The D.C. Circuit Court of Appeals is expected to rule next week on whether it will go along with President Trump's executive order on reversing Obama-era climate change regulations affecting coal-fired power plants, according to the president of a coal group involved in the underlying litigation.
"We support [the Department of Justice] asking the court to hold the Clean Power Plan in abeyance, no doubt about that," said Paul Bailey, the president and CEO of the pro-coal American Coalition for Clean Coal Electricity, in an interview with the Washington Examiner.
"We think that's the right approach," he said, conceding that the real wild card is the court itself. "We don't know whether the D.C. Circuit will agree to hold the rule in abeyance."
Bailey talked to the Washington Examiner after being briefed by industry attorneys. "We think we could hear from the court next week about ... whether they will hold the rule [their decision] in abeyance," he said. "But we don't know yet."
Like many of Trump's other executive actions, the federal court system has played a major role in weighing just how far the president can go using his executive authority.
President Trump's Energy Independence Executive Order directs the Environmental Protection Agency to initiate a review of the Obama-era climate rules, called the Clean Power Plan, to begin the process of scrapping it. But before it does that, the administration wants the court's blessing, so to speak. But it's hard to say if it will give it. It's been doing its own review of the regulation since September and should be close to issuing a decision.
The Justice Department asked the court two weeks ago to hold its decision in abeyance to allow the EPA time to conduct its review, per Trump's order. The court is reviewing a lawsuit filed by a group of 28 state attorneys general in 2015 and dozens of groups, claiming the Clean Power Plan oversteps EPA's authority and is unconstitutional. Bailey's group is a party to that litigation.
Last week, environmental groups and Democratic state and local officials asked the court to not grant the administration's request, explaining that the Trump EPA can conduct its review of the regulation without the need for the court to delay its decision on the lawsuit.
The 28 attorneys general fighting the Clean Power Plan issued their response on Thursday, saying holding the rule in abeyance was justified and proper under the law.
Bailey emphasized that the timing of the court's decision is not known, saying that "we might" get a decision next week. But it could drag out for longer.
In the meantime, he is confident that EPA Administrator Scott Pruitt will address two other regulations affecting the coal power plant fleet, which the president has not addressed in executive action. Those include EPA's rules on coal ash, which is the remains of burning coal to produce electricity. The other regulations relate to the amount of wastewater coal plants are allowed to release into rivers and streams. The coal power plant industry has fought the regulations for almost former President Barack Obama's entire eight-year tenure.
Bailey also will be getting into another issue that the president has not addressed in any of his actions: restoring the government's electricity watchdog, the Federal Energy Regulatory Commission.
The agency, which is seen as crucial to addressing many of the issues challenging coal-fired power plants, has been shut down for months because of a lack of members. Without a quorum of at least three of its five members, it cannot function. The commission has two members currently.
Bailey said his group will be prodding FERC to put pressure on the giant grid operators it oversees to create a fair market for coal that does not favor natural gas over other sources of round-the-clock "baseload" electricity, which are power plants.
"We are going to be spending more time with the regional grid operators, PJM and MISO, and that will force us to spend more time at FERC" and its counterpart the North American Electric Reliability Corporation, Bailey said. "We think they are not properly valuing baseload coal-fired generation," he said. "There's a move to burn more natural gas, and that's understandable, but we still need very reliable, very resilient sources of baseload electricity. We think coal's the best one."
The largest wholesale electricity market in the country, PJM Interconnection, which covers the Northeast and Mid-Atlantic, recently issued a report that said the market can handle nearly 90 percent of the electricity coming from natural gas.
"PJM issued a report a week ago and it has been misinterpreted as PJM can go to all gas," Bailey said. "That's not really what the report says." ACCCE filed formal comments with the grid operator Friday in which the coal group will "politely disagree with the report," he said.
The report does raise the issue of a need for the grid to have greater "resilience" to power losses and other problems that can make electric generation unstable. Experts say the grid becoming more reliant on natural gas means more dependence on pipelines, which is not as reliable as having an 80-day supply of coal available on site.
How the federal government values resilience will be a huge issue for the coal industry because coal is one of the only fuels that can adequately back up the grid, Bailey said. But PJM said "they need guidance from FERC on how to value resilience" in the market, he said. "That's going to be a big deal" for the industry, he said. It will assure that the markets that FERC operates do not push coal out of the market.
But in recent weeks, coal in PJM has been producing more power than natural gas, which hasn't been the case for almost two years. The low cost of natural gas as a result of the shale gas boom and fracking has caused more natural gas to be used in the market. And until very recently that had pushed coal out of the lead position as the dominant fuel source for electricity production.
"Year over year, March of last year compared to March of this year, gas prices in PJM have gone up I think 92 percent. So that's why you see coal and nuclear push out gas right now," Bailey said.
Growing demand for natural gas exports, combined with increased use of gas for electricity, will continue to drive natural gas prices up, Bailey said. "Gas prices are going to go up a little higher than they were projected to do last year," he said. "So, yes, I would expect coal doing better going forward."