Coal Plant Shutdown: Owners and Operators Need Vision – Part II

McCarter & English, LLP

McCarter & English, LLP

Owners and operators planning a plant shutdown benefit from developing a forward-looking "Vision" of their plant site. The Vision is a well-developed plan for the eventual reuse of the plant property that includes not only the process for shutdown, cleanup, and redevelopment but also the steps for addressing and mitigating, if possible, the negative impact of the plant's shutdown on the host community. As we explained in our February 2017 Alert, having the Vision in place early can help expedite a plant’s closing and improve the likelihood that the owner or operator’s plan will become reality. In that Alert, we provided examples of plants that have succeeded in reinventing themselves (think soccer stadiums, offices, and retail spaces), and of plants that for years have avoided a metamorphosis (think eyesores and nuisances). In this Alert, we address the benefit of bringing others into the Vision and the importance of developing and implementing the Vision early.

Bring Others into the Vision. Getting buy-in from key stakeholders—the local community, advocacy groups, unions, and local government—on the Vision can be essential in negotiations with regulators. “Stakeholder” may be an overused term, but there is a reason it is used in planning. The interests of affected people, whether they be individuals who live and work in the neighborhood, community groups, faith-based organizations, unions, taxpayers, or potential consumers, can impact how and even whether the plant owner actually gets to exit. While national and regional environmental advocacy groups with deep pockets, extensive mailing lists, and national microphones may be early vocal advocates for a plant closure, the concerns of local stakeholders will become more important once an owner decides to close a plant.

Local stakeholders will care most about having an owner address community environmental and economic issues. The local community will want a Vision that provides for effective site cleanup, the nature and scope of which will be highly dependent on the proposed future use of the site. Elected officials and other community groups will be most concerned about the loss of local tax revenue, jobs, local wages, and downstream economic activity. Once plant operations cease, the town will be left not only with a gaping hole in its budget but also with a former industrial site—often referred to as an eyesore—that may be contaminated and is not suitable for all forms of redevelopment. Plants in urban areas are often located on or near a prime real estate location such as a waterfront, but that prime location is not feasible for redevelopment efforts until after a cleanup.

A plant owner that takes a lead role, or at least actively partners with the community, in planning for the redevelopment of the site may find itself in a better position to have its envisioned reuse of the site realized. The community has a strong interest in getting the site of a closed coal plant back into productive use, and community groups can be allies. Those individuals have a vested interest in rejuvenating their community rather than digging in for a five- or ten-year fight that may see many of their friends or family in the community move away as jobs and tax revenues are reduced.

Develop the Vision Sooner. An owner will benefit by getting out in front of the shutdown of its coal plant and developing a site plan in partnership with community groups. If the community helps develop the plan, then that means other outside parties would have to overcome community resistance to change the plan. Stated differently, if an outside party gets community buy-in for its plan first, then the plant owner or operator will be the one trying to persuade a resistant community.

Developing the Vision sooner also will allow more time to bring regulators and legislators into the plan, to lobby for incentives, and to look for redevelopment partners. Even with 20/20 eyesight, one’s Vision for a shutdown coal plant may not be entirely clear. What is clear, however, is that without a Vision, an owner or operator’s ability to move on will likely face delays.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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