Up in the Air

In the very public fight between Texas and the federal government, no organization has been as vilified as the EPA and its “job-killing” regulations. That may be good politics, but is it good policy?

December 2011By Comments

Perry, along with Attorney General Greg Abbott and agriculture commissioner Todd Staples, announces the state’s decision to sue the EPA over the regulation of greenhouse gases in February 2010. 
Photograph by

On September 12, one month after Governor Rick Perry declared his intention to run for president, Luminant, the largest electricity generator in the state, announced that it would partially shut down a huge coal-fired power plant in northeast Texas, close the associated lignite coal mines, and lay off five hundred workers. Not a great headline for the governor to see, since the state’s already overburdened power grid barely kept up with demand during this past summer’s record heat wave. But as an illustration of one of his nascent campaign’s key themes, the news could not have been timelier. Luminant blamed a familiar enemy—the overreaching federal government—for the layoffs. The culprit this time, the company said, was the Environmental Protection Agency and its new Cross-State Air Pollution Rule (CSAPR), which is aimed mainly at limiting sulfur dioxide emissions from coal plants, which provide 40 percent of the electricity in Texas. “The Obama administration continues to put up roadblocks for our nation’s job creators by imposing burdensome regulations based on assumptions, not facts, that will result in job losses and increased energy costs with no definite environmental benefit,” Perry said that same day. “Yet again, this administration is ignoring Texas’s proven track record of cleaning our air while creating jobs, opting instead for more stifling red tape.”

Almost immediately, state senator Troy Fraser, the chair of the Committee on Natural Resources, convened a hearing at the Capitol to get to the bottom of things. In a packed room, Luminant’s CEO, David Campbell, made his case to the panel. He claimed that his company simply did not have enough time to retrofit the plant, known as Monticello, with expensive pollution controls to meet the EPA’s aggressive deadline of January 2012. Shutting two of the plant’s three boilers—representing 1,200 megawatts of power—and switching to low-sulfur coal from Wyoming and Montana to run the third was his only option.

Since no one from the EPA was present at the hastily called meeting, veteran lobbyist Tom “Smitty” Smith, of Public Citizen, a longtime critic of Luminant’s aging coal plants, defended the rule. Senator Kevin Eltife, a Republican from Tyler, asked Smith why he thought President Obama had just days earlier announced that he was delaying a second set of new rules that would have limited smog-producing ozone, a move widely seen by many of the president’s supporters as caving to pressure from industry. “Craven political cowardice,” Smith replied, without a moment’s hesitation. There was a titter from the crowd, but Eltife, whose district is home to Monticello and the associated strip mines, was not in the mood. “Well, I think it was because of the economy,” he shot back. “We’re going to throw five hundred people out of work, and there are no other jobs out there.”

Ten days later, Luminant received a boost when Attorney General Greg Abbott filed suit to stop the implementation of CSAPR altogether. This was hardly a surprise: Texas already had twelve outstanding suits against the EPA. The landslide of litigation began in earnest shortly after Obama moved into the White House. In 2009, when his newly appointed EPA chief, Lisa Jackson, announced that greenhouse gases would be regulated under the Clean Air Act, every state in the union began crafting rules to comply. Every state, that is, except Texas, which sued the EPA instead. “The EPA’s misguided plan paints a big target on the backs of Texas agriculture and energy producers and the hundreds of thousands of Texans they employ,” Perry told reporters at a press conference announcing the suit in February 2010. “This legal action is being taken to protect the Texas economy and the jobs that go with it, as well as defend Texas’s freedom to continue our successful environmental strategies free from federal overreach.” Four months later, Texas sued the EPA again, this time over Jackson’s finding that a long-standing state program for “streamlining” air pollution permits violated federal law. Next, the EPA took over permitting for most of the state’s big industrial facilities, after ruling that Texas’s so-called flex permit was illegal too. A raft of new regulations from Washington was met by a raft of lawsuits: in the past two years, Abbott has announced more lawsuits against the EPA over the implementation of the Clean Air Act than against polluters who violate the act itself.

Texas, long the nation’s biggest producer of industrial pollution, is now in a shooting war with the EPA, one of the nation’s most feared bureaucracies, and there is no end in sight. It’s not just Perry and Abbott who are up in arms. A host of officials have piled on with public attacks on the EPA, including railroad commissioner Barry Smitherman, agriculture commissioner Todd Staples, and even Comptroller Susan Combs, whose official duties have very little to do with regulated industries. Even the state’s top environmental regulator, Bryan Shaw, the Texas A&M professor Perry appointed to head the Texas Commission on Environmental Quality (TCEQ), enthusiastically joined the fray. None were more vocal than Perry, who devoted four pages of his anti-Washington broadside Fed Up! to the EPA’s purported overreaching. When he announced his candidacy, it was difficult to miss how nicely the state’s coordinated assault on the EPA dovetailed with one of his major themes: overzealous bureaucrats in Washington were stepping on prerogatives that rightfully belonged to the states, and killing jobs in the process. “It’s just a cemetery for jobs at the EPA,” Perry told a group of tea party supporters after his first debate. In mid-October, he revealed his long-awaited jobs plan, which focused on increased energy production, and once again took the opportunity to call out the agency. “America should not be—and when I’m president of the United States, will not be—held hostage by foreign oil and federal bureaucrats,” he told an audience of Pennsylvania steelworkers.

Perry’s message was well received in the coal and steel country of Pennsylvania, a place, like Texas, where prosperity has long been associated with extractive and environmentally destructive industries, and where a conservation ethic—born of bitter experience—has been slow to grow. Texas was, after all, the home of the first big cattle boom, when intense overgrazing built quick fortunes but destroyed the very grasslands that made the business sustainable. Then came the oil industry, which once saw 44 wells drilled in a single block in downtown Kilgore without regard for public health or safety. Next it was the overplanting in the Panhandle that led to the Dust Bowl, when we learned, too late, that topsoil was a commodity to be cared for and treasured, not a disposable resource to be squeezed for every last penny. Raised in rural Texas, Perry has come by his environmental philosophy honestly. His record has not been an issue in the GOP presidential primary, but that will change if he wins the nomination and faces Obama in the general election. More than any other candidate, Perry would push for a drastic overhaul of how the government addresses a host of environmental issues, including the most contentious one of all: climate change. Perry is an outspoken skeptic of the scientific consensus that human activity is contributing to global warming. On the campaign trail, he often touts the progress that Texas has made in improving air quality by using the same industry-friendly regulations that the EPA has now declared illegal. For those voters who wonder what kind of president Perry would be, the battle between the EPA and Texas is a useful lens, provided the reader keeps one thing in mind: in the fog of war, sometimes the facts get a little hazy.

The notion that regulations kill jobs is nothing new. Landmark air pollution legislation signed by President George H. W. Bush in 1990 was met with predictions of doom from organizations like the National Association of Manufacturers and the U.S. Chamber of Commerce. “This should be renamed the Third World Redevelopment Act of 1990,” one congressional opponent said, predicting that companies would relocate overseas. In 1997, when the federal government tightened ozone standards, naysayers predicted that cities slapped with the EPA’s “nonattainment” label would suffer. They didn’t.

During his own presidential campaign, Governor George W. Bush touted his “voluntary compliance” program, a means of enticing older facilities, like Luminant’s northeast Texas coal plants, to meet the requirements of the Clean Air Act, from which they had been largely exempted at the time of the law’s passage. After Bush became president, it emerged that few, if any, companies had actually reduced emissions under the program. Even worse, the public learned that industry lobbyists had largely written the legislation.

What sets apart the current political climate is the fact that the nation is facing 9 percent unemployment and the prospect of a double-dip recession. Under these circumstances, the “jobs versus regulations” argument has gained traction on Capitol Hill, where a number of bills—supported by legislators from across the country—have been introduced to limit the EPA’s authority.

Attacks on the agency almost always pillory “Washington bureaucrats,” but the face of the agency in Texas is an El Paso native named Al Armendariz, a 41-year-old former Southern Methodist University professor appointed by Obama in November 2009 as a regional administrator. For eight years under Bush, the EPA’s Texas office had taken an essentially hands-off approach, allowing state regulators to craft rules according to their own interpretations of federal law. It was immediately evident that Armendariz brought a new attitude. “I knew that there were serious problems with how Texas regulatory agencies were implementing federal environmental laws,” he told me. “And I knew it was going to be a fair amount of work to correct those problems—and that it also might get contentious.”

A chemical engineer by training, Armendariz’s first brush with the regulatory system in Texas came in 2006, when he served as a consultant to a citizens’ group that won a judgment against one of the many cement manufacturing companies south of Dallas, which have long contributed to the Metroplex’s intractable air pollution problems. Citizen suits—in which individuals sue nearby polluters under the Clean Air Act and bypass the state’s environmental enforcement apparatus—have become increasingly common in recent years and have resulted in significant reductions in emissions. “I learned that many of these groups feel that they don’t always have their needs addressed by the state or the federal government,” he recalled. But Ar­mendariz already knew that instinctively. He grew up not far from the notorious ASARCO smelter in El Paso, which the city fought to shut down—with little help from state environmental officials—for years.

In the midst of Luminant’s public relations onslaught over CSAPR, Armendariz showed that he could fight back too, publishing an op-ed in the Dallas Morning News pointing out the public health benefits of the rule and noting that Luminant had announced the layoffs while negotiations with the EPA were still ongoing—a subtle suggestion that the company was acting in bad faith. “I feel I’ve got the majority of the people of the state of Texas behind me,” Armendariz said. “In survey after survey, when the American people are asked whom they trust to protect the environment, they overwhelming indicate that they trust the EPA. They realize we are the champions of public health.”

That may be, but Luminant’s lobbying campaign against CSAPR, and the cavalcade of public officials who jumped on board, made one thing clear: industry drives regulation in Texas. Luminant is a heavyweight in the utility world, rivaling any company in its spending on candidates and campaigns, top-drawer lobbyists, and marquee public relations firms. It also enjoys political connections like few other companies. Phil Wilson, Perry’s former deputy chief of staff and secretary of state, was Luminant’s head lobbyist for years. Former CEO Erle Nye was long a top donor to Republican candidates, including Perry; the governor later reappointed him to the board of regents at Texas A&M.

The depth of the company’s influence was never clearer than in 2006, when the utility, then called TXU, announced plans to build eleven new coal-fired power plants in Texas. The plan was hugely ambitious—there were only eighteen coal plants in the state at the time—and would have essentially locked Texas into a future powered by the dirtiest fuel available, at a time when several metropolitan areas in the state were struggling to meet federal ozone standards. (Natural gas, the other primary fuel choice in Texas, burns more cleanly than coal.)

Shortly before the company announced its plan, the governor issued an unusual executive order. Citing predictions of a coming energy shortage, Perry directed the TCEQ, the agency charged with approving air pollution permits under the Clean Air Act, to “expedite” the permitting process. John Wilder, then the CEO of TXU, told Texas Monthly at the time that TXU’s plan was an all-or-nothing proposition: “If the decision-makers don’t like our pro
posal, it’s the only one we’ve got. We don’t have alternatives. This is not a negotiation.”

Perry’s executive order didn’t stick; a judge ruled that he had overstepped his authority. But what ultimately killed TXU’s plan was something unexpected: a bipartisan coalition of mayors from big cities and small towns, led by then–Dallas mayor Laura Miller, joined environmental groups to rally opposition. Republican powerhouses like Dallas real estate mogul Trammell Crow lent their considerable cachet. As the backlash grew, Perry found himself on the defensive about his executive order, just as he did with his now-famous directive on HPV vaccinations. But this was different. On HPV, Perry miscalculated where his base was on the issue; on air pollution, he seemed to have misjudged the political center. Anger about air pollution had gone mainstream.

“I’ve got nothing against Rick Perry, but I just felt he was wrong about this,” said Robert Cluck, the Republican mayor of Arlington who organized the first meeting of area mayors concerned about the new coal plants. Cluck, a retired obstetrician, said the issue everyone could agree on was protecting public health. “We have an asthma epidemic in our city, and so does every big city in the Metroplex,” he said. It’s unclear whether air pollution is contributing to the dramatic increase in asthma diagnoses across the country, but ozone is known to be a notorious trigger for patients who already have the condition, sending thousands of kids to the hospital every year. Hot summer days invariably mean dangerous increases in ground-level ozone, which in turn means Cook Children’s Medical Center, in Fort Worth, will see an increase in visits, said Chrystal Baeza, the hospital’s pulmonary clinical coordinator. “I can tell how busy we’ll be in the morning from the weather forecast the night before.”

Arlington had been doing everything in its power to get into compliance with the EPA’s ozone standards, Cluck said, but TXU’s plan threatened to undo all of the progress. “There was no need to build more coal plants,” he said. “We’ve got gas in our back pocket, so why aren’t we using it?” Cluck is skeptical of the motivation behind the current attack on the EPA, and he’s not alone. In a survey conducted by Hart Research Associates and GS Strategy Group on behalf of an environmental group, 67 percent of respondents supported immediate implementation of CSAPR, including 58 percent of Republicans polled. I asked the mayor about the way the debate was being framed, as a conflict between jobs and regulations in a recession. Cluck shook his head. “There’s always an excuse.”

So is the EPA really destroying jobs? Luminant insists that the CSAPR rule left it no alternative to laying off workers, but skeptics see other factors at play. Monticello is nearly forty years old and lacks modern pollution controls. The same is true for Luminant’s two other lignite-burning plants in northeast Texas, Martin Lake and Big Brown, which, like Monticello, would have to switch to western coal if CSAPR goes into effect. These three facilities produce nearly half of all the sulfur dioxide emitted by Texas’s entire fleet of power plants. Because of the prevailing winds, coal burned by these old plants blankets not only East Texas but also Dallas–Fort Worth with soot and ozone. Luminant saved billions by not investing in the types of scrubbers (devices that decrease pollution emitted from older plants) that many of their competitors installed years ago. In a letter to the editor published in the Wall Street Journal under the headline “We’re OK With the EPA’s New Air-Quality Regulations,” eight top executives of U.S. power companies noted that most of the plants facing retirement across the nation were old and inefficient. Low profit margins were the main reason the companies were considering shutting them down, not 
excessive regulation.

Profit is undeniably a problem at Luminant. TXU was purchased in 2007 for $43.2 billion by Goldman Sachs and two private equity firms, in what at the time was the largest leveraged buyout in history. The new company was called Energy Future Holdings, and the power plant division was renamed Luminant. What the new management team did not anticipate was the plummeting price of natural gas, which became tremendously more plentiful with the development of massive plays like the Barnett Shale, in North Texas. Coal had always been the cheapest fuel for electricity generators, which made TXU’s portfolio of coal plants attractive to Wall Street. When gas, which provides about 40 percent of the state’s electricity, became just as cheap, the value of the coal plants fell sharply. Moody’s has lowered EFH’s credit rating to “extremely speculative,” and the company has been forced to write-down its value by at least $13 billion since 2009. Luminant spokesperson Allan Koenig rejected the notion that the company’s financial troubles contributed to the decision to idle units at Monticello and close mines. “We were given a very short timeline to make major reductions, and those decisions were made solely to comply with the rule,” he told me. (He also noted that Luminant had reduced its sulfur dioxide emissions by 21 percent since 2005.) Still, there is no denying that the math is not in Luminant’s favor. In the competitive electricity market, Big Brown, Monticello, and Martin Lake no longer earn the company enough money to justify installing scrubbers, even if the company wanted to do so.

Larry Soward will never forget the day he heard about Perry’s executive order to expedite the hearings for TXU’s coal plants. “I was traveling in East Texas, and I get this phone call from a reporter,” said Soward, who was then a commissioner at the TCEQ. “He says, ‘What do you think about this executive order on power plants?’ And I said, ‘What are you talking about?’ ” The governor’s office had clearly consulted with business leaders ahead of time, but it never bothered to inform the agency charged with issuing the permits. Perry had appointed Soward, who served as his deputy commissioner at the Department of Agriculture in the mid-nineties, to the commission in 2003. Soward, who also worked for Lieutenant Governor David Dewhurst, had never been known as a bomb thrower, but he had a hard time staying on the reservation in his new position at the TCEQ, an agency he had come to believe sided too often with industry over protecting public health. The executive order was too much for him to stomach. “I very subtly let my colleagues know that as these items came up for a hearing, I was going to air all this out in public,” he said. In the end, TXU scaled back its construction plan to include just three coal plants, and each went through the normal permitting process.

Soward found himself a lonely voice of dissent in a string of 2 to 1 votes. “One that always floored me was the high mercury levels in East Texas lakes,” he said. People were eating fish contaminated with levels of mercury that could only be attributed to pollution from nearby coal-fired power plants. Yet when permit applications for new coal plants came before the board, the majority of commissioners refused to consider the impact on area lakes. “They said water issues are not relevant to air permits,” Soward recalled. The regulators tasked with cleaning up the lake, meanwhile, considered airborne emissions to be beyond their purview. “So the issue never gets addressed,” he said.

Shortly after TCEQ chair Kathleen Hartnett White left the agency, in 2007, Soward got a call from the governor’s office asking him to come see Kenneth Anderson Jr., Perry’s director of governmental appointments. With White gone, either Soward or his fellow commissioner Buddy Garcia would be named the new chair, and Soward figured Anderson wanted to visit with him about the decision. But Anderson had something else in mind. “We know you’ve been on the losing end of a number of votes,” he told Soward. “Surely you’d be happier if you weren’t in the minority, and we want you to know that we’d be happy to find you another place to serve.” Soward realized that Perry was trying to get rid of him. Soward still had two years left in his term, and nobody could force him to leave until it was up. “I let them know I was happy to be that dissenting voice,” he said.

Since leaving the commission at the end of 2009, Soward has worked as an independent consultant and has gotten a taste of what it is like to go up against industry in front of the TCEQ. Among other clients, he has worked for an ad hoc consortium opposing the construction of a new coal-fired power plant on Matagorda Bay called White Stallion. “All of Matagorda County was opposed to it,” Sow­ard said. “Doctors, county judges, commissioners, mayors, everybody.” The case went to a contested hearing, a trial-like proceeding overseen by an administrative law judge, where the burden is on the permit applicant to prove a project will not harm public health. The judge ruled that the company had not met the burden of proof, but the victory was a brief one. “The commissioners said, ‘Nah, they did meet it. Issue the permit.’ ” Soward was disappointed but not surprised: he had seen his fellow commissioners override judges on many occasions.

The TCEQ’s mission statement explicitly notes that the agency must take into account the effect of regulations on economic development, a responsibility that Soward said was never neglected at the agency. “I heard that every day at the commission,” he said. “ ‘How much is this going to cost industry to comply?’ ” What often gets lost in the debate, he said, is the cost of failing to properly regulate air pollution. One estimate of the annual number of illnesses, hospital visits, and deaths associated with six of Texas’s older lignite-burning power plants puts the total cost to society at $1.9 billion.

Soward stressed that the staff of the TCEQ was dedicated and hardworking. “The problem is that their hands are too often tied,” he said. Since Perry declared his candidacy, Soward has gotten quite a few calls from national reporters wanting to know what kind of regulatory regime we’d see under a Perry administration. He always tells them the same thing: minimal regulations, major programs rolled back, economic concerns as the guiding factor. Soward gave me the short version: “Just look at the TCEQ.”

Headquartered in a sprawling six-building campus in North Austin, the TCEQ is one of the state’s largest agencies. Since 2009, it has been headed by Bryan Shaw, an associate professor in Texas A&M’s Biological and Agricultural Engineering Department whom Perry tapped to fill a vacancy in 2007 and promoted to chair two years later. It’s easy to see what Perry likes about Shaw, who, at age 45, is young by the standards of agency heads and projects an air of earnest intensity in public testimony and media interviews. As an academic, Shaw’s published work has focused on the regulatory state, with an eye toward identifying rules that have created more burdens than benefits. He told me he jumped at the chance to become a regulator himself. “Instead of being a scientist saying, ‘Here’s better data, develop better regulations,’ I get to be the regulator that says, ‘Bring me better science, and I’ll develop better regulations.’ ”

Shaw rejected the idea that the agency had become an arm of Luminant or any other industry. “My decision on whether or not I’m supportive of suing the EPA has nothing to do with how it will affect an individual company,” he told me. “Our duty is to protect the environment but to do so in a way that’s conducive to continued economic growth.” As evidence, he offered a statistic that Perry has repeated many times on the campaign trail: Texas reduced average ozone levels statewide by 27 percent in the 2000’s, which is far better than the national average over that period. Perry has also claimed that the state reduced emissions of nitrogen oxide—a key component of smog—by 58 percent.

But both of these data points are deceptive. The notion of a “statewide average” for ozone reductions is a recent invention of the TCEQ. People do not breathe “average” air; they breathe the air in the city in which they live, which is why the EPA tracks changes in specific areas to look for improvement in air quality. By the EPA’s calculations, ozone levels in Houston are down 23 percent, but improvements in other metropolitan areas lag far behind.

The 58 percent reduction in nitrogen oxide is even more dubious. The figure counts only stationary sources of pollution, like factories and power plants, ignoring the enormous volume of the gas that comes from cars and trucks. State regulators have argued that Texas has little control over vehicle pollution, which is regulated by the federal government, but this is deceptive too. Texas could have chosen to adopt stricter fuel economy standards, as California did, but decided not to. In fact, when Obama announced new national standards last year, Texas sued.

Like Perry, Shaw is a climate-change skeptic. “Anytime somebody says the science on something is settled, it sends up a red flag for me,” he told me. Shaw readily admits he has no training in climate science, but he seemed eager to engage me on his understanding of the state of the research. He described at length work done by a climatologist named Roy Spencer, whose research measuring energy release from the “thermal blanket” created by greenhouse gases questioned the validity of widely accepted models for predicting temperature change. Shaw said that Spencer was one of “only two researchers that I’m aware of that are doing empirical data, where they are actually measuring what’s going on.” It was the second time in a week I’d heard Shaw discuss Spencer’s research, a portion of which was published last summer in the journal Remote Sensing. On neither occasion did Shaw mention that the editor of Remote Sensing was moved to resign amid the furor that followed publication of Spencer’s work, apologizing for publishing an article that contained “fundamental methodological errors” and “false claims.”

Shaw’s former colleagues at Texas A&M were not surprised to hear that he was still invoking Spencer’s research. Gerald North, the dean of Texas climate scientists, has an office on the twelfth floor of the Eller building, just a short walk from Shaw’s old office on campus. North, who has white hair and a white mustache and favors suspenders, once debated Spencer in Austin at an event sponsored by the conservative Texas Public Policy Foundation; Shaw served as the moderator. “I kept trying to talk about the science, but all they wanted to talk about was how much money it was going to cost to regulate carbon,” he recalled. I asked North why the sponsors brought in Spencer, who works at the University of Alabama in Huntsville, instead of finding a climate change skeptic from among the scores of climate researchers in Texas. The answer is that there isn’t one. “To my knowledge, there are no climate scientists—genuine researchers, not weather forecasters—in the state of Texas that dispute that global warming is real and is caused in large part by humans.”

We were joined in North’s office by Andrew Dessler, a young climate scientist who published a paper debunking the Spencer study cited by Shaw. He scoffed when I reported that Shaw had told me that Spencer was one of the only scientists doing empirical research on the question of energy release from the earth’s atmosphere. “That’s just wrong. He knows that’s wrong,” Dessler said.

“Well, let’s not get into what he knows and doesn’t know,” North calmly interjected.

“Okay,” Dessler replied, “he could have found out that was wrong by coming to the twelfth floor of our building.” Dessler compared the state of climate research to the science on smoking. “We still don’t know exactly how smoking causes cancer. We don’t know why some people can smoke for forty years and never get it. But we know it’s causing harm. We know enough to take action.”

In Fed Up! Perry called Al Gore a “false prophet of a secular carbon cult.” The smile lines beside North’s eyes crinkled when I reminded him of that line, like they did almost every time I brought up the poisonous political environment that has grown up around the field he has devoted his life to studying. Like many climate researchers, North spends much of his time trying to find alternative explanations for the rise in global temperatures. In a sense, he is trying to prove that skeptics like Shaw and Spencer are right. On a giant Apple monitor atop a cluttered desk, he showed me graphs he had made from ancient ice cores taken from Greenland, which allow researchers to track the impact on the earth’s climate of sunspot activity over thousands of years. The idea, North explained, is to determine whether anything like the rapid temperature rise we have seen in this century has happened before, perhaps because of the sun, perhaps because of something else. “The answer,” he said, “is no.”

In early October, the EPA announced a modification of the CSAPR rule as it applied to Texas and several other states. The agency corrected errors detected by Luminant and Texas regulators in its calculations and announced that Luminant would be given more time to comply with the required reductions in sulfur dioxide emissions. Supporters of the EPA saw an agency willing to work with industry; detractors saw confirmation that the original rule had not been based on sound science. Greg Abbott announced that the state would press on with its lawsuit regardless of any agreement between the EPA and Luminant. A similar dynamic had unfolded in the earlier fight over the flex permit: even as Abbott and others were issuing blustery press releases, dozens of companies with invalidated permits were quietly coming to the table to negotiate with EPA officials, and the vast majority came into compliance in a matter of months, with no layoffs. “At some point, companies just want regulatory certainty,” Larry Soward said.

But what do the politicians want? Perry’s ambitions are clear enough. Abbott is widely considered a likely candidate for governor when Perry leaves office. Whatever else the EPA may be, it is pure gold as a foil for conservatives running for higher office—more useful, perhaps, than notions of regulatory certainty. While rolling out his energy and jobs plan, Perry mentioned the vast potential of the Marcellus Shale, the enormous natural-gas-bearing formation beneath Pennsylvania. Extracting that gas would mean extensive use of the controversial practice of fracking—the high-pressure injection of water, sand, and chemicals to loosen gas-bearing shale formations. Fracking is not even regulated by the EPA; the agency is studying the issue, but no rules are expected until 2014. The Obama administration is widely thought to be bullish on natural gas. But you wouldn’t guess that from Perry’s speech. “We’re standing on top of the next American economic boom, and it’s the energy underneath this country. And the quickest way to give our economy a shot in the arm is to deploy the American ingenuity to tap American energy,” he said. Then he added, “But we can only do that if environmental bureaucrats are told to stand down.”


Editors’ Note: After the publication of “Up in the Air,” Luminant raised a concern about the way Texas Monthly described the implementation of the CSAPR rule.

Luminant wrote:

Toward the end of this story, Texas Monthly made a very important factual error in its reporting. Nate Blakeslee wrote, in part, “In early October, the EPA announced a modification of the CSAPR rule as it applied to Texas and several other states. The agency announced that Luminant would be given more time to comply with the required reductions in sulfur dioxide emissions.”

When the EPA announced its proposed revisions in October, it did not announce that more time would be given to Luminant or the State of Texas. In fact, the compliance date continues to be what they announced in early July—a date of Jan. 1, 2012.

This point is especially important to Luminant as it is one of the central arguments of our legal case—that this highly compressed and unprecedented timeline will cause harm to our employees, our operation and the communities we proudly serve across Texas.

Nate Blakeslee responds:

While I appreciate Luminant’s response, I stand by the story’s description of the impact of the EPA’s proposed changes to the CSAPR rule. I did not report that the EPA had changed the compliance date for the CSAPR rule, nor did I mean to imply that this had occurred.

When the EPA announced its proposed revisions to the rule in October, it in effect marginally increased the amount of emissions Luminant’s plants would be allowed to produce. According to the EPA, this would allow the company to continue operations without installing pollution controls or buying additional credits—or shutting down boilers—until late 2012.

The EPA has also proposed delaying implementation of the rule's penalty provisions until January 1, 2014. The EPA has characterized each of these proposed changes as giving Luminant “more time” to comply with the rule, which is the phrase I used in the story. Negotiations between Luminant and the agency are ongoing.

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