New environmental regulations, coming amid warnings that Texas might not meet its electricity needs next summer, could set up a legal dilemma for regulators, grid operators and generators.

The Environmental Protection Agency's Cross-State Air Pollution Rule, which takes effect Sunday, requires plants in 28 states including Texas to cut smog- and soot-forming emissions that cross state lines.

Although they have beyond Sunday to come into compliance, power plant operators and their political supporters say the rule will force shutdowns of power plants needed to keep U.S. grid capacity safely above demand.

In Texas, they cite Dallas-based Luminant Generation Co., which says it will idle two coal-fired generating units to comply with the EPA rule.

Meanwhile, the Electric Reliability Council of Texas, which operates the state's main electric grid, has projected power reserves will fall below its desired minimum next year.

The Energy Department says it has the legal authority under the Federal Power Act to require power plants to operate in emergencies to maintain grid reliability.

But U.S. Rep. Pete Olson, R-Sugar Land, said generating companies could be in an untenable position if the department orders operation of plants idled because of EPA rules: By complying with one of the federal agencies, they may defy the other one.

In the wake of ERCOT's forecast, Olson is drafting legislation he said clarifies that power plants wouldn't break environmental laws by complying with Energy Department orders.

He cited incidents over the past decade in California and Virginia, where Mirant Corp., now GenOn Energy Inc., was ordered to run generating units for reliability purposes, but faced legal action for environmental violations.

“It's not fair, when these companies do exactly what regulators ask them to do — keep the lights on — and then they're penalized for it,” Olson said in an interview.

Assistant Energy Secretary David Sandalow said recently that the Energy Department considers it a last resort to order plants to operate.

Gina McCarthy, an EPA assistant administrator, said the Clean Air Act, which authorizes the cross-state rule, never has caused reliability problems and has mechanisms to prevent local reliability issues.

Teresa Clemmer, associate director of the Vermont Law School's Environmental and Natural Resources Law Clinic, said the EPA can waive compliance for a facility and probably would do so in Texas if needed.

“I can't imagine in this instance the EPA wouldn't do the same thing,” Clemmer said.

But EPA permission didn't protect Mirant from lawsuits when it faced conflicting federal mandates, GenOn lawyer Debra Raggio told federal energy regulators in a memo last month.

Some critics of the cross-state rule say the absence of Luminant's units, along with other plant idlings predicted by ERCOT and unexpected shutdowns caused by extreme weather, could mean blackouts next summer.

“You shut down even just a couple of plants and that'll be a reality, not a theory, next summer,” said Rep. Michael Burgess, R-Lewisville.

ERCOT came close to ordering rolling blackouts during last summer's record heat and drought.

Trip Doggett, president of ERCOT, said in a phone interview that if Luminant weren't idling nearly 1,200 megawatts, the grid operator would meet its desired power-reserves.

But he noted Luminant's units aren't the only ones affecting reserves. Others will be mothballed for various reasons and new units delayed.

Still, Doggett said ERCOT wouldn't ask Luminant to restart its units for reliability purposes. “We don't believe we can put them in the position of breaking the law,” Doggett said.

The EPA and some analysts say Luminant could switch fuels, boost pollution controls or buy emissions allowances rather than closing plants to comply with the rule.

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