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Power Plant Cases in the Supreme Court

by Jacob Hollinger The Supreme Court’s 2013 term just began but it is already shaping up to be an important one for power plant owners and operators.  Three points stand out: First, on October 7, the Court denied cert. in Luminant Generation Co. LLC v. EPA, a case in which several power companies were challenging the Environmental Protection Agency’s (EPA) current approach to regulating air emissions during startup, shutdown and malfunction (SSM) events.  The Court’s action leaves in place a Fifth Circuit decision which upheld EPA’s approach, at least as applied to the Clean Air Act state implementation plan (SIP) for the State of Texas.  More importantly, the Court’s action is likely to bolster EPA’s confidence as it pursues its ongoing rulemaking concerning the SSM provisions in 39 other SIPs, a rulemaking in which EPA has proposed eliminating affirmative defenses for excess emissions that occur during...

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EPA Proposes CO2 Emission Limits for New Power Plants and on Track to Regulate CO2 Emissions from Existing Plants by 2015

by Jacob Hollinger and Bethany Hatef The U.S. Environmental Protection Agency (EPA) has issued a proposed rule concerning carbon dioxide (CO2) emissions from new coal-fired and natural gas-fired power plants. The September 20 proposal meets a deadline set by President Obama in a June 25 Presidential Memorandum and keeps EPA on track to meet the President’s June 2015 deadline for regulating emissions from existing power plants. Once the September 20 proposed rule is published in the Federal Register, interested parties will have 60 days to comment on it.  Under EPA’s September 20 proposal, which replaces an earlier, April 2012 proposal, new coal plants would be limited to 1,100 pounds of CO2 emissions per megawatt-hour (lbs/MWh) of electricity produced, with compliance measured on a 12-operating month rolling average basis.  The proposed rule would also require new small natural gas plants to meet a 1,100 lbs/MWh...

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Third Circuit PSD Decision is a Loss for EPA, But Also Contains Warnings for Power Plant Owners

by Jacob Hollinger The federal Environmental Protection Agency (EPA) suffered an important loss on August 21 when the U.S. Court of Appeals for the Third Circuit affirmed the dismissal EPA’s prevention of significant deterioration (PSD) enforcement action against the current and former owners of Pennsylvania’s coal-fired Homer City Generating Station. In United States v. EME Homer City Generation, L.P., No. 11-4408 (3d Cir. Aug. 21, 2013), the Third Circuit held that although the Clean Air Act’s PSD provisions prohibit plant owners from modifying their facilities without getting a PSD permit and implementing the best available control technology (BACT), those provisions do not prohibit operating modified facilities without those items.  That means that owners who acquire a plant after it has been modified may be shielded from PSD liability for those modifications and may be able to avoid having to install costly pollution control...

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Does the Clean Air Act Preempt State Law Nuisance Claims Against Power Plants?

by Jacob Hollinger Last week, the U.S. Court of Appeals for the Third Circuit said “no” and the decision has already prompted at least one new air emissions lawsuit against a power plant owner. In Kristie Bell, et al. v. Cheswick Generating Station, GenOn Power Midwest, L.P., No. 12-1426 (3d Cir. Aug. 20, 2013), the Third Circuit held that the Clean Air Act (CAA) does not prevent Pennsylvania residents from alleging that air emissions from a Pennsylvania power plant have created a nuisance under Pennsylvania state law.  The decision holds, in essence, that the CAA’s “comprehensive” scheme for regulating air emissions is not so comprehensive as to preempt all air-related tort claims. The Bell decision turns on the fact that the plaintiffs are relying on state tort law against an in-state source of air pollution; they are not relying on federal common law or trying to impose Pennsylvania’s tort law on an out-of-state...

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United Kingdom Government Confirms Change to Sustainability Criteria for Biomass

by Caroline Lindsey The Department of Energy and Climate Change (DECC) in the United Kingdom published its response to its “Consultation on proposals to enhance the sustainability criteria for the use of biomass feedstocks under the Renewables Obligation (RO)” on 22 August 2013 (the Response). The original consultation was published on 7 September 2012. In the Response, the UK Government confirms that it will proceed with its proposals to revise the content and significance of the sustainability criteria applicable to the use of solid biomass and biogas feedstocks for electricity generation under the Renewables Obligation (RO). The RO is currently the principal regime for incentivising the development of large-scale renewable electricity generation in the United Kingdom. Eligible electricity generators receive renewables obligation certificates (ROCs) for each megawatt hour (MWh) of renewable source electricity that they generate. Biomass...

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Possible UK Power Shortages Raise Concerns

by Thomas Morgan and David McDonnell  A warning from the UK’s energy regulator, Ofgem, on 27 June 2013, that the ‘buffer’ capacity of spare electricity on the UK’s national power grid could drop to as little as 2% of national supplies by 2015, has raised concerns in relation to the possibility of widespread disruptions in service. This spare capacity currently stands at about 4%. The warning was linked to an extensive Electricity Capacity Assessment Report, also published by Ofgem that same day. Revised studies have indicated that power supplies will shrink considerably by 2015, as electricity demand in the United Kingdom is not decreasing in the manner previously foreseen by successive governments. This is due to a variety of factors, among them, the low uptake by residential households of environmentally friendly incentives and energy-efficient practices. Ofgem recommends the implementation of far-reaching market changes...

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House Bill Would Circumvent Federal Regulation of Coal Ash

by Bethany Hatef On Thursday, the U.S. House of Representatives passed legislation that would significantly alter the U.S. Environmental Protection Agency’s (EPA) authority with respect to the regulation of coal combustion residuals (CCR) or coal ash under the Resource Conservation and Recovery Act (RCRA).  If enacted, this legislation would allow states to develop, implement and administer permit programs for handling CCR.  EPA would have permitting authority only in limited circumstances.  Furthermore, the legislation provides that, except as provided in those subsections that authorize EPA to review state permit programs for consistency with the law and those providing for EPA implementation of the permit program, “[EPA] shall, with respect to the regulation of coal combustion residuals, defer to the States pursuant to this section.” (The bill’s further reference to RCRA § 6005 as an exception appears to be a...

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Illinois Set to Regulate Shale Oil and Gas

by Thomas Hefty On June 17, 2013, Illinois P.A. 98-0022 (the Act), consisting of the Hydraulic Fracturing Regulatory Act (HFRA) and the Illinois Hydraulic Fracturing Tax Act (HF Tax Act), became law. The Act, which was the result of months of negotiations among industry and some environmental groups, had been stalled since March 2013 after a last-minute amendment added a licensing regime that would have favored water-well drilling contractors. That impasse was resolved when the objectionable well-licensing regime was replaced by a local workforce credit against HF Tax Act liability. The Act is a defeat for those environmental and community groups that favored a moratorium on horizontal hydraulic fracturing in Illinois until the U.S. Environmental Protection Agency completed its ongoing study of horizontal hydraulic fracturing’s potential to affect groundwater resources. HFRA’s supporters tout it as the United States’ most comprehensive and...

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Obama’s Climate Plan Provides Timeline to Reduce Carbon Emissions at New and Existing Power Plants

by Bethany K. Hatef Following up on his Inaugural Address promise to prioritize climate change, President Obama unveiled yesterday a Climate Action Plan (Plan), which includes details about what steps the Administration will take to reduce carbon emissions from power plants.The White House also released a Presidential Memorandum that provides the U.S. Environmental Protection Agency (EPA) with specific deadlines for future rulemakings concerning new and existing power plants but few details on what the eventual requirements for existing facilities will look like. In the Plan, President Obama aims to reduce carbon emissions nationwide by encouraging the use and development of clean energy, bringing up-to-date the transportation sector, reducing energy waste and cutting emissions of other greenhouse gases, including hydrofluorocarbons.  With regard to power plant emissions, the Plan notes that there are currently no federal standards in place to reduce...

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Illinois to Act on Fracing – Or Not

by Thomas L. Hefty The Illinois General Assembly could be on the verge of enacting legislation, the Hydraulic Fracturing Regulatory Act (H.B 2615), that some environmental groups are touting as an environmental best practices for regulating the shale oil and gas recovery method known as horizontal hydraulic fracturing (fracing). H.B. 2615, the result of months of negotiations between environmental groups and the oil and gas exploration and production (E&P) industry, was set to be voted on in the Illinois General Assembly in late March, but a last second amendment (favoring in-state licensed drilling companies) has stalled the bill’s progress.  While HB 2615 is laudable for setting robust regulations on horizontal fracing operations, what should make it the betting favorite is that it is also a revenue bill – the second half of H.B. 2615 contains the Illinois Hydraulic Fracturing Tax Act. Under H.B. 2615, Illinois...

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