Bloomberg News

EPA Eases Off Cross-State Air Pollution Rule for Texas

October 06, 2011

(Updates with comment from NRG Energy in seventh paragraph.)

Oct. 6 (Bloomberg) -- The Environmental Protection Agency proposed amending cross-state emissions rules for power companies today, easing off on pollution caps for Texas and nine other states.

Texas, which sued to block the measure set to take effect next year, would be allowed to have power plants emit 29 percent more sulfur dioxide than initially proposed, according to Rob Barnett, an energy analyst for Bloomberg Government.

The proposed changes would also affect power plants in New York and New Jersey by giving those states greater leeway to trade pollution allowances among power producers. The modifications to a rule issued in July are based on changes in data received from states and utilities, according to the EPA.

“While individual state adjustments vary, overall, the budget increases are slight -- about one percent -- when compared to the millions of tons of pollution reductions secured,” the agency said in a statement on its website.

The Cross-State Air Pollution Rule imposes caps on sulfur dioxide and nitrogen oxide that drift across borders. It applies to Texas and 26 eastern states.

The Texas cap was adjusted because seven plants in the state weren’t using pollution-control equipment as the EPA had assumed, meaning they were polluting more than had been assumed in the initial analysis, according to the proposal today.

‘More Manageable System’

The change “makes it a much more manageable system,” David Knox, a spokesman for NRG Energy Inc., said in a telephone interview. “It means the costs of achieving these reductions will be less.”

NRG Energy, the largest U.S. independent power producer, said in August that the company planned to spend about $720 million to comply with expected environmental rules.

Michigan, Nebraska, New York and Wisconsin received the biggest increase in their budget for nitrogen oxide, according to Marc De Croisset, a utilities analyst for FBR Capital Markets & Co. in New York.

Sulfur dioxide can lead to acid rain and soot emissions harmful to humans and ecosystems, and nitrogen oxide is a component of ground-level ozone, a main ingredient of smog.

Coal accounts for 98 percent of sulfur dioxide and 92 percent of nitrogen oxides released into the air by power plants, according to the EPA. Texas consumes more electricity and uses more coal than any other state, according to the U.S. Energy Information Administration.

Statewide Budgets

The standard replaces Bush-era regulations rejected in 2008 by a federal court that said trading provisions wouldn’t protect communities against pollution from nearby states.

The regulation sets statewide emissions budgets, which are then divided among power generators, providing opportunities for those companies to trade credits. The changes announced today will allow greater scope for trading, the EPA said.

Texas wasn’t part of the initial proposal and was added in July, prompting complaints from lawmakers such as U.S. Republican Senator John Cornyn.

“The only fair way to move forward at this point is through a total reconsideration of the rule,” Cornyn said in a statement today.

The largest Texas grid operator, the Electric Reliability Council of Texas, said Sept. 1 that the regulation may lead to power blackouts. The company is studying the impact of today’s changes, spokeswoman Dottie Roark said in an e-mail.

Texas sued the EPA Sept. 20 in the U.S. Court of Appeals for the District of Columbia seeking a delay in the rule.

--With assistance by Mark Chediak in San Francisco. Editors: Steve Geimann, Joe Winski

To contact the reporter on this story: Mark Drajem in Washington at

To contact the editor responsible for this story: Larry Liebert at

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