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January 31, 2011

Texas Agency Grants Power Plant Permit Over EPA Objections

In another high-stakes dust-up between the Environmental Protection Agency and environmental regulators in the state, the Texas Commission on Environmental Quality last week approved an air permit for the $3.2 billion Las Brisas Energy Center despite a formal EPA request that the commission delay issuing the permit until EPA’s concerns about the plant’s emissions impacts are fully addressed.

Beyond raising local pollution issues, the commission’s Wednesday approval of the permit for the 1,320 megawatt Las Brisas plant, which will burn petroleum coke in a circulating fluidized-bed boiler to be built in Corpus Christi, also could represent the first case nationally to test EPA’s new greenhouse gas control requirements.

The project has been controversial since it was proposed three years ago, and the Texas Commission on Environmental Quality (TCEQ)—which already has butted heads with EPA on whether the federal agency can force the state to regulate greenhouse gas emissions—has come under sharp criticism from local environmental and public health groups for seeming to be in a rush to approve the Las Brisas permit.

Two TCEQ administrative law judges (ALJ) overseeing the permit process concluded in a non-binding ruling last year that the project’s developer, Houston-based Chase Power Development LLC, had been haphazard in estimating the plant’s likely emission levels.

When the TCEQ asked the ALJs to undertake a second review of the permit—in the apparent hope that the permit could be issued before EPA’s greenhouse gas tailoring rule took effect January 2—the judges recommended denying the permit, saying Las Brisas “has not made the necessary compliance demonstration to ensure that emissions from the proposed facility would not contribute to air pollution….”

EPA has voiced numerous concerns about the plant’s emissions that the agency last week said remain unanswered. In a January 24 letter to TCEQ Executive Director Mark Vickery, EPA Region 6 Deputy Administrator Lawrence Starfield urged the commission to hold off on issuing the permit.

“We continue to have strong concerns about the public health and environmental impacts of this project based on our review,” Starfield said. “EPA is requesting that TCEQ not issue this permit until TCEQ and EPA can resolve the issues with the permit.”

Among several concerns, Starfield said TCEQ has not demonstrated by photochemical modeling that Las Brisas would not cause or contribute to violations of federal ambient air quality standards for ozone.

In addition, the permit includes plant-wide applicability (emission) limits (PAL) for the project—despite the fact that EPA in September disapproved the TCEQ’s PAL provisions in Texas’s state implementation plan (SIP) as inadequate. Since EPA has rejected the state’s SIP PAL provisions, the state cannot legally include PAL limits in an air permit, Starfield said.

Starfield also said the permit’s maximum achievable control technology (MACT) standard for certain hazardous air pollutants is less stringent than that required for a similar plant recently permitted in Louisiana. The Clean Air Act’s MACT provisions require new plants to meet emissions rates identical to the best-controlled similar facility.

In addition, Starfield noted that EPA has issued new one-hour nitrogen dioxide and sulfur dioxide standards that are now in effect, but that the permit does not indicate whether the plant will lead to the region’s failure to meet those new standards.

“Neither EPA nor the public have had the opportunity to exercise their rights under the Clean Air Act to review the proposed source’s demonstrations of compliance for those new standards and applicability requirements,” he said.

TCEQ and Chase Power Development have insisted, however, that the permit contains the most stringent emission limits for any power plant in the commission’s history. In a statement following the TCEQ’s Wednesday vote to approve the permit, the commission said “the evidence on the record proved the permit did not have an increment air pollution problem and was protective of public health and the environment.”

In addition to the questions about local pollution impacts, Las Brisas is thought to be the first new power plant in the nation that will be subject to EPA’s greenhouse gas tailoring rule, which took effect January 2. Under that rule, any new industrial project that emits 75,000 metric tons or more of carbon-dioxide-equivalent annually must modify their permit applications to address these emissions before beginning construction.

Because Texas has refused to modify its own air regulations to include greenhouse gases, EPA late last year announced it was taking over greenhouse gas permitting in the state—an action that provoked a legal challenge from Texas Gov. Rick Perry (R). A federal court in December refused Perry’s request to block the EPA takeover pending the outcome of his legal challenge.

That ruling means Las Brisas will have to modify its permit application to meet EPA’s greenhouse gas requirements before beginning construction—a process that could take as long as 18 months.

A spokesman for EPA Region 6 gave no indication Friday on how the agency plans to proceed in the Las Brisas case.

“The agency is going to review all its options and consider what would be next to ensure that the permit is in compliance,” the spokesman said.

Tom Smith, director of Public Citizen Texas, said environmental groups will challenge the permit in court.

“There are lots of issues we believe we will win on appeal,” Smith told The Energy Daily Friday. “Basically, it’s unlikely that EPA will issue an operating permit for this plant even if Las Brisas were foolish enough to build it.”

Smith also questioned the need for the project’s electricity, noting that six other coal-fired power plants have been permitted in Texas that are likely to be built before Las Brisas, and that the Electric Reliability Council of Texas has determined that there is no market for coal-fired power in Texas because of the unusually low prices for natural gas in the state.

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