no opportunity to identify the EPAs defective analysisbecause Texas was not notified about its inclusion until the final rule was published. If the State had received the notice it is guaranteed under federal law, it would have been able to explain that the EPA improperly attributed SO2 in the air in Granite City, Illinois to emissions from Texas. The EPAs decision to tie Texas emissions to Granite City were flawed for two reasons.

First, the EPA claimed that the State exceeded the .15 significance threshold because of a single air quality receptor 500 miles from Texas in southern Illinois. However, that particular monitoring cite happens to be near the U.S. Steel Granite City Works steel mill. With a steel mill near the monitoring site, there are necessarily local conditionswhich were ignored by the EPAthat more heavily influence that sites air quality data than emissions from Texas. And in addition to those local factors, as the congressional delegation correctly complained: EPA identified eight other statesmany geographically much closer to the receptor than Texasthat contribute significantly to that [Granite City] monitor. Nonetheless, the EPA now attempts to justify its last minute inclusion of Texas based upon data from that single southern Illinois site.

Second, the very purpose of the cross-state air pollution regulations is to prevent one States emissions from being the cause of another States failure to comply with national air quality standards. As a result, if the downwind state meets those federal air quality requirements, then by definition that state is not failing to meet the EPAs standardsand an upwind state cannot possibly contribute to a non-existent compliance failure. Yet, by the EPAs own admission, Granite City, Illinois is in compliance with the applicable federal standards. Thus, Texas could not have contributed to Granite Citys noncompliancebecause Granite City is currently listed as being in compliance. As a result, Texas should not have been included in the Final Rule.
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September 22, 2011 8:52pm
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