Transcript Slide 1

Mississippi’s Lead Role in the
New Frontier of Clean Coal
& Update on Gulf Oil Spill Issues
John A. Brunini
Brunini Grantham Grower & Hewes, PLLC
2011 Mississippi Bar Convention
SONREEL Section Annual
Meeting
Mississippi’s Lead Role in the New Frontier on
Clean Coal
• Mississippi has extensive coal reserves
– OSM estimates five billion
tons in Mississippi
– All Mississippi coal
is lignite
Mississippi’s Lead Role in the New Frontier
on Clean Coal
What Is Lignite?
•
Lignite is young coal
•
Very high moisture
•
Low energy value or “Btu” content
•
Only economical to transport short distances
Mississippi’s Lead Role in the New Frontier
on Clean Coal
• The North American Coal Corporation
currently operates the Red Hills Mine
– Choctaw County, Mississippi
– Appx. 6,000 life of mine acres
– Co-located lignite fired power plant operated
by GDF Suez
– Forty year contract to sell power to TVA
Mississippi’s Lead Role in the New Frontier
on Clean Coal
• The North
American Coal
Corporation is the
largest lignite
miner in the U.S.
• Lignite Mined by
Surface Mining
Methods
Mississippi’s Lead Role in the New Frontier
on Clean Coal
• Mississippi Power is currently constructing
the Kemper County IGCC Facility
• IGCC stands for IGCC stands for
“Integrated Gasification Combined Cycle”
– IGCC is a combined-cycle power plant and a
coal-gasification plant designed specifically to
work with each other
– There are currently only two coal based IGCC
plants in the U.S.
Mississippi’s Lead Role in the New Frontier
on Clean Coal
Liberty
Meridian
Mississippi’s Lead Role in the New Frontier
on Clean Coal
• Kemper County IGCC Plant is being
constructed near Liberty
• Approximately 20 Miles North of Meridian
• Co-located with 12,000+ acre lignite mine
(“The Liberty Mine”)
• To be operated by The North American
Coal Corporation
Mississippi’s Lead Role in the New Frontier
on Clean Coal
What Does an IGCC Plant Do?
• IGCC is a combined-cycle power plant and a coalgasification plant designed specifically to work with
each other.
•
There are currently only two coal based IGCC plants
in the U.S.
Mississippi’s Lead Role in the New Frontier
on Clean Coal
– Lignite is introduced into a “Gasifier”
– The fuel is subjected to high temperature
and pressure with limited air (or oxygen)
– Chemical reaction resulting in the
formation of a synthesis gas or “syngas”
– Gasification is not combustion
Mississippi’s Lead Role in the New Frontier
on Clean Coal
• Combined Cycle Power Generation
– Power is generated by combusting fuel in a
Combustion Turbine
– Hot exhaust gas from the turbine discharges to a
Heat Recovery Steam Generator (HRSG)
– Steam raised in the HRSG is expanded through a
Steam Turbine which generates additional power
– Very efficient method of power generation
Mississippi’s Lead Role in the New Frontier
on Clean Coal
• Advantages of IGCC
– Fuel diversity – Potentially wide range of feed stocks
– More efficient than traditional pulverized coal technology
– Improved NOX, SO2 and Mercury removal than traditional
pulverized coal technology
– Lower CO2 than traditional pulverized coal technology, with
greater potential for future CO2 capture
– Marketable byproducts
Mississippi’s Lead Role in the New Frontier
on Clean Coal
• Disadvantages of IGCC - $$ - High Initial
Cost
• Kemper County IGCC Receiving Multiple
Federal Financial Incentives
• Some Incentives through US Clean Coal
Power Initiative
– Loan Guarantees
– Tax Incentives
– Grants
Mississippi’s Lead Role in the New Frontier
on Clean Coal
• Environmental Permitting
– IGCC required PSD permit, 401 Water Quality
Certification, 404 wetlands permit, and
stormwater permit prior to construction
– All have been issued
– Sierra Club challenged MDEQ issuance of
PSD Permit at evidentiary hearing
– Sierra Club noticed intent to appeal Permit
Board ruling at conclusion of evidentiary
hearing
Mississippi’s Lead Role in the New Frontier
on Clean Coal
• Environmental Permitting
– Lignite Mine required 401 Water Quality
Certification, wetlands permit, NPDES
permits, and state surface coal mining permit
prior to any construction activities
– Gulf Restoration Network requested hearing
on permit board issuance of 401 Water
Quality Certification, then dismissed request
Mississippi’s Lead Role in the New Frontier
on Clean Coal
• IGCC Construction began in fall, 2010
• Lignite Mine hopes to receive surface coal
mining permit in early 2012
• IGCC plant scheduled to begin operation
in 2013
Gulf Oil Spill - Update
April 21, 2010
Update on Gulf Oil Spill Issues
• Deepwater Horizon oil well blowout
– Blowout resulted in an uncontrolled release of
crude oil and natural gas
– Blowout preventers failed
– Drilling rig was situated approximately 40
miles southeast of Louisiana coast
Update on Gulf Oil Spill Issues
Update on Gulf Oil Spill Issues
• Deepwater Horizon rig Owned by British
Petroleum
– NOAA estimates release of 4.9 million barrels
– Equates to release of 205,800,000 gallons
Update on Gulf Oil Spill Issues
• Spill Response Data as of June 15, 2010:
– More than 8100 vessels responding
– 64.4 miles of shoreline affected by oil
– 78,000 sq. miles closed to fishing
– 500,000 bbl recovered
– 1.28 million gallons of dispersant applied
– More than 205 controlled burns
– Federal response costs over $212 Million
Update on Gulf Oil Spill Issues
How does this Event Compare?
Exxon Valdez Oil Spill Occurred in 1991
• Total discharge estimated at 10.8 million
gallons (250,000 bbl)
• Settlement in that case totaled $900MM
with a reopener for an additional $100MM
Gulf Oil Spill – Natural Resource Damages
• BP has accepted its role as “Responsible
Party in this matter
• BP has also indicated intent to sue other
entities, including
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Transocean (Drilling Rig Operator)
Halliburton (Service Provider)
Cameron (Manufacturer of Blowout Preventer)
Hyundai (Manufacturer of rig)
Others?
Update on Gulf Oil Spill Issues
Update on Gulf Oil Spill Issues
• Types of Legal Claims
– Private Claims
• Common law suits for damages to industry and
commerce
– Wrongful death, business impact for fishing, shrimping,
travel, hospitality, etc.
– Shareholder derivative suits
– Legal battle among BP, Transocean, Halliburton,
Cameron, Hyundai, etc.
Update on Gulf Oil Spill Issues
• Types of Legal Claims (Continued)
– Criminal Charges
• A number of statutes provide potential criminal
liability, including:
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Oil Pollution Act
Clean Water Act
National Marine Sanctuary Act
Endangered Species Act
Clean Air Act
Update on Gulf Oil Spill Issues
• Types of Legal Claims (Continued)
– Government Claims
• Civil Penalties/Fines arising out of regulatory
violations
• Response/Cleanup costs
• Natural Resource Damages Claims
Update on Gulf Oil Spill Issues
• On June 16, 2010, President Obama
announced that BP agreed to establish a
$20 billion fund to pay claims for damages
– Economic Claims
– Natural Resource Damages
– State and Local Response Costs
Update on Gulf Oil Spill Issues
Natural Resource Damages Claims
• Oil Pollution Act § 1002(a) states:
[E]ach responsible party for a vessel or facility from which oil is
discharged…into navigable waters…is liable for removal costs
and damages…
– Covered damages include:
Damages for injury to, destruction of, loss of, or loss of use of,
natural resources, including the reasonable costs of assessing
damages, which shall be recoverable by a U.S. Trustee, a State
Trustee, or a Foreign Trustee.
Gulf Oil Spill – Natural Resource Damages
Gulf Oil Spill – Natural Resource Damages
Update on Gulf Oil Spill Issues
• What is a “Natural Resource”?
– OPA § 1001(20) defines Natural Resources as:
“[L]and, fish, wildlife, biota, air, water, ground water, drinking water
supplies, and other such resources belonging to, managed by,
held in trust by, appertaining to, or otherwise controlled by the
United States, any State or local government or Indian tribe, or
any foreign government
Update on Gulf Oil Spill Issues
• In short, a trustee (usually the head of an environmental
agency in the case of a State Trustee) may pursue a
claim against a responsible party for damages to natural
resources caused by discharges of oil.
• The measure of natural resource damages is the cost of
restoring, rehabilitating, replacing, or acquiring the
equivalent of the damaged natural resources; the
diminution in value of those natural resources pending
restoration; plus the reasonable cost of assessing those
damages.
Update on Gulf Oil Spill Issues
• What is the process for assessing a claim
for natural resources?
– Preassessment
– Restoration Planning
– Restoration Implementation
Update on Gulf Oil Spill Issues
• Preassessment
– Notice to Trustee
– Establish Jurisdiction
• Is it an OPA Incident?
• Determination of whether a trustee’s natural
resources have been or are likely to be injured
– Evaluation of Feasible Restoration Activities
– Data Collection; Administrative Record;
Coordination; Emergency Restoration
– Decision to Initiate Restoration Planning
Update on Gulf Oil Spill Issues
• Restoration Planning
– Conduct Injury Assessment
• Highly technical, scientific process with complicated
formulae, data modeling, etc.
– Develop Draft Restoration Plan & Publish
• Plan must comply with NEPA if NEPA triggered
– NEPA applies if there is a major federal action significantly
affecting the quality of the human environment
– After publication, comment, and revision, proceed to
Final Restoration Plan
– Issue Demand to Responsible Parties
Update on Gulf Oil Spill Issues
• Restoration Implementation
– Proceed with implementation of Final
Restoration Plan
• Corrective Action
• Monitoring
Update on Gulf Oil Spill Issues
• Posturing on Natural Resource Damages
began early:
– “Everything we can see at the moment
suggests that the overall environmental
impacts will be very, very modest.” - BP CEO
Dr. Tony Hayward.
Update on Gulf Oil Spill Issues
• Issues, Complicating Factors, Politics
– Minerals Management Service granted a categorical
exclusion to BP’s activities, allowing it to avoid
performing an Environmental Impact Statement as
required by NEPA.
– Therefore, there was no detailed environmental study
performed prior to drilling that would have established
significant baseline information on species, risks,
other threats to ecosystems, etc.
Update on Gulf Oil Spill Issues
• Issues, Complicating Factors, Politics
– Assessment process has no distinct timeframe, which
leads to tremendous uncertainty for Responsible
Party and creates leverage for Trustees
– Very difficult to draw line between immediate
response required in wake of spill and natural
resource damages. All response costs are covered
by Responsible Party, but NRDs are subject to caps.
– There also exists a possibility of double-dipped
damages - Responsible Party could pay
governmental claim for damage to a natural resource
(e.g., fish), then be subject to a claim from a private
party for loss of subsistence use of resource (e.g.,
fishermen)
Update on Gulf Oil Spill Issues
• Issues, Complicating Factors, Politics
– NRD Claims rely heavily on accurate baseline
data because a goal of the process is to
implement a restoration plan that returns the
damaged resource to its pre-injury condition.
• Without accurate baseline data, there could be a
battle over specific level of restoration required.
• Some experts claim that without baseline and
knowledge of other threats to or pre-spill changes
in deep sea organisms and ecosystems, accurate
assessment is impossible
Update on Gulf Oil Spill Issues
• Early Restoration Framework
– Agreement between Trustees for the
Deepwater Horizon Oil Spill and BP
• Trustees are representatives for AL, FL, LA, MS,
TX, Dept. of Interior, and NOAA
– BP provides $1 Billion for “Early Restoration
Projects”
Update on Gulf Oil Spill Issues
• What is an Early Restoration Project?
– Trustees are continuing process of Natural
Resource Damage Assessment
– May take many more years to fully
comprehend long-term injury
– Early restoration projects allow for present
implementation of projects that restore,
rehabilitate, repalce or acquire the equivalent
of injured natural resources and services
Update on Gulf Oil Spill Issues
• Early Restoration Framework
– Each state may select and implement $100
Million in projects
– NOAA and DOI select and implement $100
Million in projects
– Remaining $300 Million to be used for
projects selected by NOAA and DOI from
proposals submitted by State Trustees
Update on Gulf Oil Spill Issues
• Early Restoration Framework
– Proposed projects must:
• Address specific injury associated with incident
• Seek to restore natural resources, habitats or
services of the same type/quality
• Be consistent with anticipated long-term
restoration needs and anticipated final restoration
plan
• Be feasible and cost effective
– Trustees also seeking proposed early
restoration projects from the public
Examples of Proposed MS Projects
Living Shorelines – Wetlands Restoration
Description: Oysterbased living shoreline
structures placed would
be placed along eroding
marsh shorelines in MS
Gulf waters.
Would prevent further
erosion and accrete
sediments, leading to
recreation of lost marsh
habitats
Examples of Proposed MS Projects
Mississippi Coast Wide Seagrass Conservation Project
Would address damage
to seagrass beds by
providing public
awareness to prevent
damage from propscarring from
recreational and other
boating activities
Examples of Proposed MS Projects
Habitat Restoration with Artificial Reefs
Includes restoration and enhancement of 140 existing offshore reefs covering
70 acres and 67 existing inshore reefs covering 3 acres. Artificial reefs
provide habitat and foraging sites for numerous species
Examples of Proposed MS Projects
Restoration of Beach – Hancock County
Would restore 4.5 miles of beach in Hancock County through nourishment with
sand. Project would provide potential habitat for onshore and nearshore
species and recreational benefits
Examples of Proposed MS Projects
• Other potential projects include:
– Restoration and enhancement of costal marsh
and traditional forests in coastal MS
– Sub Tidal oyster reef restoration
– Using living shorelines to mitigate effects of
hardened shorelines
– Preservation of private coastal lands
– Ocean Expo Learning Center/Aquarium
– Native plant nursery for restoration
– Restoration of oyster reefs in MS Sound
Update on Gulf Oil Spill Issues
Future Forecast on Gulf Oil Spill
• NRDA process likely to continue for years to
come
• Due to size of the spill, the size of the Gulf, and
lack of knowledge of deep sea environments,
scientific analysis and evaluation of impacts has
been more challenging than prior oil spills
• Parties have worked cooperatively so far but
many potentially divisive issues still remain
Update on Gulf Oil Spill Issues
• Quote from Trudy Fisher:
“Since the day of the oil spill, our goals have been to
make Mississippi whole and to assure that our coastal
area completely recover. (The early restoration
framework” agreement is an important first step, but is
only the first step. Mississippi will continue its work and
will count on our many interested citizens to contribute
their ideas and input as we all work to define the scope
of these early restoration projects and develop other
restoration projects. Our goals have not changed. We
will remain actively engaged in these and other projects
until the Gulf is restored and our state is made whole.”
Update on Gulf Oil Spill Issues
THE END
John A. Brunini
Brunini, Grantham, Grower & Hewes, PLLC
[email protected]
(601) 973-8712