By Keith Goldberg, Stan Parker, Adam Lidgett, and Jack Karp

May 18, 2017 - The U.S. Environmental Protection Agency on Monday laid out its plan for complying with a West Virginia federal judge's order to study the effect of the agency’s regulations on coal industry jobs, a directive sparked by a decision the EPA has appealed to the Fourth Circuit. 

The EPA's court filing stemmed from U.S. District Judge John Bailey's January order requiring the agency to come up with a study on plant closures and job losses by July. The order followed the judge’s grant of summary judgment to coal giant Murray Energy Corp. in October in its suit accusing the EPA of failing to continually study the effects of its regulations on employment as required by Section 321(a) of the Clean Air Act.

The EPA has appealed the October ruling to the Fourth Circuit. Absent relief from the appeals court, the agency told Judge Bailey in a compliance filing that it will develop the study by resurrecting its so-called Economic Dislocation Early Warning System program to use as guidance as well as a starting point to craft an ongoing program to evaluate closures and job losses on a facility-by-facility basis.

“EPA maintains its position, however, that 'resuming the [EDEWS] … would entail enormous costs to EPA and industry with little or no gain in reliable information,” the agency said in the filing. “Furthermore, EPA continues to have serious concerns about the analytical challenges associated with facility-level evaluations generally.”

The EDEWS program, administered in the 1970s and 1980s, involved coordination between the EPA and state and local environmental enforcement officials and encouraged facility owners to contact the EPA if their plant was closing or slated for closure and if environmental regulations played a significant role in its closing. That information would be published quarterly along with the industry in which the facility operated, the number of jobs potentially lost and the specific environmental regulation that was the cause, according to the compliance plan.

The EPA said it won't be able to get all the required information from state and local officials by the July deadline, so it will rely on publicly available information on coal-mining and coal-fired facilities, including U.S. Department of Labor information on coal mines that have closed or cut jobs since 2009 and information from the Energy Information Administration, Federal Energy Regulatory Commission and the Department of Agriculture's Rural Utilities Service on coal-fired power plants that have closed or cut jobs since 2009.

For coal-fired plants threatened with closure, the EPA said it will rely on public information available in employee retirement plans, though the agency said no such option is available for coal mines.

The EPA said it will rely on statements from companies and news sources to evaluate whether its regulations played a role in a closure, though the agency cautioned that it won't be able to fully corroborate those statements. The agency said it will also provide a sectorwide overview of both the coal and electricity industries.

Judge Bailey blasted the EPA's initial response to his summary judgment ruling, in which the agency proposed to consult its Science Advisory Board and stretch out its evaluation over the course of two years. He noted that the EPA had the EDWES program in place for years in order to comply with Section 321(a)'s requirements and that the agency offered no explanation why the program was discontinued and accused the EPA of ducking the requirement to study employment effects as established by Congress.

The judge ordered the agency to come up with an economic analysis of the effects of its regulations on the coal-mining and power-generating industries by July 1 and to show the court by the end of the year that it has put measures in place to continually monitor any losses or shifts in employment that result from its regulations.

"The plan proposed by the Environmental Protection Agency is a step in the right direction, but inflates the amount of effort required to complete this analysis," Murray senior corporate counsel Gary Broadbent told Law360 Tuesday. "We will file our response in due course, and will continue to vigorously litigate this matter. We must make certain that the EPA follows the law, which they have not. We also must ensure the survival of coal jobs and family livelihoods in the United States, and affordable and reliable electricity for all Americans."

The EPA is represented by acting Assistant U.S. Attorney General Jeffrey H. Wood and Patrick R. Jacobi, Richard Gladstein, Sonya Shea and Laura J. Brown of the U.S. Department of Justice.

Murray is represented by Geoffrey K. Barnes, J. Van Carson, Danelle M. Gagliardi, John D. Lazzaretti, Whitney A. Todd and Robert D. Cheren of Squire Patton Boggs LLP, and William Robinson and Jacob A. Manning of Dinsmore & Shohl LLP.

The case is Murray Energy Corp. et al. v. Scott Pruitt, case number 5:14-cv-00039, in the U.S. District Court for the Northern District of West Virginia.