Impact of Environmental Regulation on Coal Combustion for Electrical Generation

1. Impact of Environmental Regulation on Coal Combustion for Electrical Generation Robert L. Burns, Jr., Esq. Buchanan Ingersoll & Rooney PC August 1, 2013

2. Closure of Coal-Fired Power Plants • July 9, 2013 – FirstEnergy announced closure of two coal-fired power plants in Pennsylvania • January 26, 2012 – FirstEnergy announced closure of six coal-fired power plants, including one in Pennsylvania • Since President Obama took office in 2009, 15,000 MW of coal-fired power plants have shut down • Generating companies have announced plans to shut down 37,000 MW of coal-fired power plants over the next 10 years

3. Impacts of Environmental Regulation • “War on Coal” • Since 1990’s, environmental pressures on coal-fired power plants have increased • This is in addition to pressures on coal mining • Mountaintop Removal Permitting and Mining • Mine Safety • Methane regulation and litigation

4. President’s Climate Action Plan • Issued June 2013 • Directs EPA to complete carbon pollution standards for new and existing power plants • Accelerating clean energy permitting on public lands • Reduce methane emissions, including from coal mines

5. Impacts of Environmental Regulation • Outline: • Clean Air Act (“CAA”) • Clean Water Act (“CWA”) • Resource Conservation and Recovery Act (“RCRA”) • Concentrates on federal developments

6. Power Generation • Edison Electric Institute – In 2010: • 44.9% of power generation was coal • 23.8% of power generation was natural gas • 19.6% of power generation was nuclear • The rest: hydropower, renewables, etc.

7. Clean Air Act • EPA – Power plants are dominant emitters in the United States of: • Mercury (50%) • Acid gases (over 75%) • Many toxic metals (20-60%) • EPA – 40% of electrical generating units do not have advanced pollution control equipment

8. Clean Air Act • EPA enforcement initiative targeting coal-burning power plants • Began in late 1990’s • Included in list of enforcement initiatives for 2011-2013 • Involves preconstruction permitting requirements • By end of April 2013, EPA settled enforcement actions against three utilities with coal-burning power plants

9. Clean Air Act • Clean Air Interstate Rule (“CAIR”) • Issued in 2005 to reduce impact of upwind-emissions on downwind air quality • Requires power plants emitting sulfur dioxide and nitrogen oxide to reduce emissions • Litigation: D.C. Circuit remanded CAIR to EPA, but regulations are still in effect

10. Clean Air Act • Cross-State Air Pollution Rule (“CSAPR”) • “Transport Rule” – finalized July 2011 • Response to D.C. Circuit ruling on CAIR • Would establish program requiring 28 Eastern states to reduce emissions of sulfur dioxide and nitrogen oxides • Litigation: August 2012, D.C. Circuit vacated Transport Rule and ordered EPA to continue CAIR; March 2013 – EPA petitioned for Supreme Court review

11. Clean Air Act • Mercury and Air Toxics Standards (“MATS”) • In April 2013, EPA issued final regulations limiting emissions of mercury, particulate matter, sulfur dioxide, acid gases, and certain metals from power plants • Would require monitoring and testing for MATS pollutants • Litigation is expected

12. Clean Air Act • Greenhouse Gas Regulations • April 2012 – EPA proposed New Source Performance Standards for emissions of carbon dioxide from fossil fuel-burning power plants • Proposal would limit CO2 emissions from new units generating more than 25 MW to 1,000 lbs. of CO2 per MW generated • Alternative limits for new units relying on carbon capture and storage

13. Clean Water Act • Cooling Water Intake Structures • NPDES permits required for cooling water intakes • 1976 – EPA issued standards which were remanded by Fourth Circuit • April 2011 – EPA proposed new standards after litigation by environmental groups • Existing power plans would have upper limit of fish killed by impingement • Existing facilities would conduct studies on site-specific mechanisms to limit aquatic organisms entrained • New power plants at existing facilities required to add technology equivalent to closed-cycle cooling

14. Clean Water Act • April 2013 – EPA issued proposal to update effluent guidelines for power plants • Used to set technology-based effluent limits in NPDES permits • Last effluent limitation guidelines for power plants issued in 1982 • EPA has committed to completing rulemaking by May 2014 • Proposal establishes new or additional requirements for wastewater from flue gas desulfurization, fly ash, bottom ash, flue gas mercury control, gasification of coal, combustion residual leachate and nonmechanical metal cleaning wastes

15. Resource Conservation and Recovery Act • In 2010, EPA proposed regulating coal combustion residuals • Listing them as “special waste” under RCRA Subtitle C (hazardous wastes); or • Issuing new regulations under RCRA Subtitle D (solid wastes) • Coal combustion residues beneficially used would continue to be exempt • Litigation is ongoing • Congressional response • Coal Ash Recycling and Oversight Act of 2013 • Reducing Excessive Deadline Obligations Act of 2013

16. Conclusion • Under current proposals: • Regulatory burdens on coal-fired power plants, whether new or old, likely increasing • Cost of environmental controls on coal-fired power plants likely increasing • U.S.E.I.A. – Most likely retirements are older generators with high heat rates (low efficiency) that do not have flue gas desulfurization systems installed • Coal plants without FGD system would be required to install either a FGD or dry sorbent injection system to comply with MATS • In 2010, 43% of coal-fired power plants did not have FGD systems

17. Robert L. Burns, Jr., Esq. Buchanan Ingersoll & Rooney PC One Oxford Centre 301 Grant Street, 20th Floor Pittsburgh, PA 15219 Telephone: 412-562-1312 E-mail: robert.burns@bipc.com