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 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.
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.
Proposed and Final Rules of Interest
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)
Update: On Aug. 21, 2012, the U.S. Court of Appeals for the D.C. Circuit issued a ruling to void the proposed Cross-State Air Pollution Rule. On Jan. 24, 2013, the court declined requests to rehear this decision. On March 29, 2013, the U.S. Solicitor General petitioned the Supreme Court to review the D.C. Circuit Court's decision on 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. This rule could interfere with the use of coal, especially lignite, in Texas power plants.
Texas was added to the Cross-State Air Pollution Rule at the last minute and had not been included in the proposed version, despite the fact that, according to the Texas Commission on Environmental Quality (TCEQ), EPA's own models indicate that Texas emissions do not significantly affect other states.4
The rule could have significant impacts on the Texas economy.
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. 3
- 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
- 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
- Jonathan Gardner, a vice president of the International Brotherhood of Electrical Workers, warns that the rule directly threatens 1,500 Texas jobs.10
- It also should be noted that Texas lignite plants could not easily switch to lower-sulfur coals. A changeover would involve lengthy and expensive retrofitting, new permitting and the development of new rail lines.
- According to the Texas Public Policy Foundation, eliminating lignite use abruptly would drastically reduce the Electric Reliability Council of Texas’ (ERCOT’s) reserve margin, and affect the reliability of the statewide power grid, leading to summer brownouts.8
- ERCOT has analyzed the possible impacts of the Cross-State Air Pollution Rule, projecting that it would reduce the generating capacity of Texas’ energy grid by anywhere from 1,200 to 6,000 megawatts at various times of the year. Even under its most optimistic scenario, ERCOT says that, “Had this incremental reduction been in place in 2011, ERCOT would have experienced rotating outages during days in August.” Full ERCOT report.
- 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
- TCEQ Chairman Bryan Shaw expressed concern about the impact of this rule in a recent commentary.
- The Railroad Commission of Texas asked the Texas Attorney General to take appropriate action to challenge EPA’s adoption and implementation of this rule.
Industrial/Commercial/Institutional Boiler and Process Heater Standards
On December 2, 2011, EPA proposed changes to the agency’s March 2011 rules regulating air emissions from existing and new boilers, process heaters and solid waste incinerators. On February 1, 2013, EPA published a final rule on these proposed changes. As part of this action, EPA amended certain compliance dates and made technical corrections in response to issues raised by petitioners and other stakeholders affected by the rule.
EPA estimates that nationwide this rule affects approximately 14,000 boilers at large sources of pollutants and 187,000 boilers at small sources of air pollution11, including boilers at:
- retail stores
- office buildings
- government buildings
However, EPA says that the revised rules adopted on December 20, 2012 require 98% of the boilers located at small sources to perform maintenance and routine tune-ups only.12
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.
The Mercury and Air Toxics Standards (MATS) for Power Plants rule cuts U.S. power plants’ emissions of mercury and other air pollutants.13 The rule was finalized in Dec. 16, 2011.
On March 28, 2013, EPA updated emission limits for new power plants under MATS.
Utilities would be forced to comply within four years, but the American Public Power Association says utilities need at least six years. 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
On April 17, 2012, EPA issued final rules for the oil and gas industry which regulate volatile organic compounds, sulfur dioxide, and hazardous air pollutants from oil and natural gas production.
These are the first federal air standards for sources that have been previously regulated by the states.The new rules 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
- natural gas processing plants
National Ambient Air Quality Standards
The Clean Air Act requires the EPA to establish national ambient air quality standards (NAAQS) for carbon monoxide, ground-level ozone, lead, nitrogen dioxide, particulate matter, and sulfur dioxide, and to thoroughly review those 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. The following NAAQS are currently in the news:
Ozone National Ambient Air Quality Standard
Update: On June 6, 2013, the EPA proposed a rule to implement the 2008 ozone NAAQS. This proposed rule addresses a range of state implementation plan requirements for the 2008 ozone NAAQS. The public can review and submit comments on this proposal through Aug. 5, 2013.
At the conclusion of the most recent five-year review of the ozone standard in 2008, the EPA established a new 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, including the following counties:
- Houston-Galveston-Brazoria, including the following counties:
- Fort Bend
This may affect chemical plants and refineries, power plants and motor vehicles.
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
and 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
Particulate Matter Air Quality Standard
EPA has established a NAAQS for “coarse” and one for “fine” particulate matter. “Coarse” particulate matter, known as PM10, consists of materials such as farm dust, smoke, and metals.
Even though EPA calls it “coarse,” 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.
Fine particulate matter, 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 oxide emissions to control PM2.5.
The last five-year review of the particulate matter standard was completed in 2006.19
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.
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.
On June 14, 2012, EPA proposed to lower the annual fine particulate matter standard from 15 micrograms per cubic meter to within the range of 12 to 13 micrograms per cubic meter.
On Dec. 14, 2012, EPA finalized an update to its NAAQS standards for PM2.5, setting the annual standard at 12 micrograms per cubic meter. The agency also retained the existing standards for PM10.
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.
On July 18, 2012, EPA proposed amending the Portland Cement Kiln Rules in respond to petitions for reconsideration filed by the Portland cement industry and to a decision by the United States Court of Appeals for the District of Columbia Circuit.
All links were valid at the time of publication. Changes to websites not maintained by the office of the Texas Comptroller may not be reflected in the links on this page.
- 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.)