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Romney election could create new scenario for EPA and coal

Whether Mitt Romney or Barack Obama wins the presidential election, a congressional impasse in 2013 seems likely. That’s because under most conceivable election scenarios – with Romney or Obama in the White House, and with either Democrats maintaining their Senate majority, or the Republicans taking it – the minority party could use the filibuster threat to block proposals it opposed.

Brian Snyder / Reuters

Republican presidential candidate Mitt Romney climbs onto a picnic table to address the crowd outside a campaign rally in Mansfield, Ohio September 10, 2012.

Regulation, instead of legislation, may be where whoever is president in 2013 can most effectively shape policy. The president’s appointment power and his control of regulatory agencies such as the Environmental Protection Agency (EPA) are likely to become more important than they have been in the past.

This is especially true with regulation of coal and the power plants that use it to generate electricity.

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John Eaves, the CEO of St. Louis-based Arch Coal, the nation’s second-largest coal company, recently told a conference of investment analysts that, “The EPA has been very aggressive where coal has been concerned. When we look out over the next four, five years, we've identified about 45 gigawatts of coal-fired generation that will be closed.” A gigawatt is 1,000 megawatts. The largest coal-fired generating plant in the United States, in Cheshire, Ohio, has a capacity of 1,320 megawatts.

According to the Energy Department, there are nearly 1,400 coal-fired power plants with a total of 317 gigawatts of generating capacity. So shutting down 45 gigawatts of coal-fired generation would end about 14 percent of U.S. coal-fired electricity.

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Environmental groups are looking to the Obama administration to impose more limits on coal-fired plants.

“The EPA right now has a whole bunch of rules to finalize. What we’re trying to do is ensure that those rules get out, and are commented on appropriately and that the American people’s voice is heard – and that it’s not just coal companies – and that those rules get finalized,” said Heather Taylor, director of the Natural Resources Defense Council (NRDC) Action Fund, a political advocacy group that supports alternatives to coal and is backing Obama.

“We’re especially interested in the standards for existing coal plants. It’s super-important to get those done the right way,” Taylor said. “With an Obama administration, we think that we’re going to be able to deal with air pollution in a very strong way in the next four years.”

Most industry leaders expect a more benign regulatory environment for coal if Romney wins on Nov. 6, said Kyle Danish, an attorney who specializes in energy policy at the Van Ness Feldman law firm in Washington.

Danish said Romney has made a point of drawing a contrast between his views and Obama with such statements as, "In my administration, coal will not be a four-letter word." But he said, “for the most part, the Romney energy platform does not present very explicit plans on coal.” 

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“It would depend on which Romney shows up, right?” said the NRDC Action Fund’s Taylor.

As governor of Massachusetts, Romney had an environmental record that showed “we would have been able to work productively with him,” Taylor said. “As governor, he really seemed like he was listening to all sides and trying to deal with what was in the best interests of his citizens, not necessarily what was in the best interest of his campaign donors.”

But “that guy seems to be long gone” Taylor said. “I’m very nervous that the wrong Romney would show up in the White House on the first day.”

Air quality regulation is one arena where a Romney-appointed EPA chief could have an impact, but much hinges on the courts.

“The key power plant air quality regulation for coal is the Utility Mercury and Air Toxic Standard,” Danish said. “EPA already has finalized that rule. It's subject to legal challenge. A court decision is not likely until next year. If the rule is upheld, there might be little that a Romney administration could do to modify it except perhaps postpone the compliance deadline a year or two.” 

If the court overturns the rule, he said, then an EPA headed by a Romney appointee “likely would come back with a more lenient version, but the Clean Air Act and past court decisions place some real boundaries around the options.”

Danish said Romney also has made clear that he opposes using the Clean Air Act to regulate greenhouse gas emissions.  “So, if President Romney took office you would not see greenhouse gas regulation of power plants.”

As powerful as the EPA is, the limits to its power are drawn by the court that gets to adjudicate most cases involving federal regulatory agencies, the U.S. Court of Appeals for the District of Columbia circuit.

The court hears challenges to regulations issued not only by the EPA but by the National Labor Relations Board (NLRB), the Mine Safety and Health Administration (MSHA) and other regulators. “Whatever combination of letters you can put together, it is likely that jurisdiction to review that agency’s decision is vested in the D.C. Circuit,” Chief Justice John Roberts wrote in 2006.

Last month in a two-to-one decision, that court blocked an EPA rule on cross-state air pollution that would have hurt coal producers and coal-fired plants.

“It was a really important message to be sent that EPA does have limits in terms of its overreaching regulations,” said Greg Boyce, chairman and CEO of St. Louis-based Peabody Energy, the largest private-sector coal company in the world.

On the three-judge panel that blocked the EPA rule, the two judges in the majority, Brett Kavanaugh and Thomas Griffith, were both appointed by President George W. Bush. The dissenting judge, Judith Rogers, was appointed by President Bill Clinton.

Since the political battlefield in 2013 and beyond is likely to be largely in the regulatory agencies, the D.C. Circuit court, which now has three vacancies on the 11-member court, will become even more significant. The Supreme Court grants appeals in only a tiny fraction of the decisions from the D.C. Circuit appeals court, so in most cases it is the end of the road for challenges to EPA’s rulings.

One of Obama’s biggest frustrations and failures – due to Republican senators’ opposition and threatened filibusters — is that he has not been able to appoint anyone to that court.

One Obama nominee, Sri Srinivasan, has not yet had a Judiciary Committee confirmation hearing. And last December Democrats failed to get the 60 votes needed to end debate on the other Obama nominee, Caitlin Halligan. Only Sen. Lisa Murkowski, R-Alaska, crossed party lines to vote to end debate and move to confirming Halligan.

Apart from power plant regulation, the coal industry also faces regulatory and court battles on other fronts, whether Obama or Romney is president.

The Obama administration has attempted to impose tighter restrictions on mining in the Appalachians, including mountaintop removal. “Some of these rules were invalidated in federal district courts, and the Obama administration is appealing those decisions. Most in industry believe a Romney administration is likely to drop the appeals and go in a different direction, relying more on the states to oversee permitting and regulation of mining operations,” Danish said.

American coal producers are eyeing potentially lucrative markets in Pacific Rim countries – and here, too, Romney could make a difference.

Danish said, “With demand for coal declining in the United States, the industry is seeking greater access to overseas markets, such as China. A number of port expansion projects in the Pacific Northwest and the Gulf Coast are critical to these exports. The industry generally expects that it will fare better in getting needed permits from a Romney administration.”

A present and future threat to coal’s market share is cheap and abundant natural gas – especially with the boom in shale gas produced by hydraulic fracturing (“fracking”) in Pennsylvania, Ohio and other states.

“The Romney energy platform has some potential negatives for coal,” Danish noted. “The Romney campaign has suggested that a Romney administration would accelerate gas production, including on federal lands, and would ensure that the states have exclusive control over regulation of fracking.” The EPA’s power to tilt in favor of more gas shows how much hinges on that agency and the person the president appoints to head it.