Allegheny Power 2010 Annual Report Download - page 64

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Hazardous Air Pollutant Emissions
The EPA’s CAMR provides for a cap-and-trade program to reduce mercury emissions from coal-fired power plants in two
phases; initially, capping nationwide emissions of mercury at 38 tons by 2010 (as a “co-benefit” from implementation of
SO2 and NOx emission caps under the EPA’s CAIR program) and 15 tons per year by 2018. The U.S. Court of Appeals
for the District of Columbia, at the urging of several states and environmental groups, vacated the CAMR, ruling that the
EPA failed to take the necessary steps to “de-list” coal-fired power plants from its hazardous air pollutant program and,
therefore, could not promulgate a cap-and-trade program. On April 29, 2010, the EPA issued proposed MACT
regulations requiring emissions reductions of mercury and other hazardous air pollutants from non-electric generating
unit boilers. If finalized, the non-electric generating unit MACT regulations could also provide precedent for MACT
standards applicable to electric generating units. On January 20, 2011, the U.S. District Court for the District of Columbia
denied a motion by the EPA for an extension of the deadline to issue final rules, ordering the EPA to issue such rules by
February 21, 2011. The EPA also entered into a consent decree requiring it to propose MACT regulations for mercury
and other hazardous air pollutants from electric generating units by March 16, 2011, and to finalize the regulations by
November 16, 2011. Depending on the action taken by the EPA and on how any future regulations are ultimately
implemented, FGCO’s future cost of compliance with MACT regulations may be substantial and changes to FGCO’s
operations may result.
Climate Change
There are a number of initiatives to reduce GHG emissions under consideration at the federal, state and international
level. At the federal level, members of Congress have introduced several bills seeking to reduce emissions of GHG in the
United States, and the House of Representatives passed one such bill, the American Clean Energy and Security Act of
2009, on June 26, 2009. The Senate continues to consider a number of measures to regulate GHG emissions. President
Obama has announced his Administration’s “New Energy for America Plan” that includes, among other provisions,
ensuring that 10% of electricity used in the United States comes from renewable sources by 2012, increasing to 25% by
2025, and implementing an economy-wide cap-and-trade program to reduce GHG emissions by 80% by 2050. State
activities, primarily the northeastern states participating in the Regional Greenhouse Gas Initiative and western states,
led by California, have coordinated efforts to develop regional strategies to control emissions of certain GHGs.
In September 2009, the EPA finalized a national GHG emissions collection and reporting rule that will require FirstEnergy
to measure GHG emissions commencing in 2010 and submit reports commencing in 2011. In December 2009, the EPA
released its final “Endangerment and Cause or Contribute Findings for Greenhouse Gases under the Clean Air Act.” The
EPA’s finding concludes that concentrations of several key GHGs increase the threat of climate change and may be
regulated as “air pollutants” under the CAA. In April 2010, the EPA finalized new GHG standards for model years 2012 to
2016 passenger cars, light-duty trucks and medium-duty passenger vehicles and clarified that GHG regulation under the
CAA would not be triggered for electric generating plants and other stationary sources until January 2, 2011, at the
earliest. In May 2010, the EPA finalized new thresholds for GHG emissions that define when permits under the CAA’s
NSR program would be required. The EPA established an emissions applicability threshold of 75,000 tons per year (tpy)
of carbon dioxide equivalents (CO2e) effective January 2, 2011 for existing facilities under the CAA’s PSD program, but
until July 1, 2011 that emissions applicability threshold will only apply if PSD is triggered by non-carbon dioxide
pollutants.
At the international level, the Kyoto Protocol, signed by the U.S. in 1998 but never submitted for ratification by the U.S.
Senate, was intended to address global warming by reducing the amount of man-made GHG, including CO2, emitted by
developed countries by 2012. A December 2009 U.N. Climate Change Conference in Copenhagen did not reach a
consensus on a successor treaty to the Kyoto Protocol, but did take note of the Copenhagen Accord, a non-binding
political agreement which recognized the scientific view that the increase in global temperature should be below two
degrees Celsius; include a commitment by developed countries to provide funds, approaching $30 billion over the next
three years with a goal of increasing to $100 billion by 2020; and establish the “Copenhagen Green Climate Fund” to
support mitigation, adaptation, and other climate-related activities in developing countries. Once they have become a
party to the Copenhagen Accord, developed economies, such as the European Union, Japan, Russia and the United
States, would commit to quantified economy-wide emissions targets from 2020, while developing countries, including
Brazil, China and India, would agree to take mitigation actions, subject to their domestic measurement, reporting and
verification.
On September 21, 2009, the U.S. Court of Appeals for the Second Circuit and on October 16, 2009, the U.S. Court of
Appeals for the Fifth Circuit reversed and remanded lower court decisions that had dismissed complaints alleging
damage from GHG emissions on jurisdictional grounds. However, a subsequent ruling from the U.S. Court of Appeals for
the Fifth Circuit reinstated the lower court dismissal of a complaint alleging damage from GHG emissions. These cases
involve common law tort claims, including public and private nuisance, alleging that GHG emissions contribute to global
warming and result in property damages. On December 6, 2010, the U.S. Supreme Court granted a writ of certiorari to
the Second Circuit in Connecticut v. AEP. Briefing and oral argument are expected to be completed in early 2011 and a
decision issued in or around June 2011. While FirstEnergy is not a party to this litigation, FirstEnergy and/or one or more
of its subsidiaries could be named in actions making similar allegations.