Luminant Wins Ruling in Pollution Suit, Sierra Club Says

Energy Future Holdings Corp. and its Luminant Generation unit, the largest power generator in Texas, won a ruling in a lawsuit accusing it of violating U.S. air pollution standards at its Big Brown plant near Longview, according to the company and the Sierra Club.

“This is a significant legal victory for our company,” Stephanie Zapata Moore, Luminant’s general counsel, said in an e-mailed statement, calling the decision a “full vindication.” The ruling in federal court in Waco, Texas, couldn’t be immediately confirmed in court records.

The Sierra Club sued the power company in May 2012 seeking more than $330 million in civil penalties and $140 million in pollution-control enhancements to address claims that Big Brown violated the U.S. Clean Air Act more than 6,000 times since July 2007, the company and the environmental group said in separate statements.

The alleged violations occurred while the units were undergoing maintenance or as they shut down and restart, according to court records. These are recognized periods when pollution controls function inefficiently and regulators may allow a plant’s emissions to exceed statutory limits.

Luminant asked U.S. District Judge Walter S. Smith to “defer” to state regulators’ prior determinations that all of the emissions at issue in the case were allowable under Big Brown’s amended permits, according to a court filing today. The company asked Smith to strike the Sierra Club’s request for civil penalties and enter judgment in the company’s favor.

Three-Day Trial

Smith issued a oral ruling today, finding the environmentalists’ claims to be without merit after a three-day non-jury trial, according to the company.

“We are deeply disappointed by today’s court decision,” Al Armedariz, a senior representative of the Sierra Club’s Beyond Coal Campaign, said in statement. The group pledged to continue its fight against the plant.

Energy Future, formerly known as TXU Corp., is seeking to restructure $45.6 billion of debt after a plunge in natural gas prices, which determine the price of electricity in the state, triggered 10 straight quarterly losses. Attempts to agree on a reorganization plan with creditors in October failed.

The Dallas-based company, bought in the largest leveraged buyout in history six years ago, is resuming efforts to line up loans that would fund it through a bankruptcy.

Luminant owns more than 15,400 megawatts of power plant capacity including about 8,000 megawatts of coal-fired generation. One megawatt can power about 200 Texas homes during hot summer afternoons.

The case is Sierra Club v. Energy Future Holdings Corp., 6:12-108, U.S. District Court, Western District of Texas (Waco).

Before it's here, it's on the Bloomberg Terminal.