www.bipc.com

Robert L. Burns, Jr., Esq.

Buchanan Ingersoll & Rooney PC

August 1, 2013

Impact of Environmental Regulation on Coal

Combustion for Electrical Generation

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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

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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

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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

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Impacts of Environmental Regulation

Outline: Clean Air Act (“CAA”) Clean Water Act (“CWA”) Resource Conservation and Recovery Act

(“RCRA”)

Concentrates on federal developments

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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.

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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