(November 2009)Regulators are in the unenviable position of determining an allowance for ROE that’s fair to consumers and investors in a volatile economy. The cases that stand out this year...
2010 Law & Lawyers Report
the executive branch, environmental policies and other green initiatives continued moving forward in 2010 (see “ Bench Report: Top 10 Legal Decisions of 2010 ”). Few of these initiatives reached a conclusive result, however, and in general new environmental policies coming from the EPA have only exacerbated the industry’s sense of policy limbo.
“We continue to push for a legislative solution on GHG emissions, but it keeps getting more complicated,” says Chuck Barlow, Entergy Corp.’s assistant general counsel for environmental law.
For example, in May 2010, EPA issued its final “Tailoring” rule, which established GHG emissions thresholds that trigger regulation under the agency’s NSR Prevention of Significant Deterioration (PSD) program (see “ Bench Report - #9 Greenhouse Two-Step ”). But that resolution, despite being a final rule, brought a cloud of uncertainty; by the end of June, a swarm of companies, organizations, and regulatory agencies filed suit in federal court to challenge the Tailoring rule on various grounds, from its implementation timeline to its effect on biomass-fired power plants. Meanwhile EPA is moving ahead to promulgate other GHG regulations based on the Tailoring rule, all of which could be swept away if litigants prevail in their challenges.
Likewise, this year the EPA decided to scrap the Clean Air Interstate Rule (CAIR)—which was promulgated by EPA in 2005 but vacated by a federal appeals court in 2008. The agency proposed the new “Transport” rule to replace CAIR (see “ Bench Report - #7 Spreading Downwind ”). And again, once finalized, the Transport rule seems likely to face months or even years of court battles before the compliance regime can be fully understood.
The same tortuous process affects new EPA standards involving mercury emissions, coal-ash disposal, and cooling-water intake. In effect, the basic rules for operating power plants are in a frustrating state of flux.
“We truly need some definition around how coal plants will be treated, in terms of environmental regulations for air, water, and ash. This issue is pervasive right now,” says Kevin Greene, partner and chief of the Troutman Sanders public law section, and Georgia Power’s lead regulatory attorney in matters before the state Public Service Commission.
The lack of policy clarity affects not just new coal-fired plants, but also projects to improve the performance of existing facilities.
“We’ve been facing a tremendous amount of uncertainty,” Barlow says. “We’re trying to build new units or make modifications to meet regulatory standards. We go through design and procurement processes, and 18 months later the regulatory regime gets changed or scrapped entirely. We’ve had entire projects put on the back shelf or changed substantially.”
As an example, Barlow points to Entergy’s White Bluff facility in Arkansas, where the company planned to invest more than $500 million to install scrubbers. Entergy was forced to put the project on hold pending resolution of a disagreement between EPA and the State of Arkansas regarding permitted emissions limits under EPA’s Visibility rule—which pertains to air emissions affecting national parks.
“We’re waiting to see whether the federal government and the state will agree,” Barlow says.