POWER February 2016 - 31

LEGAL & REGULATORY
2. The compliance context. Teri Donaldson with DLA Piper and Michael G. Cooke of
Greenberg Traurig addressed multiple issues that are creating a complicated context for compliance
with recent environmental regulations. Source: POWER/Gail Reitenbach
3. Consolidation ahead? Floyd Self
of Berger Singerman predicted the pressure
of recent regulations may force some smaller
utilities to merge with larger ones. Source:
POWER/Gail Reitenbach
Cooke examined the situations faced by
two states, Maryland and Florida, to contrast
their current circumstances.
Florida is a traditionally regulated state
and essentially an isolated grid. The state's
preliminary analysis suggested that significant
coal-fired generation might have to be
retired as a result of the CPP and that capacity
challenges could be created. It expects a continued
shift to natural gas-fired generation,
which already makes up 65% of the state's
portfolio. Some estimates are that natural gas
will rise as high as 85% by 2025, making the
state very dependent on one type of fuel.
Maryland, a deregulated state, also expects
the rule to result in the retirement of some coal
capacity, but it expects to rely on a multistate
trading approach with continued emphasis
on renewable portfolio standards (RPSs) to
address the challenge. Maryland has a much
more diversified fuel mix-44% coal, 38%
nuclear, 9% natural gas, 5% hydro, 1% oil, and
3% other-so even with some change, it will
be far less dependent on a single fuel source.
Unintended Consequences of
Multiple EPA Rules
Floyd Self (Figure 3), an attorney with
Berger Singerman, said that the collection
of new EPA rules have helped forge mergers
between electric and gas utilities and necessitated
new natural gas pipelines. They have
also prompted the consolidation of energy
production and may bring about the demise
of small utilities. " As cheap natural gas and
environmental compliance accelerate, we
need to question whether smaller utilities can
ultimately survive, especially municipalities
and co-ops, " he said.
February 2016 | POWER
Self noted that munis and co-ops are heavily
invested in coal and have a lot of debt.
" I don't know, " he said, " if some of these
smaller utilities will have the scope or scale
that will enable them to successfully get out
of debt to make that transition over to natural
gas. In my mind, the only way that some of
these smaller utilities can ultimately comply
is if they merge with other larger utilities. "
Attorney Tom Boer from Hunton & Williams
(Figure 4) outlined key aspects of the
final CWA 316(b) rule (the Cooling Water
Intake rule), which became effective October
14, 2015. It already has legal challenges
filed in the First, Second, Fourth, Fifth, Sixth,
Seventh, and Ninth Circuit courts of appeal.
Those challenges have been filed by regulated
industry and trade associations, which argue
that compliance will cost hundreds of millions
of dollars, as well as by environmental groups,
which argue that the rule isn't sufficiently protective
to meet CWA requirements.
That rule is likely to be overturned, Boer
said, though the EPA will undoubtedly post
an iteration that will replace it. Boer advised
industry to prepare to comply with the 316(b)
rule as a best business practice.
Responding to the Clean Power Plan
The longest session of the day was devoted to
the Clean Power Plan (Figure 5). Discussing
the opening round of litigation against the
CPP, Allison Wood, a partner with Hunton
& Williams, noted that there are signs that
the Supreme Court is beginning the view the
EPA's actions with a more skeptical eye. She
urged attendees to pay close attention to other
EPA cases before the CPP finally reaches
the court in a few years.
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4. Don't forget the water rule. Tom
Boer from Hunton & Williams addressed legal
challenges to the 316(b) Cooling Water Intake
rule. Source: POWER/Gail Reitenbach
Wood, who was part of the team of lawyers
representing the utility sector in the landmark
case of Massachusetts v. EPA, which opened
the door to carbon dioxide (CO2
) regulation,
suggested the Supreme Court does not see that
case as an open-ended license. It's clear from
recent cases, such as Utility Air Regulatory
Group v. EPA in 2014 that the court is mindful
of not letting the EPA stray beyond its statutory
authorization in regulating emissions. That
is significant, Wood said, because of the arguments
CPP opponents are making that the plan
is outside the EPA's authority under the CAA.
Patrick Ferguson, a partner with Davis
Wright Tremaine, noted that much of the
future of the CPP depends on state choices
for compliance and whether they decide to
submit a plan at all. States that submit a SIP
will have the most control over how to approach
compliance. He noted that several of
the states suing the EPA have nevertheless
begun work on their SIP.
But political opposition is so intense in
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POWER February 2016

Table of Contents for the Digital Edition of POWER February 2016