By Rebecca Kern and Stephen Lee

August 23, 2017 - The White House denied requests from Murray Energy Corp. to issue an emergency order to keep Murray’s coal mines and FirstEnergy Corp. coal plants operating and the companies out of bankruptcy, despite President Donald Trump’s promises to back the requests.

Murray Energy and FirstEnergy executives met with Trump in late July and early August to ask the administration to provide an emergency order to keep the facilities open—an order the companies said is needed to help them avoid bankruptcy. Murray Energy CEO Robert Murray said in written requests that invoking an emergency order is a last resort to save thousands of coal mining jobs, and to ensure the security and reliability of the nation’s electric grid.

The decision not to issue an emergency order appears in direct conflict with White House statements and action the Trump administration has taken in the past to support coal-mining jobs, including repealing the Clean Power Plan and removing the U.S. from the Paris Climate Agreement.

“We look at the facts of each issue and consider the authorities we have to address them but with respect to this particular case at this particular time, the White House and the Department of Energy are in agreement that the evidence does not warrant the use of this emergency authority,” Shaylyn Hynes, Energy Department press secretary, told Bloomberg BNA Aug. 22.

Trump verbally directed Energy Secretary Rick Perry to invoke the emergency order, according to Aug. 4 and Aug. 18 letters from Murray Energy to the White House and the Energy Department. The letters were obtained by The Associated Press and posted online. Murray Energy declined to comment to Bloomberg BNA.

Murray said in the letter that FirstEnergy, which is a large Murray Energy coal customer, is “on the verge of bankruptcy,” and if FirstEnergy declares bankruptcy, it would be forced to close its coal-fired power plants. FirstEnergy’s bankruptcy would “force” Murray Energy into immediate bankruptcy, leading to 150,000 direct and indirect Murray Energy coal-mining job losses in West Virginia, Pennsylvania, Ohio, Kentucky, Illinois, and Utah, according to the letters.

Jennifer Young, a spokeswoman for FirstEnergy, told Bloomberg BNA that the company still hasn’t heard anything official from the Trump administration. FirstEnergy operates six coal plants in Ohio, Pennsylvania, and West Virginia. Three of them are undergoing a strategic review to assess if they can remain in operation, and one—the Bay Shore Plant in Oregon, Ohio—has announced it will close by 2020, Young said.

“We’ve spoken to federal officials on numerous occasions about the importance of baseload plants and the need for action to preserve those assets,” Young said. “For FirstEnergy Solutions, which is the competitive side of our business that owns the power plants, bankruptcy could be a possibility.” FirstEnergy announced the possibility of filing for bankruptcy in November 2016, she said.

The National Mining Association, which represents coal mining and other mining companies including Murray Energy, told Bloomberg BNA it was not commenting on the administration decision.

Emergency Order Authority

Section 202(c) of the Federal Power Act allows the energy secretary, in a state of emergency, to “require temporary connections of facilities, and generation, delivery, interchange, or transmission of electricity as the secretary determines will best meet the emergency and serve the public interest.”

The Energy Department has used its 202(c) emergency order authority under the Federal Power Act in a limited number of circumstances in the past, Brooksany Barrowes, a partner at Baker Botts with experience in Federal Power Act application, told Bloomberg BNA Aug. 22.

The Trump administration has used the emergency order under the Federal Power Act twice in the past seven months for a state-owned dam in Oklahoma and two Dominion Energy Virginia coal plants in Yorktown, Va. The Obama administration never used the emergency exemption. It was previously used during the 2000 California energy crisis and after Hurricane Katrina in 2005, among a few other uses for weather- or security-related emergencies.

“The circumstances have typically been a national security threat to health and safety,” Barrowes said. “You can read between the lines that perhaps there was a decision that it wasn’t of the same character of some of the historical orders.”

“The character of the Murray request is not the same urgency nor did it make the same demonstration that’s apparent in other situations,” she added. “Section 202(c) is a last resort where there’s nothing else to be done to resolve the problem or because of a regulatory conflict that can’t be reconciled.”

She said in the case of bankruptcy, there are mechanisms to resolve their problems, including bankruptcy courts.

Likewise, Dave Doot, a partner and head of Day Pitney’s energy practice, told Bloomberg BNA, “It seems that [Murray] didn’t make the case for why it impacts the electrical grid, and while they may have had a very compelling case, without drawing that linkage, one could argue” that that’s why the administration denied the requests.

Cheap Gas, Not Regulations, Driving Coal Out

The coal industry has been facing falling prices due to record-low natural gas prices, leading to bankruptcies of other companies. Murray Energy said environmental regulations restricting power plant carbon emissions have led to coal plant closures across the country.

“The U.S. coal industry has been in structural decline for many years because of market forces like cheap natural gas, renewable energy, and Asian markets, not because of environmental rules,” Jason Bordoff, Obama’s special assistant for energy and climate change, now international and public affairs professor at Columbia University, told Bloomberg BNA Aug. 22.

Also, James Van Nostrand, director of West Virginia University Law School’s Center for Energy and Sustainable Development, said “there’s virtually no evidence” supporting Murray’s claim that there will be threats to the nation’s electric grid reliability if more coal-fired power plants close.

“In the last few years, the grid has become much more diverse. We have more high-efficiency natural gas plants, dozens of wind farms, and thousands of solar installations, and that diversity of the electricity supply has produced a more resilient grid,” he told Bloomberg BNA Aug. 22.