EPA Must Consider Regulatory Impacts on Coal/Utility Industry Jobs and Plant Closure

On October 17, 2016, the U.S. District Court for the Northern District of West Virginia granted summary judgment to Murray Energy Corporation and its subsidiary coal companies, including UtahAmerican Energy, Inc. The decision requires the U.S. EPA to follow the mandate of Section 321 of the Clean Air Act, 42 U.S.C. Section 7621. This provision requires EPA to evaluate plant closures or reductions in employment that may result from its administration or enforcement of the federal Clean Air Act. Murray Energy alleged that EPA failed to consider the impacts of the Clean Power Plan and implementing regulations contributing to the shut-down of coal-fired power plants and reduction of employment in the utility and coal mining industries. As set forth in the complaint, Murray Energy and its subsidiaries comprise the largest underground coal mining operation in the United States and collectively employ over 7,200 workers. The company alleged injury resulting from the actions of EPA causing a reduced market for coal which threatens its economic viability. The Court agreed that the injuries alleged by Murray Energy were related to EPA’s actions and the agency’s failure to evaluate losses or shifts of employment related to its actions as required by CAA Section 321. EPA must now file a schedule of compliance with Section 321(a) which is due to the Court this week.

Commentators have suggested that the economic analysis required by Section 321 is informational only and will have no substantive impact on EPA’s regulations.[1] In fact, this ruling comes too late for at least one power plant in Utah. The Carbon Plant located near Helper, Utah was forced into early retirement last year due to the cost of retrofits needed to meet EPA’s mercury emission standards.[2] Closure resulted in the loss of 74 jobs in Carbon County and was only one of an estimated 150 coal-fired power plants shuttered since 2010. The decline of the coal market was also a factor in PacifiCorp’s decision to shut down the Deer Creek Coal Mine in December, 2016. This closure resulted in the loss of 182 jobs in Emery County, Utah.[3] However, even at this late date, an analysis as required by CAA Section 321 would help confirm the importance of coal mining and the coal-fired power plants to the Utah economy. In 2013, Utah’s coal industry contributed some $887 million to Utah’s economy, generated more than 2,000 jobs and contributed significantly to the tax base of rural counties in the State.[4] More than seventy percent of Utah’s power is generated by coal-fired plants.[5] This contributes to keeping the average price of electricity per kWh significantly below that of many other Western States. The Section 321 analysis could be influential in determining the future of two coal fired-generating units at the Intermountain Power Project in Delta, Utah.  IPP’s long coal supply agreements with California come to an end in 2027; however IPA is committed to providing coal–fired power from these units so long as there is a market for the power.[6]

The compliance schedule soon to be released in response to this ruling will be significant. The detailed analysis required by Section 321 will inform the decisions of the EPA and those who oversee their actions.

[1] Law360, October 18, 2016, Keith Goldberg, “Coal Co.’s Win Won’t Diminish EPA’s Regulatory Clout,” http://www.law360.com/articles/852671/coal-co-s-win-won-t-diminish-epa-s-regulatory-clout.

[2] The Salt Lake Tribune, October 21, 2013, Brian Maffly, “Utah’s Carbon Power Plant heads for early retirement.”

[3] The Salt Lake Tribune, July 7, 2015, Mike Correll and Michael McFall, “Emery County mine to shut down; 182 losing their jobs.”

[4]  2015 Report by Applied Analysis. http://energy.utah.gov/wp-content/uploads/UtahsEnergyEconomy_EconomicImpactAssessment.2015.compressed.pdf.

[5] Energy Information Administration power pricing tables. http://www.eia.gov/electricity/monthly/.

[6] “Renew IPP, Securing the Long Term Future of a Major Contributor to Utah’s Economy,” Intermountain Power Agency, http://www.ipautah.com/data/upfiles/newsletters/RenewIPP.PDF.