Susan Combs - Texas Comptroller of Public Accounts
Texas Ahead - Economic Resources for Growing and Governing Texas

Air Regulation

Environmental Protection Agency Air Regulation: Issues of Interest for Texas

The Comptroller of Public Accounts is following numerous proposals regarding air quality that could have an impact on the state's economy.


Potential Impact of Federal Air Regulations

Coal powered electricity generation is a significant portion of the state’s electricity generation. In 2010, more than one-third of the electricity produced in Texas was from coal.1 Texas coal fired power plants will be disproportionately impacted by several federal regulations such as the Cross-State Air Pollution Rule and the Mercury and Air Toxics Standards for Power Plants Rule.

The coal mines that supply these plants could be impacted by how power plants are required to comply with these federal rules.

On the Map

Click here to see a map with areas of Texas that may be impacted most by federal review of new listings of species as endangered.

Sources: Compiled by Texas Comptroller of Public Accounts with data from the Railroad Commission of Texas, Electric Reliability Council of Texas and the Environmental Protection Agency.


Carbon Pollution Standard for Future Power Plants

In March 2012, EPA proposed standards for carbon dioxide emissions from new fossil-fuel-fired power plants. The proposed standards would apply to fossil-fuel-fired power plants with a generating capacity greater than 25 megawatts that begin construction after April 2013.

EPA’s Cross-State Air Pollution Rule (CSAPR)

EPA’s Cross-State Air Pollution Rule (CSAPR), adopted July 2011, addresses power plant sulfur dioxide and nitrogen oxides emissions that EPA says travel across state lines. According to EPA, this rule “requires 27 states to significantly improve air quality by reducing power plant emissions that contribute to ozone and/or fine particle pollution in other states.”2 On October 6, 2011, EPA proposed revisions to the CSAPR emission allocations for several states, including Texas. Texas is one of the affected states. This rule could interfere with the use of coal, especially lignite, in Texas power plants.

On September 20, 2011, the Attorney General of Texas filed a lawsuit against EPA regarding CSAPR and asked the court to “stay” or postpone implementation of the rule. On Friday, December 23, 2011, the U.S. Court of Appeals for the D.C. Circuit granted Texas’ request to stay CSAPR. The rule will not be implemented until the court has reviewed the merits of Texas’ petition. The court plans to hear the case by April 2012. 3

Learn more

  • Texas was added to this rule at the last minute and had not been included in the proposed version.
  • According to the Texas Commission on Environmental Quality (TCEQ), EPA’s own models indicate that Texas emissions do not significantly affect other states.4
  • Could force the closure of Texas coal-fired power plants as early as January 2012.5
  • Our economic modeling indicates that eliminating the 2,481 jobs in the state’s lignite mining industry (NAICS 212111) could adversely affect another 7,244 jobs in other Texas industries.6
  • From The Energy Report:
    • As of 2006, Texas had four power plants that burned both lignite and sub-bituminous coal and five that burned only lignite.
    • Texas has 13 active lignite mines, most supporting a nearby coal-fired power generation plant or industrial facility. Nearly all Texas lignite is consumed at the point of production.7
  • The Electric Reliability Council of Texas (ERCOT) analyzed the possible impacts of the Cross-State Air Pollution Rule on the reliability of the ERCOT electric grid system and developed three possible scenarios. In these scenarios ERCOT projected that the ERCOT system at various times of the year would have anywhere from 1,200 to 6,000 megawatts less available generating capacity. Even in the most optimistic scenario, ERCOT wrote that “Had this incremental reduction been in place in 2011, ERCOT would have experienced rotating outages during days in August.” Full ERCOT report.
  • The Railroad Commission of Texas requested the Texas Attorney General to take appropriate action to challenge EPA’s adoption and implementation of this rule.
  • TCEQ Chairman Bryan Shaw expressed concern about the impact of this rule in a recent commentary.
  • According to the Texas Public Policy Foundation:
    • Lignite provides 11 percent of Texas electricity.
    • Lignite mining supports 10,000 to 14,000 Texas jobs, $1.3 billion in annual economic impact and $71 million in state revenue.
    • Texas lignite plants cannot easily switch to lower-sulfur coals such as Wyoming’s. A changeover would involve lengthy and expensive retrofitting, new permitting and the development of new rail lines.
    • Eliminating lignite use abruptly could halve the Electric Reliability Council of Texas’ (ERCOT) reserve margin and affect the reliability of the statewide power grid, leading to summer brownouts.8
  • Shuttering low-cost coal-fired power plants could lead to higher energy prices.
  • San Antonio’s CPS Energy has announced it will close two energy plants by 2018, 13 years earlier than their planned retirement date, in anticipation of this rule.9
  • Jonathan Gardner, a vice president of the International Brotherhood of Electrical Workers, warns the rule directly threatens 1,500 Texas jobs.10
  • On September 23, 2011, the U.S. House of Representatives approved the Transparency in Regulatory Analysis of Impacts on the Nation (TRAIN Act). The TRAIN Act creates an interagency committee to assess the impact of EPA rules on U.S. economic competitiveness. The Act also delays the implementation of CSAPR until at least six months after that analysis is complete.

Industrial/Commercial/Institutional Boiler and Process Heater Standards

On December 2, 2011, proposed changes to the agency’s March 2011 rules regulating air emissions from existing and new boilers, process heaters and solid waste incinerators. EPA estimates that nationwide this rule affects approximately 14,0000 boilers at large sources of pollutants and 187,000 boilers at small sources of air pollution, including boilers at retail stores, office buildings, hotels, restaurants, hospitals, schools, museums, government buildings and airports.11 However, EPA says that the December 2, 2011, revision would require 98% of the boilers located at small sources to perform maintenance and routine tune-ups only.12

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  • On October 13, 2011, the U.S. House of Representatives passed the EPA Regulatory Relief Act of 2011. This bill stays the hazardous air pollutant standards for industrial boilers and requires EPA to develop a new rule package to be adopted no sooner than 15 months from the effective date of the Act.

Mercury and Air Toxics Standards for Power Plants Rule

The Mercury and Air Toxics Standards for Power Plants rule seeks to cut U.S. power plants’ emissions of mercury and other air pollutants.13

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  • The rule should be finalized by the end of 2011.
  • Utilities would be forced to comply within three years; the American Public Power Association says utilities need at least twice that much time. 14
    • On September 23, 2011, the U.S. House of Representatives approved the Transparency in Regulatory Analysis of Impacts on the Nation (TRAIN Act). The TRAIN Act establishes an interagency committee charged with assessing the impact of EPA rules on U.S. economic competitiveness and also delays the implementation of MATS until six months after this analysis is complete.

Oil and Gas Regulation

In July 2011, EPA proposed four separate rules for the oil and gas industry which will regulate volatile organic compounds, sulfur dioxide, and hazardous air pollutants from oil and natural gas production, including the first federal air standards for sources that have been regulated by the states, such as wells that are hydraulically fractured. These rules would regulate air emissions from “upstream oil and gas operations” such as well drilling and completion including hydraulic fracturing, condensate and crude oil storage tanks, glycol dehydrators, pipeline compressor engines, and natural gas processing plants.

Ozone National Ambient Air Quality Standard

The Clean Air Act requires the EPA to complete a thorough review of the National Ambient Air Quality Standards (NAAQS) at five-year intervals. At the conclusion of that review EPA can determine that the existing standard is appropriate or can propose to change the standard. At the conclusion of the most recent five-year review in 2008, the EPA established a new ozone standard at 75 parts per billion averaged over eight hours. However, EPA delayed implementation of that standard while they considered whether to further lower the ozone standard ahead of the five-year review schedule. On September 2, 2011, at the direction of President Obama, the EPA decided not to propose a new ozone standard ahead of schedule. Instead, the agency will reconsider the standard in 2013 on its required five-year review schedule.15

Since the EPA did not adopt a new ozone standard in 2011, the agency resumed implementation of the 2008 standard. As part of this implementation, on April 30, 2012, the EPA designated two areas in Texas as “nonattainment" for the 2008 standard:

Dallas-Fort Worth: Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, Tarrant, and Wise counties.

Houston-Galveston-Brazoria: Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, and Waller counties.

Learn more

  • EPA’s proposed standard would reduce allowable ozone from the existing 0.075 parts per million (ppm) to 0.07 ppm or even 0.06 ppm.
  • This may affect chemical plants and refineries, power plants and motor vehicles.
  • TCEQ says it could result in additional Texas counties being declared non-attainment zones.16
  • According to the National Journal, the head of Small Businesses for Sensible Regulations says the revised standard would cost the economy “$19 billion to $90 billion… by EPA’s own estimates.”17
  • TCEQ says the studies EPA is relying on in considering this change are inadequate (“the epidemiology studies used… are not scientifically rigorous enough to be used as the basis for this important policy decision.”)18

Particulate Matter Air Quality Standard

The Clean Air Act requires EPA to set standards for particulate matter. EPA has an air quality standard for “fine” particulate matter and one for “course” particulate matter. “Course” particulate matter, known as PM10, consists of materials such as farm dust, smoke, and metals. Even though EPA calls it “course,” PM10 consists of particles that are less than or equal to 10 microns in diameter or about 1/7th the average width of a human hair. The fine particulate matter standard, PM2.5, is four times smaller than PM10 or about 1/28 the average width of a human hair. PM2.5 is so small that it primarily consists of condensed nitrates and sulfates. EPA regulates sulfur dioxide and nitrogen oxides to control PM2.5.

EPA is required to review these standards every five years. EPA has taken regulatory action over the last few years regarding these standards. The last review of the standards was completed in 2006.19

Learn more

  • In October 2011, Earthjustice, the American Lung Association, and National Parks Conservation Association sent a “notice of intent to sue” letter to the EPA, indicating the groups will sue if the agency doesn’t propose new particulate matter standards within 60 days. The groups allege EPA failed to comply with the Clean Air Act requirement to review each National Ambient Air Quality Standard (NAAQS) every five years.
  • The Farm Dust Regulation Prevention Act of 2011 was heard by a subcommittee of the U.S. House of Representatives Energy & Commerce Committee on October 25, 2011.

Portland Cement Kiln Rules

In August 2010, EPA issued rules to regulate air emissions from new and existing Portland cement kilns. The Portland Cement Association says about 18 of the 97 cement plants in the United States will have to close if the existing EPA rules are allowed to stand.

Learn more

  • In October 2011, the U.S. House of Representatives passed the Cement Sector Regulatory Relief Act of 2011, which would stay the existing rules, require EPA to adopt new cement plant regulations, and extend the compliance data to five years after the new rules are adopted.

State of Texas and Other Relevant Lawsuits

The state of Texas and other entities have filed numerous lawsuits against the Environmental Protection Agency regarding federal actions that could be devastating to our state's businesses and communities.

Description of Legal Action (Links to the Office of the Attorney General's Press Release Where Available) Case Number (Links to Briefs Where Available) Court Date Filed Updates
American Petroleum Institute, et al. v. EPA: The industry groups are challenging the EPA’s 2012 renewable fuel standards (77 Fed. Reg. 1320), alleging that the new cellulosic biofuel volume requirements violate the Clean Air Act because they are unrealistically high. 12-1139 United States Circuit Court of Appeals for the District of Columbia Circuit 3/9/12  
The Exotic Wildlife Association (EWA), et al. v. the U.S. Department of the Interior, et al.: The EWA is petitioning the courts to reinstate an exemption from the Endangered Species Act for three exotic antelope species that are being raised on Texas ranches: the scimitar-horned oryx, dama gazelle, and addax. 12-cv-00340-BAH United States District Court for the District of Columbia 3/2/12  
White Stallion Energy Center, et al. v EPA: Twenty-four states including Texas, White Stallion Energy Center, the National Mining Association, the National Black Chamber of Commerce, the Institute for Liberty, the United Mine Workers of America, Peabody Energy, the American Public Power Association, and others have petitioned the federal court to review EPA’s mercury and air toxics rules for coal- and oil-fired power plants. The rules were published in the Federal Register at 77 Fed. Reg. 9304 on Feb. 16, 2012. Twelve states, the District of Columbia, New York City, and a number of organizations have intervened on EPA’s behalf. 12-1100 United States Circuit Court of Appeals for the District of Columbia Circuit 2/16/12  
Challenging the EPA's Cross-State Air Pollution Rule 11-1338 U.S. Court of Appeals for the District of Columbia Circuit 9/20/11 Scheduled to be heard by the U.S. Court of Appeals by April 2012
Challenging the EPA's Federal Implementation Plan as arbitrary and capricious 11-1128 U.S. Court of Appeals for the District of Columbia Circuit 5/4/11
Challenging the EPA's Partial Disapproval of TCEQ's Rules to Implement Utility Deregulation Rules; Challenge Held in Abeyance Pending Resolution of New Source Review Reform Lawsuit 11-60158 U.S. Court of Appeals for the Fifth Circuit 3/10/11
Challenging the EPA's Requirement that States Adopt Regulations to Issue Greenhouse Gas Air Quality Permits ("Greenhouse Gas State Implementation Plan Call Rule") (11-1063 consolidated with 11-1037) 11-1063
11-1037		 U.S. Court of Appeals for the District of Columbia Circuit 3/1/11
Mingo Logan Coal Company, Inc. v. EPA: Mingo Logan challenged EPA’s withdrawal of an existing Clean Water Act (CWA) permit. In January 2007, the U.S. Army Corps of Engineers issued a CWA permit to the Mingo Logan Coal Company for their Spruce Number 1 coal mine in West Virginia. In January 2011, EPA invalidated those existing permits. 10-0541 U.S. District Court for the District of Columbia 2/28/11 On March 23, 2012, Judge Amy Berman Jackson ruled that EPA had exceeded its authority under the CWA. Judge Berman concluded that the CWA does not give EPA the power to render a permit invalid once it has been issued by the Army Corps of Engineers.
Challenging the EPA's Partial SIP Disapproval and Takeover of the State Greenhouse Gas Air Permitting Program 10-1425 U.S. Court of Appeals for the District of Columbia Circuit 12/30/10
Challenging the EPA's Disapproval of Texas' New Source Review State Pollution Control Project Standard Permit Rules 10-60891 U.S. Court of Appeals for the Fifth Circuit 11/12/10 On March 26, 2012, the U.S. Court of Appeals for the Fifth Circuit ruled against EPA, vacating the EPA's disapproval of Texas' New Source Review State Pollution Control Project Standard Permit.  The Court instructed EPA to reconsider these regulations and approve or disapprove them expeditiously.  The Court further instructed EPA to limit its review of Texas's regulations to ensuring that the regulations meet the minimal federal Clean Air Act requirements.
Challenging the EPA's October 20, 2010 Adoption of New Fine Particulate Prevention of Significant Deterioration Permitting Requirements 10-1415 U.S. Court of Appeals for the District of Columbia Circuit 10/20/10
The Independent Petroleum Association of America and U.S. Oil & Gas Association petitioned the court to review statements on an EPA website which describe EPA’s policy regarding the permitting of oil and gas hydraulic fracturing operations that use diesel fuel as an additive. The petitioners argued that the website changed EPA policy without giving the public notice or an opportunity to comment as required under the Administrative Procedure Act. Further, they argued the EPA's determination was arbitrary and capricious. 10-1233 United States Circuit Court of Appeals for the District of Columbia Circuit 8/12/10
The parties settled on February 23, 2012.  EPA agreed to change the wording on its website to reflect existing EPA policy. The EPA published its draft guidance describing the new policy in the May 10, 2012 edition of the Federal Register (77 Fed. Reg. 27451). The draft guidance is also available on EPA's website and can be viewed by clicking here:  Permitting Guidance for Oil and Gas Hydraulic Fracturing Activities Using Diesel Fuels. Per the notice, EPA will consider public comments received by July 9, 2012.
Challenging the EPA's Disapproval of Texas' Flex Permit Program 10-60614 U.S. Court of Appeals for the Fifth Circuit 7/26/10
Challenging the EPA’s Disapproval of Texas' Qualified Facilities Program 10-60459 U.S. Court of Appeals for the Fifth Circuit 6/11/10
Challenging the EPA's Greenhouse Gas "Tailpipe Rule" 10-1092 U.S. Court of Appeals for the District of Columbia Circuit 5/7/10
Challenging the EPA’s Greenhouse Gas "Timing Rule" and "Tailoring Rule" 10-1073 U.S. Court of Appeals for the District of Columbia Circuit 4/2/10
Challenging the EPA's Greenhouse Gas Endangerment Finding 09-1322 U.S. Court of Appeals for the District of Columbia Circuit 2/16/10
Sackett v. EPA: Michael and Chantell Sacket of Idaho contend that EPA violated the Administrative Procedure Act (APA) and deprived the Sacketts of their Constitutional right to due process by not allowing them an opportunity to challenge an EPA order against them. The EPA order declared that the residential lot on which the Sacketts were building their home contained wetlands and that their construction project violated the Clean Water Act. The EPA issued a compliance order demanding that the Sacketts stop construction of their home and return the land to its former condition or face fines of up to $37,500 to $75,000 per day. The issue in the case was whether the Sacketts could bring suit under Chapter 7 of the APA, which allows for judicial review of “final agency action for which there is no other adequate remedy in a court.” 5 U. S. C. §704. 10-1062 U.S. Supreme Court 10/20/08 The U.S. District Court for Idaho dismissed the claims for lack of subject-matter jurisdiction, and the U.S. Court of Appeals for the 9th Circuit affirmed. However, on March 21, 2012, the U.S. Supreme Court reversed the lower court's judgment, ruling 9-0 that the EPA's compliance order was final agency action for which there was no adequate remedy available other than APA review. The Sacketts may bring a civil action against EPA to challenge the EPA’s compliance order.
1 Texas Comptroller Calculation based on data obtained from U.S. Energy Information Administration, Electric Power Monthly 2009 – Monthly Data Tables, 2001 - Present Net Generation by State by Type of Producer by Energy Source, http://www.eia.doe.gov/cneaf/electricity/epa/generation_state_mon.xls
2 U.S. Environmental Protection Agency, Cross-State Air Pollution Rule (CSAPR). (Last visited August 26, 2011.)
3 Kate Galbraith, “Cross-State Air Pollution Rule Stayed in Texas,”, The Texas Tribune (December 30, 2011). (Last visited January 25, 2012.)
4 Texas Commission on Environmental Quality, “What’s Happening,” by Commissioner Buddy Garcia, July 25, 2011. (Last visited August 26, 2011.)
5 Bryan W. Shaw, Chairman, Texas Commission on Environmental Quality, “EPA’s Role: Protecting Environment or Killing Jobs?” Lufkin Daily News (July 15, 2011). (Last visited August 26, 2011.)
6 Economic Modeling Specialists, Inc., Texas Industry Employment data. (Last visited August 29, 2011).
7 Texas Comptroller of Public Accounts, The Energy Report (Austin, Texas, May 2008). (Last visited August 26, 2011.)
8 Texas Public Policy Foundation, “EPA’s Capricious Lignite Rule Threatens Texas’ Electricity Supply,” by Kathleen Hartnett White, Austin, Texas, July 12, 2011. (Last visited August 26, 2011.)
9 Matthew Tresaugue, “EPA’s Tough New Rules Irritate Officials in Texas,” San Antonio Express-News (July 8, 2011). (Last visited August 26, 2011.)
10 Competitive Enterprise Institute, “Obama’s War on Coal,” by William Yeatman, August 9, 2011. (Last visited August 26, 2011.)
11 U.S. Environmental Protection Agency, “Emissions Standards for Boilers and Process Heaters and Commercial / Industrial Solid Waste Incinerators.” (Last visited November 10, 2011.)
12 U.S. Environmental Protection Agency, “EPA Proposes Changes to Clean Air Act Standards for Boilers and Incinerators/Reconsidered standards would set emission limits for less than one percent of boilers, achieve public health benefits while increasing flexibility and responding to public input,” Dec. 2, 2011.
13 U.S. Environmental Protection Agency, “Mercury and Air Toxics Standards (MATS) for Power Plants.” (Last visited August 26, 2011.)
14 AOL Energy, “MACT Ruling Faces Utility Opposition,” August 4, 2011. (Last visited August 26, 2011.)
15 The White House, “Statement by the President on the Ozone National Ambient Air Quality Standards,” September 2, 2011. (Last visited September 7, 2011.)
16 Texas Commission on Environmental Quality, “Nonattainment Counties Could Increase to 27,”. (Last visited August 26, 2011.)
17 Blanche Lincoln, “EPA’s Regulatory Balancing Act,” National Journal (August 8, 2011). (Last visited August 26, 2011.)
18 Texas Commission on Environmental Quality, “TCEQ Chief Toxicologist Dr. Michael Honeycutt Provides Comment on EPA Proposed Ozone Standard,” (PDF), Austin, Texas, February 2, 2010. (Last visited August 26, 2011.)
19 U.S. Environmental Protection Agency, Technology Transfer Network National Ambient Air Quality Standards (NAAQS), “Particulate Matter (PM) Standards.” (Last visited November 10, 2011.)