Texas Business Report: Appeals Court Sides with Texas over EPA

Texas Attorney General Greg Abbott scored a victory over the EPA this week over when a federal appeals court ordered the federal agency to take more time to consider Texas's pollution control measures.
Sat March 31, 2012 12:56 am
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The Texas economy is one of the most robust in the world. Wildly profitable companies and ingenious entrepreneurs call this state home, and what happens here influences businesses around the nation. Here’s a slice of the profits, losses, big deals, and backroom decisions happening across Texas this week. 

Tough Abbott to Break
Texas energy companies and Attorney General Greg Abbott claimed victory over the Environmental Protection Agency this week when the U.S. Court of Appeals for the Fifth Circuit admonished the EPA for unduly rejecting the state’s proposed pollution control measures. The agency took four years to disapprove the plan for regulating energy producers, including coal plants, according to the Associated Press. The ruling requires the EPA to reconsider Texas’s proposal in a timely fashion and to approve it if it meets Clean Air Act requirements.

The Bottom Line : Texas is also joining several other states in a lawsuit “against EPA regulations to cut interstate pollution from power plants,” Bloomberg reports. Industry observers say this week’s ruling bodes well for the states in that case .

Time on Our Side
Austin got a mention in Time Magazine’s cover story this week as shining counterexample to the “wimpy” economic recovery plaguing the rest of the country. The article discusses the flow of investment capital into the city, adding, “[t]he big question is whether boomtowns like Austin are mere islands while job growth remains underwater elsewhere.”

On Time’s website, Hilary Hylton delved further into the implications of Austin’s economic success, including its development boom and demographic changes in recent years. Hylton concludes, “Amid all this hype and change, hope hangs in the air that the authentic Austin does not become as elusive as an affordable home inside the city.”

The Bottom Line : As evidence of Austin’s promising future, the article cites economist Angelos Angelou’s prediction that the metro area would add some 45,000 jobs in the next year and see its unemployment rate fall from 6.3 percent to 5.6 percent over the same period.

Hate of the Union
Fort Worth-based AMR, the bankrupt parent company of American Airlines, encountered more turbulence in its restructuring effort this week, seeking a court order to void its contracts with employee unions. The airline is attempting to cut $1.25 billion in annual labor expenses, leading to a standoff with pilots, flight attendants and other transport union workers over collective bargaining, Bloomberg reports. Federal bankruptcy courts can grant companies permission “to reject labor contracts to cut costs if it can’t reach a consensual deal with unions.”  

The Bottom Line : The filing could be a risky move for the airline, according to Bloomberg. AMR’s unsecured creditors’ committee, which has a say in takeover bids during bankruptcy, contains union members, which could make it easier for US Airways, Delta or another suitor to swoop in and take advantage of employee discontent.

Too Oily to Tell
Oil companies became the latest pawns in the election-year political game this week, as the Senate gave initial approval to a bill that would repeal tax breaks for Exxon Mobil, BP, ConocoPhillips, Chevron and Royal Dutch Shell. If adopted, the legislation would save about $24 billion over 10 years.

However, Reuters reports the bill “is unlikely to become law” and the 92–4 vote was an attempt by both parties to “score political points over rising gasoline prices.”

The Bottom Line : Senate Republicans, who actually oppose eliminating the tax breaks, voted for the bill knowing it would be dead on arrival in the House, which is controlled by Republicans.

Winners of the Week: Natural Gas Vehicles
The goal of increasing the presence of low-emissions vehicles in Texas has been slow going, but a potential partnership between Valero and Chesapeake Energy could help correct that problem. The companies say they are considering working together to develop “a network of natural-gas fueling stations between Dallas, Houston and San Antonio,” according to the San Antonio Business Journal .

Valero and Chesapeake could apply for grants from the Texas Commission on Environmental Quality, which has been allocated $4.5 million to establish infrastructure for natural gas fuel in the “Clean Transportation Triangle.” The Houston Chronicle reports there are about 1,000 natural gas refueling stations nationwide, but only three in Houston.

Loser of the Week: Natural Gas Industry
While natural gas fuel may be the next big thing on Texas roadways, the industry as a whole has been lagging in recent years as the state has scaled back on gas-generated electricity. A new report by University of Houston professor Michael Economides estimates that Texas’s economy took a hit of $7.7 billion and missed out on 8,600 jobs from 2005 to 2011 due to the drop in natural gas consumption, according to the Dallas Observer . Economides, an industry supporter, says the state could have avoided that outcome by relying less on imported coal and more on natural gas, which is cheaper and produced in-state.

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