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Rick Perry’s coal rescue runs aground at White House

© Cliff Owen/AP Photo Energy Secretary Rick Perry’s proposals — which would also keep aging nuclear power plants operating — have riled up the oil and gas industry.

By Eric Wolff and Darius Dixon, POLITICO

One of the Trump administration’s major efforts to prop up ailing coal companies has run aground in the White House, a setback to an industry that had hoped for a major resurgence after Donald Trump won the presidency.

Energy Secretary Rick Perry has spent more than a year pushing various plans that would invoke national security to force power companies to keep their economically struggling coal plants running — a goal in line with Trump’s frequent pledges to revive what he calls “beautiful, clean coal.”

But the White House has shelved the plan amid opposition from the president’s own advisers on the National Security Council and National Economic Council, according to four people with knowledge of the discussions.

It is unclear whether Trump himself has decided against following Perry’s proposal. Even if he has, the sources warned that Trump frequently changes his mind, and the idea could re-emerge in advance of the president’s reelection campaign.

The failure of Perry’s bailout efforts still leaves Trump with plenty to brag about in coal country: He has shredded former President Barack Obama’s environmental regulations and pulled out of the Paris climate agreement. But the stalemate is frustrating the politically active coal mining companies that backed Trump’s presidential campaign and lobbied heavily for an economic lifeline for their industry.

Perry’s proposals — which would also keep aging nuclear power plants operating — have riled up the oil and gas industry, which has prospered as inexpensive natural gas has increasingly eaten away at coal’s share of U.S. power markets. Other critics include consumer groups worried about rising power bills for customers, environmental organizations concerned about the threat to wind and solar power, and conservative policy organizations that oppose what they see as heavy-handed federal intervention in the economy.

“The problem they’ve got is every option they might consider raises the costs for somebody at a time when nobody has an appetite for increased costs anywhere,” said Bob Coward, co-leader of energy advisory firm MPR Associates, echoing what people with knowledge of the discussions told POLITICO. “I think that’s the problem they keep running into. The political will to pay for it is not broadly there enough yet for them.”

The setback is a turnaround from the months of pressure Trump has placed on Perry to help the coal industry. Trump has even given public shoutouts to the obscure piece of the Federal Power Act — Section 202 — that the Energy Department could use to set things in motion.

“We’ll be looking at that 202,” Trump told the crowd at a speech in West Virginia this spring. “You know what a 202 is? We’ll be looking at that.”

The White House directed Perry to “prepare immediate steps to stop the loss” of retiring coal and nuclear plants more than four months ago, and Trump even interrupted an Ohio fundraiser in May to order an aide to call Perry to talk about the bailout. He also touted the national security benefits of coal a few months later at another West Virginia speech.

But in recent months, Trump has omitted mentions of a potential rescue even in his pro-coal speeches, such as at a rally last week in Richmond, Ky.

Industry lawyers and agency staffers say DOE leadership remains united behind a plan to keep the coal plants running, which would also help the coal-mining companies that provide fuel to the plants.

But the agency has struggled to provide the White House with details on which plants would get funding and who would pay, the sources said. Without a legally justifiable methodology, White House advisers have cooled to the idea of a major intervention in power markets.

A draft document DOE presented to the NSC in May proposed tapping federal emergency powers under a trio of laws to force economically struggling coal and nuclear plants to stay online for as long as two years. During this period, the NSC would conduct a study on grid vulnerability. The document did not mention how many plants would get federal help.

That lack of detail seems to have undermined DOE’s case in the White House, and the agency has not been able to convince key presidential advisers, such as National Economic Council Director Larry Kudlow, that it has a strong national security case for saving coal and nuclear plants, according to two of the sources.

Further damaging Perry’s arguments was an order in January by the Federal Energy Regulatory Commission, which oversees the nation’s power markets, that the retirement of aging power plants did not pose an emergency or require federal intervention.

One of Perry’s biggest problems in formulating a bailout is figuring out who would pay the billions of dollars needed to keep money-losing power plants operating — raising the specter that electric customers would have to cover the cost in their monthly utility bills.

The leaked DOE plan also called for invoking the Defense Production Act, a Korean War-era law that would put the onus on Congress to appropriate money for the plants.

DOE declined to comment for this article, and the White House did not respond to a request for comment.

Even without a bailout, the administration’s other regulatory rollbacks to help coal are likely to keep voters in coal-heavy regions solidly in Trump’s camp.

“If you’re Donald Trump’s speechwriter and you travel to West Virginia, you have everything you need. ... That’s your applause line,” said Jeff Navin, a founder of Boundary Stone Partners and a former chief of staff for the Energy Department under Obama.

But the White House silence has left ardent coal supporters on Capitol Hill frustrated.

“I’m trying to find the darn plan because I understand it’s gone from the Department of Energy over to the White House, and I don't know who in the White House would be sitting on it for whatever reason,” Sen. Joe Manchin (D-W.Va.) told reporters last week.

Last year, Manchin pressed Trump and Perry to examine how regulations, subsidies and mandates have hurt the coal and nuclear industries. Shortly afterward, Perry kicked off a DOE study of the electric grid.

The stalled plan marks DOE’s third attempt to save coal plants since Trump took office. A grid study intended to highlight the benefits of coal and nuclear power found, inconveniently, that most of those units were shutting down because of competition from cheap natural gas rather than onerous regulations. A subsequent proposal that Perry submitted to FERC was struck down unanimously by the five commissioners — four of whom Trump had appointed.

The effort has been a priority of Bob Murray, a coal magnate who has been a staunch Trump supporter and who met with Perry last year to deliver a list of policy priorities that would benefit the industry. Executives at his mining company, Murray Energy, sent letters to the White House describing how Trump had directed Perry to help the company after having a conversation with Murray.

Murray has repeatedly called on DOE to use its emergency power to keep coal-fired plants running, and for most of the FERC commissioners to be fired after they rejected Perry’s initial proposal.

“President Trump has repeatedly directed members of his Administration to enact measures that will ensure the reliability, resiliency, and fuel security of our Nation's electric power grids,” Murray Energy spokesman Cody Nett wrote in an email. Still, he argued, it “is clear that there are those within his Administration that are working against the President’s wishes.”

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