Clean Power Plan Already Affecting Coal Industry, Murray Energy Tells Court

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By Andrew Childers

Feb. 27 — Demand for coal already is falling due to uncertainty about how coal-fired power plants will comply with proposed carbon dioxide standards, Murray Energy Corp. told a federal appellate court.

Murray Energy told the U.S. Court of Appeals for the District of Columbia Circuit in a Feb. 26 reply brief that the Environmental Protection Agency's proposed Clean Power Plan is already affecting the coal company's customer base.

“The mere pendency of the proposed rule causes immediate harm because coal producers and utility customers must make—and are making—current business decisions now. EPA’s pursuit of this rulemaking continues to pressure states and capital markets to dismantle Murray Energy’s customer base,” the company said.

The coal company is asking the D.C. Circuit to use its authority under the All Writs Act to take the unusual step of deciding whether the EPA has the legal authority to propose carbon dioxide emissions standards for existing power plants even before the rule is finalized. Murray Energy argued that waiting until the rule is finalized will cause the company significant economic harm that could not be remedied at a later date.

“The issue under review is a single question of EPA’s statutory authority, and judicial review will abate significant and ongoing injury to Murray Energy that cannot be remedied by a later decision of this Court after the nation’s existing coal-fired power plants have gone cold. Judicial review is available and appropriate now,” Murray Energy said.

The EPA's proposed Clean Power Plan (RIN 2060-AR33) would establish unique carbon dioxide emissions rates for the power sector in each state. The rule would be implemented by state officials, who would determine how best to achieve the emissions targets. It is expected to be finalized this summer as part of a package of regulations limiting carbon dioxide emissions from the power sector.

Murray Energy is challenging the EPA's authority to propose the carbon dioxide rule, which it argues is prohibited by the plain text of Section 111(d) of the Clean Air Act. Power plants are already subject to hazardous air pollutants standards under Section 112 of the act, and therefore cannot be subject to standards issued under Section 111(d), the company says.

When the Clean Air Act was amended in 1990, the House and Senate approved conflicting amendments to Section 111(d). The Senate amendment would bar the EPA from regulating pollutants under Section 111(d) if they already subject to hazardous air pollutant standards under Section 112. The House amendment can be read as barring the agency from regulating industrial sources under Section 111(d) if they are subject to standards under Section 112. Both provisions were included in the final bill.

EPA Argues Against Standing 

The EPA has argued that Murray Energy is not directly regulated by the proposed rule and therefore lacks standing to bring its lawsuit.

“The administration’s Clean Power Plan is forcing existing coal-fired power plants to decide now whether to invest millions to prepare for an onslaught of future requirements, switch from coal to other fuels, or shut down entirely,” Murray Energy said. “This plan will dramatically reduce the use of coal to generate electricity at the nation’s coal-fired power plants, and thus attacks Murray Energy’s customer base.”

EPA Interpretation Challenged 

Industry groups that intervened in support of Murray Energy also argued that the EPA's proposal violates the Clean Air Act's plain text.

The National Federation of Independent Business and the Utility Air Regulatory Group said in their Feb. 26 reply brief that Section 111(d)'s provisions are “unambiguous.” They dismissed the EPA's argument that the statute's requirements are ambiguous as “interpretive performance art.”

“Needless to say, Section 111(d) should not be read as a mystery wrapped in a riddle to be unfolded by interpretive gymnastics, but as a straightforward provision of law,” the industry groups said. “That provision declares that source categories regulated under Section 112 are exempt from further regulation under Section 111(d).”

Peabody Energy Corp. argued in its Feb. 26 reply brief that it is incumbent upon Congress and not the EPA to resolve any conflicting language in Section 111(d)'s requirements.

“This is not an exercise in resolving ambiguities but an ambitious gambit to decide what is the law of the land. EPA effectively seeks to play the role of the congressional Conference Committee reconciling two different versions of a bill,” the company said.

D.C. Circuit will hear oral argument April 16.

To contact the reporter on this story: Andrew Childers in Washington at achilders@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com