Texas power company files suit against EPA

A Texas power generation company said it would have to shut down two coal-burning power plants and lay off about 500 workers to comply with an upcoming new air pollution rule promulgated by the Environmental Protection Agency.

Luminant, Texas’ largest power generation company, filed a lawsuit in the U.S. Court of Appeals for the District of Columbia to exempt the state from the EPA’s new Cross-State Air Pollution Rule aimed at slashing emissions of sulfur dioxide and nitrogen oxide, saying it would be forced to idle about 9% of its generating capacity. The rule was finalized in July, and many utilities with coal-fired plants, including Luminant, have said the timeline is too tight for them to make changes, such as retrofitting old plants, to meet the reduction targets.

While rules on some pollutants were toughened, 10 days ago President Barack Obama dropped tougher smog rules governing different pollutants because of concerns about their possible effects on job creation.

Republicans, utilities and lobbyists seized upon the Luminant announcement as proof of their contention that environmental regulations kill jobs. The Republican-controlled House of Representatives plans to introduce a raft of legislation shortly to slash EPA’s regulatory authority or delay rules, including the Cross-State Air Pollution Rule.

The House Energy and Commerce committee said, “The new rule places unfair and excessive burdens on Texas and other states, which will be forced to shoulder a disproportionate percentage of the country’s emissions reductions.”

The EPA promulgated the new rule after federal courts vacated rules put in place by the George W. Bush administration. In a statement, the EPA countered that it had worked with Luminant to meet the standards without layoffs and plant closures.

Texas state officials and utilities have argued that new EPA rules could lead to more plant closures and an erosion of electricity reliability, critical to a state in which an epic drought is expected to continue into next year. But environmentalists said the power industry has known since 1990 that it would have to curtail harmful emissions, and some have taken steps to build cleaner plants without layoffs or damaging electricity reliability.

The object of a $45 billion leveraged buyout in 2007, then the biggest in history, Luminant’s new owners, Kohlberg Kravis Roberts, Goldman Sachs and TPG, used $40 billion in debt to acquire it. Since then, the company has struggled to pay its debts in the face of falling power prices. Those financial ills and the lack of planning for imminent air pollution rules have led to Luminant’s current woes, environmentalists said.

“These companies have been engaged in a delay game for the better part of 30 years, and now they want more time,” said Ilan Levin, a Texas lawyer with the Environmental Integrity Project. “They are using public health rules that are long overdue as a scapegoat for bad business decisions.”