Cleaning up the Train W reck: Air W ater and W aste Rules Driving - - PowerPoint PPT Presentation

Cleaning up the Train W reck: Air W ater and W aste Rules Driving the Shutdow n of Coal Units

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20 11 20 12 20 13 20 14 20 15 20 16

Train W reck Tim eline for the Mom ent

• Dec. 20 11

EPA finalizes EGU MACT rule

• Dec. 20 11

D.C. Cir. stays CSAPR Early 20 12 GHG NSPS for New EGUs proposed rule Early 20 12 GHG Tailoring Rule Phase 3 proposed no new sources April 20 12 Area designations for 2008 ozone NAAQS Mid 20 13 1-hour SO2 NAAQS final area designations expected June 20 12 PM2.5 NAAQS revision proposed June 20 13 316(b) final rule expected Late 20 12 Effluent guidelines proposed rule expected 20 13 Rulemaking on implementation of 1-hour SO2 NAAQS expected Dec.14 , 20 12 Final PM2.5 NAAQS revision expected 20 13 Lead NAAQS revision expected Late 20 12 Final coal combustion residuals rule expected 20 14 Effluent Guidelines Final Rule Expected April 16 , 20 15 Initial EGU MACT compliance 20 15 Effluent guidelines compliance 3-5 years after final rule 20 16 316(b) compliance 4-6 years after final rule 20 16 Coal combustion residual compliance 4-5 years after final rule Key: Red: Transport Orange: Ash Green: Water Blue: HAPs Purple: GHGs Black: NAAQS April 16 , 20 16 Possible extended EGU MACT compliance Late 20 12 GHG NSPS for New EGUs final Mid 20 13 Proposed new ozone NAAQS expected

W hat Part of the Train W reck w ill Shut Dow n your Coal Units?

• Cross-State Air Pollution Rule?

▫ NO!

• Mercury and Air Toxics Standards?

▫ Maybe! ▫ 200 MW and smaller units vulnerable ▫ 75 MW-200 MW units need creative solutions

 DSI, piggy-backing on upgraded controls, ESP rebuilds, coal treatment  Need to pay careful attention to water and waste issues resulting from creative air compliance options

W hat Part of the Train W reck w ill Shut Dow n your Coal Units?

• New NSR Enforcement Actions?

▫ Yes

• New Clean Water Act regulations?

▫ Yes for older plants that are marginal for MATS

• Coal Combustion Residual rule?

▫ Likely not, looking to be an industry issue

D.C. Circuit CSAPR Decision

• Oral Argument Held on April 13, 2012
• Three Judge Panel: Rogers, Kavanaugh and Griffith
• August 21, 2012 opinion vacated CSAPR.
• The court held that CSAPR exceeded EPA’s authority under the CAA because the

rule would require upwind states to reduce emissions beyond their significant contribution to downwind state nonattainment with the NAAQS.

• Under the good neighbor provision in § 110(a)(2)(D)(i)(I) of the CAA, EPA has

the authority to require upwind states the reduce only significant contribution to a downwind state’s nonattainment, requiring additional reductions violates the CAA.

• In addition, the D.C. Circuit vacated the 59 Federal Implementation Plans

(FIPs) that EPA issued simultaneously with CSAPR, holding that EPA improperly departed from its consistent prior approach by denying states the initial opportunity to implement the required reductions from sources within their borders. EPA is only allowed to promulgate a FIP after it has determined that a state has failed to make a required SIP submission or after EPA has disapproved a SIP.

D.C. Circuit CSAPR Decision

• Decision did not challenge EPA’s use of modeling to determine

significant contribution to non-attainment, only EPA’s failure to reduce the impacts from one state to another based on the modeling

• In her dissent, Judge Rogers wrote that the court had exceeded its

jurisdiction and “trampl[ed]” on the court’s prior precedent. EPA will face a new mandate to first quantify each state's exact “significant contribution” to air pollution and give states time to craft emission control plans before the agency can force them to cut emissions. The ruling may also limit EPA to only requiring states to cut their “significant contribution” emissions and not more.

• Dissent focused on EPA’s arguments that the Court has no jurisdiction

to review CSAPR and the FIPs because the contributions issues were not properly before the Court and that States were required to include Good Neighbor reductions in prior NAAQS SIPs so FIPs were justified.

• Will EPA take a narrow appeal on jurisdictional grounds?

D.C. Circuit CSAPR Decision

• The court required EPA to continue administrating

the Clean Air Interstate Rule (CAIR) pending the promulgation of a valid replacement. The D.C. Circuit previously remanded CAIR to EPA without vacating the rule in North Carolina v. EPA.

• The panel also instructed the Clerk withhold

issuance of the mandate finalizing remand of CSAPR until seven days after disposition of any timely petition for rehearing or petition for rehearing en banc.

• EPA has 45 days to appeal to D.C. Circuit and 90

Days to appeal to the Supreme Court

W hat happens now ?

• D.C. Circuit decision expects EPA to appeal
• EPA choices:

▫ Appeal to D.C. Circuit or Supreme Court and continue to implement CAIR Phase 1 (and Phase 2 in 2015?) ▫ Revise CSAPR to address majority’s concerns by determining:

1. whether each state’s emissions contribute significantly to a downwind state’s nonattainment of NAAQS, 2. the portion of the upwind state’s contribution to the downwind state’s nonattainment 3. that the combined reductions required for the upwind states do not over-control for attainment in downwind states

▫ and working through the SIP process ▫ Key question: continue to base rule on 1997 annual PM2.5, 1997 Ozone and 2006 PM2.5 NAAQS or use current or future NAAQS.

Bottom Line

• The CAIR/ CSAPR mess isn’t going to be sorted out

any time soon and will not result in shutdowns before 2015/ 2016, BUT,

• MATS might!
• New NSR Enforcement Actions focused on

shutdowns.

• New Clean Water Act regulations will add costs and

stress for old and new units.

• Coal Combustion Residual rule has potential to place

the industry in a very difficult position and is already changing how ash is and will be handled.

EGU MACT/ MATS Rule

• Finalized on December 21, 2011
• Compliance Date: April 16, 2015
• A one-year compliance extension is available on a

case-by-case basis from the state permitting authority.

▫ An additional year must be necessary to complete the installation of pollution control equipment required to comply with the rule. CAA § 112(i)(3)(B).

• EPA OECA guidance allows up to a year extension

for units critical to system reliability even if the units will not be retrofitted.

▫ Administrative Order under CAA § 113(a)(4).

EGU MACT – Em ission Lim its for Pulverized Coal Boilers

Non-Mercury Metallic HAP(1) Acid Gas HAP(2) Mercury Regulatory Option Filterable PM Total HAP Metals Individua l Metals HCl Surrogate SO2 Surrogate Existing Non- Lignite Units 0.030 lb/ MMBt u 0.00005 lb/ MMBt u See Table 2 to Subpart UUUUU 0.0020 lb/ MMBt u 0.20 lb/ MMBt u 1.2 lb/ TBtu(3) 0.013 lb/ GWh(3) 0.020 lb/ MWh 1.5 lb/ MWh 4.0 lb/ TBtu(4) Existing Lignite Units 0.30 lb/ MWh 0.50 lb/ GWh 0.040 lb/ GWh(4) New Units 0.0070 lb/ MWh 0.060 lb/ GWh See Table 1 to Subpart UUUUU 0.40 lb/ GWh 0.40 lb/ MWh 0.00020 lb/ GWh(3) 0.040 lb/ GWh(4)

1Units may choose to comply with the limits for either filterable PM, total HAP metals, or individual metals. 2Units that use a FGD system and SO2 CEMS may choose to comply with the SO2 limit as an alternative to the HCl limit.

All other units must comply with the HCl limit.

3For units designed to burn coals other than lignite. 4For units designed to burn lignite.

Petition to Reconsider MATS

• On July 20, 2012, EPA granted reconsideration
• f the New Unit provisions of MATS rule
• New Unit provisions stayed for 3 months, EPA

targeting issuing revisions to rule by March 2013

• Remaining reconsideration petitions still

pending

W hite Stallion Energy Center v. EPA

• Industry groups and states have challenged the MATS

▫ Briefs have not yet been filed, but expected challenges include the pollutant-by-pollutant approach, failure to establish appropriate source subcategories, and new unit emission limits

• Environmental groups and states have intervened on

behalf of EPA.

• On April 27, 2012, developers of new coal plants filed a

motion to sever their claims from the consolidated case and moved for expedited briefing.

▫ Expedited briefing is necessary so that construction can begin before April 2013, after which GHG NSPS will apply. ▫ On August 24, 2012, D.C. Circuit set briefing schedule for expedited appeal (October-April) (two tracks)

Bottom Line

• No stay has been issued by the Court or the agency

for the MATS limits on existing units

• DC Circuit has yet to set a briefing schedule for

challenge to MATS limits on existing coal units

• Limits very likely to remain in place
• Some flexibility in compliance schedule

▫ 2016 through permitting agency or OECA ▫ Potentially beyond 2016 under agreements with states and EPA ▫ Need to understand whether retro-fit options will meet Hg, PM and SO2 (or HCl) limits ▫ Watch water and waste regulations and initiatives

NSR Enforcem ent I nitiative

• NSR enforcement initiative on-going

▫ Five EPA District Court cases, 5-10 environmental and state cases/ Notices of Intent to sue ▫ GHG Tailoring rule and H2SO4 shifting focus to PCPs ▫ EPA partnering with environmental groups and states

• 23 NSR settlements to date
• Dozens of unit shutdowns in settlements
• Environmental community less focused on retrofits

and more focused on shutdowns – Beyond Coal Campaign

• EPA continues to issue 114 document requests

Proposed Section 3 1 6 ( b) Rule

• Published on April 20, 2011; EPA recently amended

the CD with Riverkeeper to extend the deadline to finalize the rule from July 2012 to June 2013.

• Sets forth BTA requirements for cooling water

intake structures operated by existing facilities withdrawing at least 2 MGD cooling water.

• Impingement mortality BTA requirements

▫ 12% impingement mortality annually; 31% monthly; or ▫ Maximum intake velocity of 0.5 feet per second ▫ Both impingement mortality BTA options require use

• f protective measures such as modified traveling

screens, guard rails, smooth woven mesh, low pressure washes, and fish handling and return systems.

Proposed Section 3 1 6 ( b) Rule, cont’d.

• Entrainment mortality BTA

▫ Site-specific controls; or ▫ Comply with the requirements applicable to new units: reduce actual intake flow to a level commensurate with closed-cycle cooling through use of closed-cycle cooling or other design changes.

• Numerous reporting and monitoring requirements

▫ Impingement mortality reduction plan, performance studies, entrainment characterization study (ECS) based on a peer- reviewed entrainment mortality data collection plan, peer- reviewed technical feasibility and cost evaluation study, peer- reviewed benefits valuation study, and a peer-reviewed study of non-water quality impacts. ▫ The ECS, technical feasibility and cost evaluation study, and study of non-water quality impact study must be submitted only by facilities with more than 125 MGD actual intake flows.

Bottom Line

• New 316(b) rule will not require close-cycle

cooling, BUT,

• the rule will force stations to reduce intake

volumes, upgrade intake technologies, continually analyze intake, impingement and entrainment, and,

• provide potential leverage to the environmental

community.

Revised Effluent Guidelines for Pow er Plants

• In 2009, EPA announced its intent to revise the

guidelines, which were last updated in 1982

• Proposed rule will cover FGD wastewater, fly and bottom

ash transport water, and leachate from coal ash landfills, gasification wastewater from IGCC plants, and wastewater from flue gas mercury controls

• EPA has identified several technology-based controls

that could be in the proposed rule such as chemical precipitation, anoxic/ anaerobic biological treatment, vapor-compression evaporation, zero discharge, and cyanide destruction.

• Revised EGs will be proposed in Fall/ Winter 2012 and

finalized in January 2014, to be effective during the 5- year NPDES permitting cycle from 2014 to 2019

Bottom Line

• New effluent limits likely to require all power

plants to install physical/ chemical treatment systems which is an expenditure that older plants typically can’t justify

• Older plants generally also have space issues

even if the expenditure can be justified

• Need to project these costs into air retrofit

decisions

• Depending on the metals that EPA regulates,

newer, larger plants may also have compliance issues and have to make major investments in new treatment technologies

Coal Com bustion Residual Rule

• On June 21, 2010, EPA proposed the Coal

Combustion Residuals rule to either regulate CCRs as a hazardous, or “special,” waste under RCRA subtitle C or as a solid waste under RCRA subtitle D.

• Subtitle D alternative likely, supported by recent

legislative actions.

• Under the proposed regulations, EPA proposing

dam safety requirements focused on the structural integrity of surface impoundments.

Bottom Line

• If EPA goes Subtitle C, the entire utility industry will

be placed in an impossible compliance position which will force immediate challenges to stay the rule and negotiations with EPA

• Under Subtitle D alternative, existing older, smaller

plants with ash ponds are concerned about ground water monitoring which is driving dry ash options

• Also, under Subtitle D alternative, newer larger

plants moving to dry ash options in expanded landfills that meet liner requirements.

• Remediating existing ash ponds is a potential major

DDD expenditure or cost of conversion to dry.

Regulatory DDD I ssues

• As you consider whether to retire units and

plants vs. spinning reserve, pay attention to:

▫ Potential heat input requirements to maintain allowances (future Transport rules?) ▫ Potential NSR Reactivation Policy issues (two years) ▫ Potential Title V requirements ▫ Potential EPA/ State emissions inventory/ reporting requirements

• Maintain all permits
• Maintain units in condition to operate

Final Thoughts

• If new gas generation is driving DDD of coal

units, be sure that all new permitting requirements and potential future requirements are thoroughly evaluated.

▫ Current and future NAAQS (one-hour SO2, one- hour NO2, 24 hour PM2.5, one-hour Ozone) ▫ GHG NSPS ▫ NSR/ BACT for GHGs

• Once that coal unit is shutdown permanently,

those coal MWs likely gone forever

Jay Holloway Winston & Strawn LLP 1700 K Street Washington, DC 20006 (202) 282-5807 jholloway@winston.com

Brought to you by Winston & Strawn LLP and Environmental Resources Management

Decom m issioning, Decontam ination and Dem olition of Pow er Plants

Regulatory Concerns for DDD Coal-Fired Pow er Plants

• When planning to decommission a coal-fired

power plant:

▫ Environmental Regulatory Concerns

 Determine what regulatory permits are in place at the facility.  Identify regulatory requirements for terminating coverage under all permits.  Identify record retention requirements under law, permits, and any applicable consent decrees or orders.

▫ Accounting Considerations

 Evaluate Asset Retirement Obligations and determine whether any adjustments are needed.

Asset Retirem ent Obligations

• Asset Retirement Obligations (“AROs”) are

recognized as liabilities associated with the future retirement of tangible long-lived assets.

• AROs are significant for remediation work necessary

to restore a property after ceasing operation of a power plant.

▫ Removal of an ash pond or intake structure. ▫ Removal of other site features or segments of power plant.

• AROs relate only to remediation liabilities arising

from normal operation of a power plant, and do not relate to accidental releases or contamination.

Coal-Fired Pow er Plant Contam inants and Regulatory I ssues

• Contaminants associated with ongoing
• perations
• As air regulations have gotten more stringent,

emissions control technology has been used to limit air emissions.

• Pollutants captured by this technology have been

placed in impoundments or discharged into lakes and rivers.

Closure of Coal Ash Ponds

• Currently no RCRA closure requirements

because coal ash is exempted from the definition

• f hazardous waste.
• Regulatory requirements vary from state to

state.

• Illinois EPA

▫ Corrective action under the Illinois Pollution Control Board's Groundwater Management Zone (GMZ) provisions is appropriate regulatory mechanism for closure of coal ash impoundments.

▫ Similar to EPA's proposed Subtitle D option.

• Check individual state requirements.

EPA’s Proposed Coal Com bustion Residual Rule

• Subtitle C Option Closure Requirements
• Coal ash would be designated a “special waste” and

regulated under Subtitle C of RCRA.

• Subject to interim status closure requirements of 40 CFR

265.111 and 265.228(a)(2), or, full RCRA subtitle C closure requirements.

• Facilities that do not meet the minimum technology

requirements would be given five years to cease receiving waste and two years to close ponds.

• The existing closure and post-closure care requirements

under Subtitle C would apply.

• Closure plan approval;
• Cap, final cover, or other containment systems;
• 30-years of post-closure care including cap maintenance and

groundwater monitoring.

EPA's Proposed CCR Rule

• Subtitle D Option Closure Requirements
• Coal ash landfills and surface impoundments unable to

demonstrate compliance with location restrictions would have to close within five years, with a two-year extension if no available alternative disposal capacity and no immediate threat.

• Closure plan
• Closure in place or removal and decontamination
• Final cover system
• 30 years of post-closure care (groundwater

monitoring, corrective action, maintenance of final cover and leachate collection and removal system).

Current status of the proposed CCR rule

• Proposed June 21, 2010
• In October 2011, EPA published a Notice of Data Availability

soliciting additional public comment on the proposed rule.

• EPA has not set a date for issuance of the final rule, but it is likely to

to be finalized sometime next year.

• Environmental groups and two coal combustion products suppliers

filed suit in April 2012 to compel EPA to finalize the rule, claiming EPA has violated section 2002(b) of RCRA, which requires EPA to review and revise every three years, where necessary, regulations promulgated under RCRA.

• Plaintiffs filed a motion for summary judgment on August 14 which

is still pending.

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Coal-Fired Pow er Plant Contam inants and Regulatory I ssues

• Contaminants associated with historical operations

and physical structure

• Asbestos-Containing Materials (ACM)
• Many power plants were built before 1978.
• ACM in power plants may include duct insulation, piping

insulation, gaskets, flooring, roofing, and siding.

• National Emissions Standard for Hazardous Air

Pollutants (NESHAP) for ACM

• Owner planning demolition must conduct self-inspection.
• If ACM found, owner must submit detailed notice of

demolition to EPA.

• Removal and disposal of ACM must adhere to strict NESHAP

guidelines.

Coal-Fired Pow er Plant Contam inants and Regulatory I ssues

• Contaminants associated with historical
• perations and physical structure

▫ PCB-containing fluids from old pneumatic control systems and hydraulic systems. ▫ Lead from equipment painted with lead-based paint. ▫ Possibility of buried coal tar associated with former manufactured gas plants.

Coal-Fired Pow er Plants Listed as Superfund Sites

• Potential CERCLA Liability under proposed CCR rule
• CCRs would be listed as a CERCLA hazardous substance if

CCRs are regulated under Subtitle C.

• Saltville Power Plant, Saltville, VA
• Power plant is part of a larger superfund site that was

formerly a chemical manufacturing plant.

• EPA issued an administrative order in 1995 directing owner

to remove asbestos and lead and demolish power plant.

• Power plant was demolished, deed restriction placed on

property limiting it to industrial use.

• Low levels of lead, asbestos, and arsenic associated with

power plant operations remain in soil around power plant.

Coal-Fired Pow er Plants Listed as Superfund Sites

• Fort Wainwright Central Heat and Power Plant,

Fairbanks, AK

▫ Designated as a superfund site for contamination

• f soil and groundwater with coal, petroleum, and

pesticide wastes. ▫ Site includes sanitary landfill that has received waste oil, waste fuel, spent solvents, and paint residues since the 1950s.

Tools for Brow nfields Redevelopm ent

• Tax Incentives
• Federal Brownfields Tax Incentive
• New York State Brownfields tax credit programs offer

robust refundable tax credits for site preparation and for redevelopment, but these credits are scheduled to sunset in 2015.

• Limits on Liability
• Bona Fide Prospective Purchaser work agreements
• Innocent Landowner protection
• Connecticut passed Brownfields redevelopment

liability relief legislation in 2011 focused on expediting and clarifying the regulatory approval process and providing meaningful release of liability to redevelopers.

Tools for Brow nfields Redevelopm ent

• Loan and Grant Programs

▫ Federal  Revolving Loan Program ▫ Michigan  Brownfields loan and grant program passed recently. Loans are often preferable because they reduce or delay federal tax liability as compared to grants.

• Environmental Insurance Products
• Voluntary Cleanup Programs

Coal-Fired Pow er Plants Shut Dow n and Redeveloped

• Crawford and Fisk Plants, Chicago, IL
• Plants ceased operations on 8/ 29/ 2012 (Crawford) and

8/ 30/ 2012 (Fisk).

• Community groups and government filed suit against Midwest

Generation alleging permit violations.

• Suits were dropped when Midwest entered into agreement with

Mayor’s Office to shut down plants.

• Redevelopment plans are being led by Midwest and a Re-

use Task Force.

• Coal-related equipment will be removed, but transmission

equipment and reserve generators will remain onsite.

• Task force is considering plans for a park and/ or

commercial or industrial use.

• Company that makes storage batteries that connect to

electric grid has expressed interest.

Coal-Fired Pow er Plants Shut Dow n and Redeveloped

• Powerhouse Science Center, Sacramento, CA
• PG&E Power Station shut down in 1954, will be

reopened in 2013 as a high-tech educational

• facility. $50 M in funding provided through

partnership between PG&E, City, and others.

• The Wharf at Rivertown, Philadelphia, PA
• Chester Power Station shut down in 1982,

renovated as office and retail complex in 2002-04. State and federal governments contributed more than $11 M for environmental cleanup, new roads, and other improvements.

Eleni Kouimelis Winston & Strawn LLP 35 W. Wacker Drive Chicago, IL 60601 (312) 558-5133 ekouimelis@winston.com