United States Government Accountability Office

Washington, DC 20548 

August 4, 2009 

Congressional Addressees 

Subject: Air Pollution: Air Quality and Permitting of New Coal-Burning, 

Electricity-Generating Units in Central Texas

Burning coal generates about 50 percent of the nation’s electricity and produces air 

pollution that can pose a significant threat to human health and ecosystems. The 

Department of Energy (DOE) predicts that demand for electricity will increase 

nationally by 26 percent between 2007 and 2030, and DOE’s Energy Information 

Administration projects that Texas’s electricity demand will steadily increase through 

2030. This increasing demand for electricity in Texas has in recent years led to 

proposals for 33 new coal-burning, electricity-generating units across the state.1 Ten 

of these new units were proposed to be built in Central Texas, a region where 24 

electricity-generating units, including coal-burning units, already operate. Data from 

DOE’s Energy Information Administration show the 10 proposed coal-burning units 

would add nearly 10 percent to the state’s electricity-generating capacity. However, 

these proposed units in Central Texas raised concerns about the potential impact on 

air quality in the region. Furthermore, one energy company’s simultaneous 

submission of permit applications to the state for four coal-burning units to be built 

in Central Texas raised questions about whether the state permitting agency was 

required to consider the cumulative impact of all four units as part of the permit 

application review process. 

The Clean Air Act requires the Environmental Protection Agency (EPA) to establish 

national ambient air quality standards for six pollutants to protect public health and 

welfare. These six pollutants, also known as criteria pollutants, are carbon 

monoxide, nitrogen dioxide, sulfur oxides, particulate matter, ozone, and lead. In 

Texas, ozone is the criteria pollutant of primary concern. States are primarily 

responsible for ensuring attainment and maintenance of national ambient air quality 

standards once EPA has established them. States submit state implementation plans 

to EPA for approval that provide for the attainment and maintenance of air quality 

standards. If the state fails to submit this plan, submits an inadequate plan, or fails to 

implement any requirement of the plan, the state could face ineligibility for federal 

highway funding and may also lose authority to implement Clean Air Act programs. 

Under the act, the plans include stricter pollution control measures for areas not 

meeting the national ambient air quality standards, known as nonattainment areas. 

 

1

A power plant can have more than one coal-burning unit. 
Page 2 GAO-09-787R Air Quality and Power Plants in Central Texas 

Steps that states and local governments are required to take under the act to control 

ozone pollution in nonattainment areas can include strict emission controls on new, 

modified, and existing industrial facilities; additional planning requirements for 

transportation sources; and vehicle emissions inspection programs. 

Once EPA approves a plan, states are generally responsible for implementing the 

New Source Review and Prevention of Significant Deterioration provisions of the 

Clean Air Act. When new major sources of air pollution, such as power plants, are 

proposed, they must undergo New Source Review and, in areas that meet national air 

quality standards, a Prevention of Significant Deterioration review. New Source 

Review entails reviewing applications for the proposed power plants to establish 

emission limits and ensure they utilize appropriate air pollution control technologies. 

A Prevention of Significant Deterioration review ensures that the emissions from the 

source will not exceed maximum allowable increases for three of the criteria 

pollutants—nitrogen dioxide, sulfur oxides, and particulate matter—and that the 

source will not cause or contribute to a violation of the national air quality standards. 

Additionally, states generally issue permits for power plants under the Clean Air Act. 

In Texas, a Prevention of Significant Deterioration permit is issued prior to 

construction of a power plant and an operating permit shortly before it begins 

operation.2 In this report, the term permit refers to the Prevention of Significant 

Deterioration permit unless stated otherwise. 

We prepared this report in response to a congressional directive in the Joint 

Explanatory Statement accompanying the Consolidated Appropriations Act of 2008. 

This report provides information on (1) the current status of permitting coal-burning, 

electricity-generating units in Central Texas; (2) the process EPA and Texas use, 

under the Clean Air Act, to review permit applications for proposed new major 

sources of air pollution; and (3) what is known about air quality and respiratory 

health in Central Texas. 

To respond to these objectives, we interviewed officials from EPA and the Texas 

Commission on Environmental Quality (TCEQ), the environmental agency for Texas, 

regarding (1) the status of coal-burning, electricity-generating units proposed to be 

built in Central Texas, (2) how the state implements federal and state laws and 

regulations in its permit application review process, and (3) air quality standards and 

monitoring. We reviewed relevant laws, regulations, and policies on federal and state 

permitting requirements for new major sources of air pollution and federal 

requirements related to air quality standards and monitoring. We also obtained and 

analyzed existing ambient air quality data reported by TCEQ and mortality rates from 

the Texas Department of State Health Services and the Centers for Disease Control 

and Prevention’s National Center for Health Statistics’ National Vital Statistics 

System, to determine current air quality and health conditions in Central Texas. We 

assessed the reliability of these data and determined that they were sufficiently 

reliable for the purposes of this report. For the purposes of our review, we defined 

“Central Texas” as the 20 Texas counties that fall within TCEQ Region 9—Bell, 

 

2

Known as a Title V operating permit, this permit contains all existing federal Clean Air Act 

requirements, including the provisions of the Prevention of Significant Deterioration permit, applicable 

to the power plant. 
Bosque, Brazos, Burleson, Coryell, Falls, Freestone, Grimes, Hamilton, Hill, 

Lampasas, Leon, Limestone, Madison, McLennan, Milam, Mills, Robertson, San Saba, 

and Washington counties. Because TCEQ is subject to ongoing litigation related to 

some of the recently permitted coal-burning units that fell under our review, we did 

not evaluate whether the permitting actions taken by EPA or TCEQ comply with the 

Clean Air Act or other relevant statutes, regulations, or guidance. We conducted our 

work from October 2008 to August 2009 in accordance with all sections of GAO’s 

Quality Assurance Framework that are relevant to our objectives. The framework 

requires that we plan and perform the engagement to obtain sufficient and 

appropriate evidence to meet our stated objectives and to discuss any limitations in 

our work. We believe that the information and data obtained, and the analysis 

conducted, provide a reasonable basis for any findings and conclusions in this 

product. Enclosure I provides additional details on our objectives, scope, and 

methodology. 

Summary 

Of the permit applications TCEQ has received in recent years for 10 coal-burning, 

electricity-generating units to be built in Central Texas, applications for 5 have been 

withdrawn, and TCEQ has issued draft or final permits for the remaining 5. 

Specifically, in February 2007, one energy company withdrew its simultaneously 

submitted permit applications for four new coal-burning units in Central Texas after 

facing opposition from environmental advocates, local government officials, and 

some Central Texas residents. The following year, after a change in ownership, a 

different energy company cancelled plans to build a coal-burning unit in Central 

Texas and withdrew its permit application. Currently, TCEQ has issued either a draft 

or final permit for five coal-burning units to be built in the region. Construction on 

two of these units is near completion, and they are scheduled to begin operations in 

late 2009. However, the five coal-burning units have faced legal and administrative 

challenges from environmental advocates, local government officials, and some 

Central Texas residents. These challenges have generally claimed that TCEQ’s 

approval of the draft or final permits failed to comply with various Clean Air Act 

requirements. While some of the administrative and legal challenges have been 

settled, those that remain are in varying stages of resolution, and it is unclear when 

they will be resolved. 

When EPA approved Texas’s state implementation plan—a plan for attaining and 

maintaining national air quality standards—TCEQ became responsible for reviewing 

all permit applications and issuing permits for proposed new major sources of air 

pollution. An important component of the permit application process is the 

applicant’s analysis of the proposed new source’s likely effect on air quality. 

Specifically, for most criteria pollutants, applicants determine if the new source’s 

emissions of those pollutants are likely to exceed EPA-established thresholds. If the 

applicants determine that emissions are not likely to exceed EPA thresholds, no 

further analysis is required. However, if emissions are likely to exceed threshold 

levels, the applicant is required to perform a more detailed analysis to assess the 

impact of emissions from the new source, as well as the impact of emissions from, for 

example, other sources located or being constructed nearby. Regarding EPA’s 

Page 3 GAO-09-787R Air Quality and Power Plants in Central Texas 
Page 4 GAO-09-787R Air Quality and Power Plants in Central Texas 

 

oversight of TCEQ’s permitting procedures for new major sources, EPA said that the 

agency reviews most applications and draft permits and provides comments to TCEQ 

on most of them. According to EPA, although it tries to resolve differences with 

TCEQ, the state agency has at times issued permits with which EPA comments have 

disagreed. If EPA’s review of a draft permit reveals that the permit does not comply 

with the Clean Air Act or the Texas state implementation plan, EPA officials said that, 

generally, EPA must utilize its authority under section 113 of the Clean Air Act to take 

an enforcement action. Under this authority, EPA may issue an order to stop 

construction of the new major source or can impose administrative penalties. In 

addition, EPA expressed concerns to TCEQ about permit application review 

problems that arose in 2006 when a company simultaneously submitted applications 

for four coal-burning units to be built in Central Texas. Specifically, EPA expressed a 

concern about the cumulative impact of the emissions from these units and said the 

impact on air quality from the new coal-burning units could not be accurately 

determined. TCEQ said that permit applicants were not required to perform an 

analysis to determine the cumulative impact of emissions from these units and that 

routine EPA modeling practices were followed for each of the applications. 

Current data show Central Texas meets national air quality standards, but mortality 

rates from respiratory illnesses are slightly higher for the region than for the state or 

the nation. TCEQ operates an air quality monitoring network throughout the state, 

with two monitors currently in Central Texas that measure pollutant concentrations. 

Current TCEQ data show that Central Texas meets national air quality standards for 

all six criteria pollutants. However, ozone concentrations in the region are close to 

exceeding a new national ozone standard EPA issued in 2008. Research over the past 

50 years has consistently found that exposure to ozone is linked to the development 

of respiratory illnesses such as asthma. Furthermore, recent studies have provided 

strong evidence that respiratory health effects associated with ozone—such as 

decreased lung function and premature mortality—can occur at ozone concentrations 

below the current standard. Regarding respiratory health in Central Texas, the most 

recent data available from the Texas Department of State Health Services and the 

National Center for Health Statistics show mortality rates from most respiratory 

illnesses are slightly higher for Central Texas than for the entire state of Texas or for 

the nation as a whole. Specifically, the region has higher mortality rates from certain 

chronic lower respiratory diseases, pneumonia and influenza, and lung cancer. These 

agencies do not draw links between these mortality rates and any specific cause of 

the respiratory illnesses. 

Background

In Texas, there are currently three ozone nonattainment areas based on EPA’s 1997 

national ozone standard.3

 Coal-burning, electricity-generating units contribute to 

ozone formation by emitting nitrogen dioxides, which, in the presence of sunlight, 

react with manmade and naturally occurring volatile organic compounds to form 

3

The areas in Texas currently classified as ozone nonattainment areas are (1) Dallas/Fort Worth (nine 

counties); (2) Houston/Galveston/Brazoria (eight counties); and (3) Beaumont/Port Arthur (three 

counties). 
ozone.4

 Moreover, ozone, as well as other pollutants, can be transported to 

downwind areas many miles away. Many clinical studies have shown that repeated 

exposure to ozone can lead to respiratory illnesses, decreased lung function, and 

premature death. To provide increased protection against these ozone-related 

adverse health effects, EPA revised the national ozone standard in 2008 based upon 

the evidence from over 1,700 scientific studies conducted since the 1997 national 

ozone standard was issued. In March 2009, the governor of Texas listed seven areas 

in the state that were not meeting the new 2008 national ozone standard and 

recommended to EPA that these areas be designated as ozone nonattainment areas 

by initially designating them as nonattainment.5 EPA will consider the governor’s 

recommended initial designation and promulgate ozone nonattainment area 

designations by March 2010. If EPA designates these areas as nonattainment for 

ozone, the number of nonattainment areas in the state will increase from three to 

seven, substantially expanding the number of Texas residents living in areas where 

ozone levels exceed the national standard. 

The Number of Proposed Coal-Burning, Electricity-Generating Units in 

Central Texas Has Declined from 10 to 5 in Recent Years 

Since 2002, TCEQ has received proposals for 10 coal-burning, electricity-generating 

units to be built in Central Texas, but permit applicants for 5 of these units have 

withdrawn their applications (see fig. 1 for the location of each proposed unit). 

 

4

Burning coal to produce energy also emits carbon dioxide—a greenhouse gas—into the atmosphere. 

5

The areas recommended to be designated as nonattainment for the new 2008 national ozone standard 

are the existing nonattainment areas identified in footnote 3 and (1) Austin (one county); (2) El Paso 

(one county); (3) San Antonio (one county); and (4) Tyler (three counties). Also, it was recommended 

that one county be added in the Dallas/Fort Worth area. None of the areas recommended as 

nonattainment for the 2008 national ozone standard is within the region we refer to in this report as 

Central Texas. 

Page 5 GAO-09-787R Air Quality and Power Plants in Central Texas 
Page 6 GAO-09-787R Air Quality and Power Plants in Central Texas 

Figure 1: Locations of Coal-Burning Units Proposed in Central Texas Since 2002 

$

"

"

"

Austin

Waco

Oak Grove

Limestone

Sandy Creek

Twin Oaks

Lake Creek

Big Brown

Tradinghouse

Sandow

Coal-burning unit permit status

Austin

Sources: GAO; EPA; TCEQ; MapInfo (map); and Art Explosion (clip art).

Waco

Permit application withdrawn

(Twin Oaks, Big Brown, Lake 

Creek, and Tradinghouse)

Draft permit issued

(Limestone)

Final permit issued

(Sandow, Sandy Creek, and 

Oak Grove)

Notes: The Oak Grove and Tradinghouse power plants each had two coal-burning units included in their permit 

applications. Additionally, the Sandow, Twin Oaks, Big Brown, and Limestone power plants included existing 

coal-burning units prior to 2002. 

Specifically, from 2002 through 2006, one energy company proposed seven new coalburning units for Central Texas and submitted permit applications for four of these 

units simultaneously. Environmental advocates, local government officials, and some 

Central Texas residents opposed the addition of these coal-burning units to Central 

Texas, claiming that their emissions would cause the region to violate the national 

ozone standard. In February 2007, a group of private equity firms purchased the 

company that had proposed the seven new coal-burning units. As part of the 

purchase, the company agreed to withdraw the permit applications for the four coalburning units that it had submitted simultaneously.6

 In exchange for the company 

withdrawing these applications, two environmental groups agreed to drop their 

opposition to the three Central Texas coal-burning units that the company had 

proposed separately. In addition, from 2004 through 2006, three other energy 

companies submitted permit applications to each build one coal-burning unit in 

 

6

The permit applications for these four units were withdrawn in September 2008. 
Central Texas. However, one of these companies withdrew its application in 2008 

after a change in ownership. TCEQ has issued a draft or final permit for each of the 

remaining five coal-burning units, although opposition to building these units 

persists. Table 1 provides additional information on the 10 proposed coal-burning 

units. 

Table 1: Ten Coal-Burning Units Proposed in Central Texas Since 2002 

Coal-burning unit 

Permit 

application date Location Permit status 

Generation 

capacity (in 

megawatts)

Sandowa November 2002 Milam County Final permit issued 564

Sandy Creek January 2004 McLennan County Final permit issued 800

Twin Oaks July 2005 Robertson County Application withdrawn 600

Oak Grove (first unit) July 2005 Robertson County Final permit issued 800

Oak Grove (second unit) July 2005 Robertson County Final permit issued 800

Big Brown April 2006 Freestone County Application withdrawn 860

Lake Creek April 2006 McLennan County Application withdrawn 860

Tradinghouse (first unit) April 2006 McLennan County Application withdrawn 860

Tradinghouse (second 

unit) 

April 2006 McLennan County Application withdrawn 860

Limestone June 2006 Limestone County Draft permit issued 800

Sources: GAO and TCEQ. 

a

The Sandow unit is comprised of two coal-burning boilers connected to one electricity generator. Although 

TCEQ regulates these two boilers as two separate emission points, for the purposes of our report, we refer to the 

Sandow coal-burning unit as one coal-burning, electricity-generating unit. 

The five coal-burning units with draft or final permits to be built in Central Texas are 

in various stages of construction and litigation. Construction is nearing completion 

on the Sandow unit and one of the Oak Grove units, and these two units are 

anticipated to begin operating by the end of 2009. The remaining two units with final 

permits are currently under construction and will likely be operational within the 

next few years, and construction has not begun on the Limestone unit, which 

currently has a draft permit. The five coal-burning units have faced administrative 

and legal challenges from environmental advocates, local government officials, and 

some Central Texas residents. In general, the challenges have claimed that TCEQ’s 

approval of the permits failed to comply with Clean Air Act requirements. These 

administrative and legal challenges include the following: 

• Sandow Unit 5. In 2001, a coalition of environmental and community groups 

sued Sandow’s operator for violating the Clean Air Act and Texas state 

implementation plan by failing to obtain the necessary permits and adopt the 

appropriate pollution control strategies. The lawsuit was settled in 2003 by 

consent decree, and Sandow’s operator has chosen to comply with the consent 

decree, as modified in 2004 and 2007, by building a new unit.

• Sandy Creek Unit 1. In August 2008, an environmental and consumer group 

filed a complaint in federal district court against the owners of the Sandy 

Creek power plant for failing to install appropriate pollution control 

technology to limit mercury and other hazardous air pollutants. The court 

held a hearing in early April 2009, but as of June 2009, the court had not issued 

a ruling, and the case was still pending. 

Page 7 GAO-09-787R Air Quality and Power Plants in Central Texas 
Page 8 GAO-09-787R Air Quality and Power Plants in Central Texas 

• Oak Grove Units 1 and 2. As of June 2009, five lawsuits were pending in state 

court alleging that TCEQ’s approval of the permit application violated Clean 

Air Act requirements, among other allegations. 

• Limestone Unit 3. In February 2009, the Texas State Office of Administrative 

Hearings held a contested case hearing over the draft permit’s limits on 

mercury emissions.7 TCEQ expects to decide by the end of 2009 whether to 

issue the final permit. 

Texas Reviews Permit Applications and Issues Permits for New Major 

Sources of Air Pollution under EPA’s Oversight 

When EPA approved Texas’s state implementation plan—a plan for attaining and 

maintaining national air quality standards—TCEQ became responsible for reviewing 

permit applications and issuing permits for proposed new major sources of air 

pollution. EPA retains oversight to ensure TCEQ adheres to its state implementation 

plan permit procedures. For example, senior EPA air program officials said they 

have reviewed over 90 percent of Texas’s new major source permit applications and 

draft permits in the last 2 years to ensure TCEQ was properly implementing Clean Air 

Act requirements and have provided written comments to TCEQ on the majority of 

these actions. 

According to TCEQ, when a new major source such as a power plant submits a 

permit application to TCEQ, the agency reviews the application to ensure it contains 

the required documentation, determines the compliance history of the applicant, and 

then directs the applicant to conduct public notice about the proposal with a 30-day 

comment period. Once the agency completes this initial review, TCEQ evaluates the 

application’s content, which includes the applicant’s analysis of the proposed new 

major source’s likely effect on air quality in the area. If TCEQ approves the permit 

application, it develops a draft permit for the source and issues a public notice about 

the draft permit with another 30-day comment period.8

 TCEQ also sends the draft 

permit to EPA and members of the public who previously commented on the permit 

application, as well as others. 

According to both TCEQ and EPA, one of the most important components of the 

permit application process for new major sources is the air quality analysis that 

applicants prepare. TCEQ explained that the first step in this analysis is for 

applicants to use air dispersion models to determine if the new source’s emissions 

 

7

A contested case hearing is a proceeding in which the legal rights, duties, or privileges of a party are 

to be determined by a state agency after an opportunity for adjudicative hearing. 

8

During this public comment period and the public comment period following TCEQ’s receipt of the 

permit application, certain members of the public and others may ask for a contested case hearing 

and/or a public meeting on the permit application or draft permit. Any member of the public may 

submit a comment to TCEQ on the permit application or draft permit during their respective comment 

periods. 
are likely to exceed EPA-established threshold levels for certain criteria pollutants.9

 

If these dispersion models demonstrate that emissions are not likely to exceed these 

threshold levels, no further analysis is required.10 However, if emissions are likely to 

exceed threshold levels, the applicant is required to perform a more detailed analysis 

to assess the impact of emissions from the new source, as well as the impact of 

emissions from other sources located within approximately 50 kilometers (about 31 

miles) from the new source.11 Specifically, TCEQ requires applicants to consider 

emissions from the new source, as well as from those sources that (1) already exist; 

(2) are under construction; or (3) have a complete permit application but have not yet 

received a permit. TCEQ officials said that this modeling is in accordance with EPA 

guidance. According to both EPA and TCEQ officials, there is no federal or Texas 

requirement for an air quality analysis to consider new major sources whose permit 

applications are not complete. 

Regarding EPA’s oversight of TCEQ’s permitting procedures for new major sources, 

EPA attempts to resolve any differences with TCEQ related to EPA’s review of these 

permit applications or draft permits before a permit is issued. However, EPA said 

that there are occasions when TCEQ has issued permits with which EPA’s comments 

on either the application, or draft permit, have disagreed. EPA explained that this 

situation can occur when EPA’s determinations and interpretations of the Texas state 

implementation plan differ from TCEQ’s. TCEQ may, however, issue a final permit 

even if the differences are not fully resolved. If EPA’s review of a draft permit reveals 

that the permit does not comply with the Clean Air Act or the Texas state 

implementation plan, EPA officials said that, generally, EPA must utilize its authority 

under section 113 of the Clean Air Act to take an enforcement action. Under this 

authority, EPA may issue an order to stop construction of the new major source, 

impose administrative penalties, or bring a civil action against the owner or operator 

 

9

Because ozone forms in the atmosphere and is not emitted directly, there is no EPA-established 

threshold of ozone emissions. Instead, emission levels of the precursors of ozone—nitrogen dioxide 

and volatile organic compounds—are considered. 

10As previously noted, TCEQ evaluates the content of a permit application, including the applicant’s 

analysis of the proposed new major source’s likely effect on air quality in the area. Dispersion models 

project the impact of the proposed source’s emissions on recent existing air quality levels and other 

proposed sources, based on air quality and weather monitoring data, emission inventory data of 

surrounding sources, the technical specifications of the new sources, and the topography of the 

surrounding landscape, among other factors. The results of modeling depend on such variables as 

data inputs and the design of the model. 

11According to EPA, 50 kilometers is the useful distance to which most steady-state Gaussian plume 

models are considered accurate for setting emission limits. The traditional stationary source models 

recommended in EPA’s Guideline on Air Quality Models (40 C.F.R. Part 51, Appx. W) are the models 

generally used in the air quality impact analysis of stationary sources for most criteria pollutants. 

TCEQ officials said that available air dispersion modeling techniques used for permitting purposes 

generally provide accurate modeling estimates up to 50 kilometers from the source being modeled. 

Although EPA recognized the need to estimate impacts at distances greater than 50 kilometers, its 

guidelines state that long range transport models are limited for regulatory use to a case-by-case basis.

Page 9 GAO-09-787R Air Quality and Power Plants in Central Texas 
Page 10 GAO-09-787R Air Quality and Power Plants in Central Texas 

 

of the facility.12 For example, EPA may issue an administrative order against any 

person assessing a civil administrative penalty of up to $25,000 per day for violation 

of the Clean Air Act, under certain circumstances, after a hearing on the record.13 

EPA expressed concerns to TCEQ about draft permit review problems in November 

2006 when a company simultaneously submitted applications for four coal-burning 

units to be built in Central Texas. Specifically, EPA expressed a concern about the 

cumulative impact of the emissions from these units, especially on ozone levels, and 

recommended that TCEQ perform a cumulative ozone impact analysis that would 

include all of the proposed coal-burning units. In TCEQ’s February 2007 response to 

comments on draft permits, it stated that individual permit applicants were not 

required under TCEQ rules to perform this analysis. EPA officials told us that 

Prevention of Significant Deterioration regulations do not require TCEQ or the 

applicant to conduct a cumulative ozone impact analysis. However, EPA officials 

said that the applicant must determine if other existing sources or proposed sources 

are within the impact area to be modeled.14 If so, these emissions must be included in 

the modeling required by the applicable regulations. This modeling must 

demonstrate that the proposed source, in conjunction with all other applicable 

emissions increases or reductions, would not cause or contribute to air pollution in 

violation of any national ambient air quality standard or maximum allowable increase 

for certain pollutants. Therefore, if a series of new sources within the same impact 

area submits a permit application, each successive source must include the emissions 

from the sources who have already filed a complete permit application in the air 

quality modeling for its source. 

According to EPA, it may make a recommendation that cumulative modeling is easier 

and more convenient where (1) a significant number of proposed new sources are in 

an area that is close to not meeting national air quality standards (Central Texas) and 

(2) where proposed new sources that will emit significant amounts of the precursors 

of ozone are just outside of an ozone nonattainment area (Dallas/Fort Worth), but it is 

only a recommendation.15 EPA officials stated that they would, however, review each 

draft permit to ensure that modeling included all existing and previously proposed 

sources in the impact area. EPA further noted that, generally, under section 165(a) of 

the Clean Air Act, no major emitting facility may be constructed unless the proposed 

permit has been subject to a review in accordance with the applicable regulations and 

12When EPA’s review of a draft operating permit reveals that it is not in compliance with the Clean Air 

Act or the state implementation plan, EPA must object to the permit. TCEQ is then required to revise 

the draft permit in response to the objection. If TCEQ fails to do so, EPA must assume responsibility 

for determining whether to issue or deny the draft operating permit. 

13However, EPA’s authority to impose administrative assessments of civil penalties is limited to matters 

where the total penalty sought does not exceed $200,000 and the first alleged date of the violation 

occurred no more than 12 months prior to the administrative action, except when the EPA 

Administrator and Attorney General agree that a larger penalty or longer period can be appropriately 

addressed by an administrative penalty. 

14According to EPA guidance, the impact area is a circular area with a radius of approximately 50 

kilometers (about 31 miles) extending from the proposed source. 

15As previously noted, the precursors of ozone are nitrogen dioxide and volatile organic compounds. 
that it is TCEQ’s responsibility as the permitting authority to ensure, prior to granting 

the permit, that potential impacts caused by an individual proposed source will not 

cause or contribute to a violation of any applicable national air quality standard, 

including ozone. 

Additionally, when EPA commented on the draft permits in November 2006, it said it 

had difficulty evaluating the air quality analyses of the individual permit applications 

because TCEQ had deemed the applications as complete at the same time and had 

not assigned a sequential order to them. EPA explained that applicants generally 

submit permit applications on separate days, and when that occurs, the sequence of 

the applications and, therefore, the scope of the air modeling required are clear. 

However, in this case, EPA stated that though the air modeling for each of these four 

coal-burning units should have accounted for the likely emissions from the others 

applying that day, EPA was unable to determine if the modeling had accounted for 

those emissions. As such, EPA said that the impact on air quality from these new 

sources could not be accurately determined. According to TCEQ officials, however, 

routine EPA modeling practices were followed for each of the applications. The 

permit applications for these four units were ultimately withdrawn by the company 

after it was purchased in February 2007 by a group of private equity firms. 

Central Texas Meets National Air Quality Standards, but Available Data 

Show Slightly Higher Mortality Rates from Respiratory Illnesses in the 

Region than in the State or Nation 

Current data from TCEQ’s air quality monitoring network show Central Texas meets 

national air quality standards for all six criteria pollutants.16 However, monitoring 

data also show ozone concentrations in the region are close to exceeding the new 

EPA 2008 national ozone standard. TCEQ operates an air quality monitoring network 

of over 200 monitoring sites throughout the state. In Central Texas, two air quality 

monitors currently measure pollutant concentrations. One monitor, located near the 

city of Waco, measures levels of carbon monoxide, nitrogen dioxide, sulfur oxides, 

particulate matter, and ozone. This monitor began collecting data on pollution levels 

in April 2007, when TCEQ established it to satisfy a request from a member of the 

Texas legislature. The second monitor is located in the city of Killeen, and it 

measures ozone levels. TCEQ established this monitor in June 2009 to meet federal 

air quality monitoring requirements.17 Because EPA’s ozone nonattainment 

designations are based on 3 complete years of data, the Waco air quality monitor 

cannot be used in EPA’s consideration of a nonattainment designation for the region 

 

16TCEQ uses emissions data to monitor lead concentrations throughout most of the state. According to 

TCEQ, ambient air quality in Central Texas meets the 1978 national air quality standard for lead. 

17TCEQ establishes air quality monitors in accordance with design requirements contained in Appx. D 

to 40 C.F.R. Part 58. For ozone, the various monitor locations depend upon area size (in terms of 

population and geographic characteristics) and typical peak concentrations (expressed in percentages 

below, or near, the ozone national ambient air quality standard). 

Page 11 GAO-09-787R Air Quality and Power Plants in Central Texas 
Page 12 GAO-09-787R Air Quality and Power Plants in Central Texas 

until April 2010, and the Killeen monitor cannot be used until June 2012.18 However, 

when TCEQ calculates current data from the Waco monitor for comparison against 

the 2008 national ozone standard of 75 parts per billion, the region’s preliminary 

calculated ozone value, as of July 30, 2009, is 72 parts per billion.19 Furthermore, as 

figure 2 shows, Central Texas is bordered by areas that EPA designated as 

nonattainment under the 1997 national ozone standard and areas that the governor of 

Texas recommended EPA designate as nonattainment under the new 2008 national 

ozone standard. 

Figure 2: Designated and Recommended Ozone Nonattainment Areas in Texas 

Austin

San Antonio

Central Texas

Dallas/Fort Worth

El Paso

Tyler

Houston/

Galveston/Brazoria

Beaumont/

Port Arthur

Sources: GAO; EPA; TCEQ; and MapInfo (map).

Recommended nonattainment areas under 2008 national ozone standard (27 counties)

Designated nonattainment areas under 1997 national ozone standard (20 counties)

 

18EPA makes attainment and nonattainment designations based on a statistic, known as a design value, 

which EPA compares to the national air quality standard. For the national ozone standard, the design 

value is the 3-year average of the annual fourth-highest daily maximum 8-hour average ozone 

concentration. The 2008 national ozone standard is 0.075 parts of ozone for 1 million parts of air, (or 

75 parts of ozone for 1 billion parts of air). Areas with a design value above this amount have failed to 

meet the standard. 

19The preliminary calculated ozone design value of 72 parts per billion includes data from April 20, 

2007, through July 30, 2009. When 3 complete years of data from the Waco monitor are available in 

April 2010, the calculated ozone design value will likely be different because it will include monitored 

ozone levels from the entire summer of 2009. (Ozone levels are typically highest during the summer.) 
When an area is classified as a nonattainment area for ozone, the state must revise its 

state implementation plan to describe the measures the state will implement so that 

the area will attain the national ozone standard. If EPA finds that the state has failed 

to submit this plan revision, submitted an inadequate plan, or failed to implement any 

requirement of the plan, EPA makes a finding of inadequacy and publishes a 

proposed rule calling for the imposition of sanctions on the nonattainment area.20 

After the proposed rule’s notice and comment period, EPA must impose an emission 

offset sanction or federal highway funding sanction on the nonattainment area.21 For 

example, the highway funding sanctions allow EPA to impose a prohibition on the 

Secretary of Transportation’s approval of certain projects or awarding certain grants 

applicable to the nonattainment area. These sanctions could have adverse economic 

consequences for the nonattainment area. In addition, the state’s revised 

implementation plan must list the pollution control measures the state will apply so 

that the area will attain the national ozone standard. Examples of these pollution 

control measures include requirements that the state and local governments impose 

strict nitrogen dioxide and volatile organic compound emission limits on new, 

modified, and existing sources of these pollutants because they contribute to ozone 

formation. According to TCEQ and EPA officials, the cost of meeting these emission 

limits may discourage businesses from locating factories and other industrial 

facilities in nonattainment areas. In fact, TCEQ said that when one international 

company recently considered building a new factory in Texas, the company avoided 

the Dallas/Fort Worth and Houston areas because of the strict emission limits in 

those two ozone nonattainment areas. 

Research over the past 50 years has consistently found that exposure to ozone is 

associated with adverse respiratory effects.22 Epidemiological and human exposure 

studies conducted in the last several years provide evidence of a robust association 

between ozone exposure and decreased lung function, respiratory hospitalizations, 

 

20Some of the inadequacy findings, such as a failure to implement, must be made through a separate 

rulemaking. 

21The emission offset sanction requires a ratio of at least 2 to 1 for emissions reductions from existing 

sources of pollution within the nonattainment area to offset emissions from major new or modified 

facilities. In other words, a company that is constructing or modifying a facility over a certain size is 

required to reduce emissions in the nonattainment area by 2 tons for every new ton the new or 

modified facility will emit. The offset requirement refers to reductions in emissions that major new 

and modified sources must get from existing sources before they may begin construction. 

22We refer to several epidemiological and human exposure studies under this section that are found in 

72 Fed. Reg. 37818 (July 11, 2007) (the proposed rule for the national ambient air quality standards for 

ozone) or the criteria document that EPA’s Office of Research and Development developed to 

critically evaluate the latest scientific information on the health and welfare effects of ozone. EPA 

used these studies, along with many others cited in these documents, to support its decision to revise 

the national ozone standard in 2008. We did not assess the methodological soundness of the studies or 

the analysis referred to in our report. 

Page 13 GAO-09-787R Air Quality and Power Plants in Central Texas 
Page 14 GAO-09-787R Air Quality and Power Plants in Central Texas 

s 

y 

 

and premature mortality.23 These studies also found that children, older adults, 

adults who are active outdoors, and those with pre-existing lung conditions such as 

asthma, are more vulnerable to these adverse health effects.24 Furthermore, recent

studies have provided strong evidence that respiratory health effects associated with

ozone occur at ozone concentrations below the current standard. For instance, an

EPA analysis of a 2006 study found statistically significant lung function decrement

in healthy adults exposed to ozone levels of 60 parts per billion, and a 2006 multicit

study found the relationship between ozone concentration and mortality could occur 

at concentrations far below the current standard.25

Regarding respiratory health in Central Texas, the most recent data available show 

mortality rates from most respiratory illnesses are slightly higher for the region than 

for the entire state or the nation as a whole. Specifically, the Texas Department of 

State Health Services and the National Center for Health Statistics report mortality 

rates from respiratory illnesses for 2001 through 2005 that are adjusted to control for 

differences in the age distribution of the different populations but not for other 

influences, such as rates of smoking and socioeconomic levels.26 As figure 3 shows, 

Central Texas has higher mortality rates than the entire state and the nation as a 

whole from certain respiratory illnesses, but mortality rates from one type of 

respiratory illness—other chronic obstructive pulmonary diseases—were slightly 

lower for Central Texas than for the state and the nation. The Texas Department of 

State Health Services and National Center for Health Statistics data do not draw links 

between these mortality rates and any specific contributing causes of the respiratory 

illnesses. 

23These studies include: W. F. McDonnell et al., “Ozone-induced respiratory symptoms: exposureresponse models and association with lung function,” European Respiratory Journal, vol. 14 (1999); 

R. T. Burnett et al., “Association between ozone and hospitalization for respiratory diseases in 16 

Canadian cities,” Environmental Research, vol. 72 (1997); M. L. Bell et al., “Ozone and short-term 

mortality in 95 US urban communities, 1987-2000,” Journal of the American Medical Association, vol. 

292 (2004). 

24These studies include: P. Höppe et al., “Environmental ozone effects in different population 

subgroups,” International Journal of Hygiene and Environmental Health, vol. 206 (2003); N. Gouveia 

and T. Fletcher, “Time series analysis of air pollution and mortality: effects by cause, age and 

socioeconomic status,” Journal of Epidemiology and Community Health, vol. 54 (2000); S.A. Korrick 

et al., “Effects of ozone and other pollutants on the pulmonary function of adult hikers,” 

Environmental Health Perspectives, vol. 106 (1998). 

25See J.S. Brown, “The effects of ozone on lung function at 0.06 [parts per million] in healthy adults,” 

Memo to the Ozone NAAQS, OAR-2005-0172 (2007); W.C. Adams, “Comparison of chamber 6.6 hour 

exposures to 0.04—0.08 ppm ozone via square-wave and triangular profiles on pulmonary responses,” 

Inhalation Toxicology, vol. 15 (2006); and M.L. Bell, et al., “The exposure-response curve for ozone 

and risk of mortality and the adequacy of current ozone regulations,” Environmental Health 

Perspectives, vol. 114 (2006). 

26The mortality rates are per 100,000 population, and the standard used for age adjustment is the U.S. 

2000 standard population. 
Figure 3: 2001-2005 Mortality Rates from Respiratory Illnesses in Central Texas, Texas, and the United 

States 

0

10

20

30

40

50

60

70

United States

Texas

Central Texas

Pneumonia Emphysema Asthma

and influenza

Other chronic

obstructive

pulmonary

diseases

Lung, trachea,

and bronchus

cancers

Mortality rates per 100,000 population

Source: GAO analysis of Texas Department of State Health Services and National Center for Health Statistics data.

Cause of death

________________________ 

We provided relevant sections of this report to the Environmental Protection Agency 

and the Texas Commission on Environmental Quality to confirm the information they 

provided and incorporated their technical comments, as appropriate. We are sending 

copies of this report to appropriate congressional committees and other interested 

parties. In addition, this report will be available at no charge on the GAO Web site at 

http://www.gao.gov. 

Page 15 GAO-09-787R Air Quality and Power Plants in Central Texas 
Page 16 GAO-09-787R Air Quality and Power Plants in Central Texas 

If you or your staffs have any questions about this report, please contact John 

Stephenson at (202) 512-3841 or stephensonj@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last page of this 

report. Key contributors to this report include Michael Hix (Assistant Director), 

Heather Chartier, Nancy Crothers, Philip Farah, Cindy Gilbert, Kristin Hughes, Karen 

Keegan, Summer Lingard, Kirk Menard, and Jeanette Soares. 

John Stephenson 

Director, Natural Resources 

 and Environment
Congressional Addressees

The Honorable Dianne Feinstein

Chairman 

The Honorable Lamar Alexander 

Ranking Member 

Subcommittee on Interior, Environment 

 and Related Agencies 

Committee on Appropriations 

United States Senate 

The Honorable Norman D. Dicks 

Chairman 

The Honorable Michael K. Simpson 

Ranking Member 

Subcommittee on Interior, Environment 

 and Related Agencies 

Committee on Appropriations 

House of Representatives 

The Honorable Chet Edwards 

House of Representatives 

Page 17 GAO-09-787R Air Quality and Power Plants in Central Texas 
Page 18 GAO-09-787R Air Quality and Power Plants in Central Texas 

Enclosure I: Objectives, Scope, and Methodology 

We prepared this report in response to a congressional directive in the Joint 

Explanatory Statement accompanying the Consolidated Appropriations Act of 2008. 

The objectives of this review were to provide information on (1) the current status of 

permitting coal-burning, electricity-generating units in Central Texas; (2) the process 

the Environmental Protection Agency (EPA) and Texas use, under the Clean Air Act, 

to review permit applications for proposed new major sources of air pollution; and 

(3) what is known about air quality and respiratory health in Central Texas. 

To provide information on the current status of permitting coal-burning, electricitygenerating units in Central Texas, we interviewed officials with EPA’s Region 6 

Multimedia Planning and Permitting Division in Dallas, Texas, and the Texas 

Commission on Environmental Quality’s (TCEQ) Air Permits Division in Austin, 

Texas. The information we obtained from these officials helped us identify coalburning, electricity-generating units proposed to be built in Central Texas and 

describe the history and current status of those units. To gain a better understanding 

of how coal-burning, electricity-generating units work, we also visited a coal-fired 

power plant in Central Texas and discussed with company officials how their coal 

plant operates. For the purposes of our review, we defined “Central Texas” as the 20 

Texas counties that fall within TCEQ Region 9—Bell, Bosque, Brazos, Burleson, 

Coryell, Falls, Freestone, Grimes, Hamilton, Hill, Lampasas, Leon, Limestone, 

Madison, McLennan, Milam, Mills, Robertson, San Saba, and Washington counties. 

To provide information on the process EPA and TCEQ use to review permit 

applications for proposed new major sources of air pollution under the Clean Air Act, 

we reviewed relevant laws, regulations, and policies on federal and state permitting 

requirements for new major sources of air pollution. We also interviewed officials 

with EPA’s Region 6 Multimedia Planning and Permitting Division in Dallas, Texas, 

and TCEQ’s Air Permits Division, Monitoring Operations Division, and Chief 

Engineer’s Office, in Austin, Texas, to determine how the state implements federal 

and state laws and regulations in its permit application review process. TCEQ is 

subject to ongoing litigation related to some of the recently permitted coal-burning, 

electricity-generating units that fell under our review. GAO’s policy is to avoid taking 

a position on or addressing matters that are pending in litigation. Because of this 

ongoing litigation, we did not evaluate whether the permitting actions taken by EPA 

or TCEQ comply with the Clean Air Act or other relevant statutes, regulations, or 

guidance. Specifically, we did not assess any permit applications, the quality of any 

air modeling conducted by an applicant, or the quality of the data used to conduct an 

air modeling analysis due to ongoing litigation. 

To provide information on air quality and respiratory health in Central Texas, we 

reviewed federal requirements related to air quality standards and monitoring and 

interviewed EPA and TCEQ officials about these issues. Additionally, we obtained 

and analyzed existing ambient air quality data reported by TCEQ’s Monitoring 

Operations Division to determine current air quality conditions in Central Texas. To 

assess respiratory health conditions in the region, we obtained and analyzed 

mortality data reported by the Texas Department of State Health Services and the 

Centers for Disease Control and Prevention’s National Center for Health Statistics’ 
Page 19 GAO-09-787R Air Quality and Power Plants in Central Texas 

National Vital Statistics System. To assess the reliability of the air monitoring data 

we obtained from TCEQ and the mortality data we obtained from the Texas 

Department of State Health Services and the National Center for Health Statistics, we 

interviewed agency officials about data quality control procedures and reviewed 

relevant documentation. We determined that the data were sufficiently reliable for 

the purposes of this report. 

We conducted our work from October 2008 to August 2009 in accordance with all 

sections of GAO’s Quality Assurance Framework that are relevant to our objectives. 

The framework requires that we plan and perform the engagement to obtain 

sufficient and appropriate evidence to meet our stated objectives and to discuss any 

limitations in our work. We believe that the information and data obtained, and the 

analysis conducted, provide a reasonable basis for any findings and conclusions in 

this product. 

(360997)
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