Cleaning up the Train W reck: Air W ater and W aste Rules Driving the Shutdow n of Coal Units Brought to you by Winston & Strawn LLP and Environmental Resources Management
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Train W reck Tim eline for the Mom ent Key: Red: Transport Orange: Ash Green: Water Blue: HAPs Dec. 20 11 April 20 12 Purple: GHGs 20 14 EPA finalizes Area designations Effluent Guidelines Black : NAAQS EGU MACT rule for 2008 ozone Final Rule NAAQS Expected April 16 , 20 16 20 13 Possible extended Rulemaking on Dec. 20 11 EGU MACT June 20 12 implementation of D.C. Cir. stays PM 2.5 NAAQS compliance April 16 , 20 15 1-hour SO 2 NAAQS CSAPR revision proposed Initial EGU MACT expected compliance 20 16 316(b) compliance Dec.14 , 20 12 20 13 4-6 years after final Final PM 2.5 NAAQS Lead NAAQS revision rule revision expected expected 20 11 20 12 20 13 20 14 20 15 20 16 June 20 13 Late 20 12 316(b) final rule expected 20 15 20 16 Early 20 12 GHG NSPS for New Effluent Coal combustion GHG NSPS for EGUs final guidelines residual New EGUs compliance 3-5 compliance 4-5 Mid 20 13 proposed rule years after final years after final Late 20 12 1-hour SO 2 NAAQS final Effluent guidelines rule rule area designations proposed rule expected expected Early 20 12 GHG Tailoring Late 20 12 Mid 20 13 Rule Phase 3 Final coal combustion Proposed new ozone proposed no residuals rule expected NAAQS expected new sources
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) Regulatory Filterable Total Individua HCl SO 2 Mercury Option PM HAP l Metals Surrogate Surrogate Metals 0.00005 0.0020 0.20 1.2 lb/ TBtu (3) 0.030 0.013 lb/ GWh (3) Existing Non- 0 lb/ MMBt lb/ MMBt lb/ MMBt See Table Lignite Units lb/ MMBt u u u 2 to 4.0 lb/ TBtu (4) u Subpart 0.020 1.5 0.040 Existing 0.30 0.50 UUUUU lb/ MWh lb/ MWh lb/ GWh (4) Lignite Units lb/ MWh lb/ GWh 0.00020 See Table lb/ GWh (3) 0.0070 0.060 1 to 0.40 0.40 0.040 New Units lb/ MWh lb/ GWh Subpart lb/ GWh lb/ MWh lb/ GWh (4) UUUUU 1 Units may choose to comply with the limits for either filterable PM, total HAP metals, or individual metals. 2 Units that use a FGD system and SO 2 CEMS may choose to comply with the SO 2 limit as an alternative to the HCl limit. All other units must comply with the HCl limit. 3 For units designed to burn coals other than lignite. 4 For units designed to burn lignite.
Petition to Reconsider MATS • On July 20, 2012, EPA granted reconsideration of 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
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