Jul 11 - The Dallas Morning News

As Texas power companies lead the nation's biggest shift to burning cheaper coal instead of cleaner natural gas, holes have opened in the system intended to protect Texans from dirty air.

Sixteen new coal-burning units -- all upwind of the already-smoggy Dallas-Fort Worth area during the summer -- are either permitted or awaiting approval by state regulators working under Gov. Rick Perry's order to put the permits on the fast track.

Final rulings on the permits are months away. Already, however, state officials have made decisions that are likely to allow more pollution from coal, the dirtiest fuel for generating power.

They have also decided, at least for now, not to include the new coal plants in a federally ordered clean-air plan to protect urban North Texas' 5.9 million people.

Critics say that means the new coal plants are probably headed to state approval with high-level political support but minimal public oversight.

"I think it should be considered criminal," said state Rep. Lon Burnam, D-Fort Worth, the only legislator who attended a public meeting on smog that the Texas Commission on Environmental Quality, the state environmental agency, held last month in Irving.

"I have watched this agency and its predecessors for 25 years, and I have yet to see it work for the people instead of the polluters," said Mr. Burnam, a five-term representative who's one of the House's few liberal members and a longtime supporter of tougher environmental protection.

The environmental commission didn't respond directly to Mr. Burnam's statement. Spokeswoman Lisa Wheeler said the agency will give an update on its efforts Thursday in testimony before the state Senate Natural Resources Committee. The public hearing is set for 10 a.m. in Room 6ES of Dallas City Hall.

It's apparent, though, that the biggest expansion of coal plants in Texas history is moving faster than the state's air quality rules, its still-unwritten smog plan or even public awareness can catch up.

With that in mind, environmental groups urged the governor to declare a moratorium on new power plant permits. When they launched that campaign in January, seven new coal-burning units were proposed upwind of Dallas-Fort Worth. Since then, the number has more than doubled.

Instead of applying the brakes, Mr. Perry has kept the new permits on a fast track under an Oct. 31 executive order that cuts the public review period for the permits from about a year to six months.

Easing off

Four policy decisions by the state environmental agency, whose commissioners are Perry appointees, have reduced pressure on power companies to cut emissions. Some are new, while others reflect long-standing practice:

-- Power companies will not be required to prove that pollution from each new coal plant would not make the Dallas-Fort Worth area's smog worse. Federal law requires such proof, but Texas rules do not. One commission member has questioned whether the Texas rules are legal.

-- State officials won't calculate total emissions from the new plants before deciding how much each may emit. Instead, they will treat each as if it were the only one being built. That prevents the state from using permits to control the coal boom's cumulative effect on North Texas smog.

-- The state will not make power companies consider new technology that might slash emissions of smog-causing pollution and global-warming gases. That decision was based on a controversial policy memo from the U.S. Environmental Protection Agency that environmental groups have blasted as illegal and are suing to stop.

-- The state has decided, at least for now, that new and existing power plants outside the nine-county Dallas-Fort Worth area will not have to reduce their pollution as part of a new plan to clean up the urban area's smog. The environmental commission's own staff has said a strictly local smog plan won't work because they can't identify enough local emissions to cut.

Even before the proposed new plants, urban North Texas' air had too much ozone -- a chemical that gives smog its lung-scarring, eye-burning quality -- for children, asthmatics and the sick or elderly to breathe safely, especially during the summer.

16 units planned

In the past two years, six energy companies have filed permit applications for 16 new coal-burning units. Nearly all are in Texas' eastern half, home to big deposits of Texas lignite, the dirtiest-burning coal. Many of the new units would burn cleaner coal from Wyoming.

Dallas-based TXU, already the state's biggest electricity generator, had proposed three new coal units when it announced eight more on April 20, for a total of 11 new units -- more than any other utility. TXU says it's a good deal for customers and shareholders because burning coal is relatively cheap -- dragging down overall Texas electricity prices -- and produces big profits.

In the first quarter of 2006, TXU earned $576 million, in part because of those strong margins.

All but two of the 16 new units from all the companies would be upwind of Dallas-Fort Worth during the summer smog season, boosting worries about pollution.

However, TXU also voluntarily promised to cut its overall pollution from coal by 20 percent, even after adding its new plants. The company hasn't specified how it would do that. According to an analysis by The Dallas Morning News, about one-third of the reduction is already mandated by a new federal clean-air rule starting in 2009.

Other companies with coal plans haven't made that pledge.

The coal boom in general, and TXU's $10 billion strategy in particular, has high-level support. Mr. Perry came to Dallas to stand beside TXU executives when they announced their new plants.

That appearance by the governor didn't translate as a direct order to approve the permits, said one state regulator, but it was clear that the coal plants were a high priority.

"The governor's office is not calling every day asking, 'Where are the permits?' " said Erik Hendrickson, who heads the team reviewing the permits at the environmental commission. "You don't have to tell seasoned staff that this is important."

TXU also has heard encouraging words from Richard Greene, regional administrator for the EPA. At a June 23 seminar organized by the Press Club of Dallas, Mr. Greene praised TXU's emissions pledge.

"That's a pretty compelling case of industry saying, 'We understand,' " Mr. Greene said at the seminar on North Texas transportation and clean air. "We will hold them to that standard. If all pans out as expected, they'll get their permits."

There's no direct link between the emissions pledge and the permits, since the cuts are a voluntary move by TXU. A review of the company's permit applications shows, and state officials confirm, that the applications don't mention the 20 percent cut and don't have to in order to win approval.

The state, not the EPA, decides whether to grant the permits. All the federal agency can do is to object if it finds a problem.

TXU welcomed Mr. Greene's praise. "We are very proud of that 20 percent commitment," spokeswoman Kimberly Morgan said. "We're drawing a line in the sand for other companies in Texas."

One prominent Texas environmental organizer said the EPA shouldn't prejudge a permit fight.

"It's sounding to me like the deal's already done," said Tom "Smitty" Smith, head of the Texas office of Public Citizen.

No smog studies needed

To understand how the Texas environmental commission might handle the new coal plant permits, it's helpful to see how it's handled other recent ones.

The state has forced some lower emissions than a company requested. Other decisions, however, benefited power companies and blocked their opponents.

In the case of New Jersey-based LS Power's Sandy Creek plant near Waco, the commission decided that it would not require power companies to assess a new plant's potential effect on a nearby smoggy area -- in this instance, Dallas-Fort Worth.

Lawyers for plant opponents said the state ignored the federal Clean Air Act. The act requires a demonstration, backed by scientific evidence, that a new plant won't cause or worsen an urban clean-air violation.

The state-federal discrepancy bothered Larry Soward, one of two Perry appointees now on the commission. The third seat is vacant.

Mr. Soward agreed at a May 17 commission meeting that Texas rules don't require the smog study. But he said he was worried that the state wasn't following federal law.

"I don't think that our rules require the demonstration that the Clean Air Act says is supposed to be done," he said. "To me, the Clean Air Act is clear that it says that each new source has to do this demonstration and that our rules don't require that."

Still, Mr. Soward voted with commission Chairwoman Kathleen Hartnett White to grant LS Power's permit since the company followed state rules.

The commission's executive director, Glenn Shankle, told people at the public meeting in Irving that the agency would apply to the other new coal plants now awaiting permits the same standard that bothered Mr. Soward. They won't be required to demonstrate that their pollution wouldn't harm Dallas-Fort Worth's air.

Despite the lack of a requirement, TXU did such a smog study anyway to defend the permits for its proposed two-unit Oak Grove coal plant in Robertson County. TXU says it doesn't plan to do similar smog studies for its other pending permits.

A consultant for TXU testified in a hearing that the Oak Grove plant wouldn't affect Dallas-Fort Worth's air quality. But Dr. David Allen, a leading air pollution expert at the University of Texas at Austin, testified that it would.

TXU's consultant, Environ Corp., is also the environmental commission's consultant on regional smog studies. Environmentalists say the dual role is a conflict of interest.

Environ spokesman Dave Souter said there was no conflict. He said Environ's work for public and private clients in Texas depends on its scientific integrity.

Individual assessment

Although the coal boom represents the biggest package of major new permits in Texas in more than a decade, the environmental commission doesn't plan to assess its total effect on Dallas-Fort Worth before it issues permits for the individual plants.

Instead, it is evaluating each permit on its own, as if it were the only one up for approval. The agency is sticking to that position despite pointed questions from members of the public.

"I'm not telling you that we've closed the door" to a more comprehensive approach, Mr. Shankle told North Texas residents at the meeting in Irving. But for now, he said, "they are being handled as individual units."

Critics say that defies reason. The state could easily add up all the pollution the companies are requesting, they say, to get a worst-case scenario.

"It's not about achieving clean air," said Mr. Burnam, the Fort Worth legislator. "The whole permitting process is about allowing pollution in the air for economic gain."

The LS Power case also showed that the environmental commission was unwilling to force new technology into the giant Texas power market.

Environmentalists wanted the state to make LS Power consider using a new technology, integrated gasification combined cycle, at its new plant near Waco.

Utilities say the technology is unproven. If it works, however, it would yield much lower emissions and would open the door to keeping greenhouse gas emissions out of the atmosphere.

The state environmental commission ruled in December that it wouldn't make LS Power -- or, by extension, any other utility -- consider the new technology for new plants. The commission cited a Dec. 13 letter from an EPA official to a coal industry consultant that said the federal agency would not require gasification studies in coal plants' permits.

Since states can go beyond the EPA's requirements, Texas could have decided on its own to require plants to study the newer pollution control for Texas permits.

Meanwhile, national and Midwestern environmental groups call the EPA position an illegal regulatory decision made with no public notice. They're suing to overturn it.

The smog control plan

The last backstop for cleaning up coal is the new Dallas-Fort Worth smog plan that's in the works.

It's a more comprehensive approach than individual permitting, since it can result in orders for whole industries to cut emissions. It also involves regionwide controls, since pollution drifts in from other areas.

For the new North Texas smog plan, however, the state is examining only sources within the Dallas-Fort Worth area for possible emissions cuts.

The agency says that's the best policy because local vehicles are a big part of the problem. It's also true that a local emissions cut does more good than a distant one.

"First we have to challenge the nine-county [Dallas-Fort Worth] area," Mr. Shankle said at the public meeting in Irving. "I think that's only practical."

But state studies show that distant power plant emissions are adding to Dallas-Fort Worth's smog and that strictly local measures won't be enough.

So far, the state's studies don't account for the new plants. That means the new plants' total effect on North Texas smog is unknown.

Environmental groups think that's a recipe for failure. "When do these emissions get included?" said Ramon Alvarez, staff scientist in the Austin office of Environmental Defense.

State drafts on many of the new plants' permits might be out in September. Under Mr. Perry's fast-track order, that could set final commission votes on them as early as March -- a month before the commission could vote on the new smog plan.

Staff writer Elizabeth Souder contributed to this report.

E-mail rloftis@dallasnews.com 

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