A U.S. federal appeals court gave a reprieve to coal companies on Tuesday, ruling that the cross-state air-pollution rule, for power plants, proposed to be imposed by the Environmental Protection Agency was far above what was required under law.
The U.S. Court of Appeals in the District of Columbia said that emission reduction requirements by the EPA was much more than the limits required by law and exceeded its statutory authority.
For coal companies this has come as a huge relief and shares in these companies showed an immediate uptick.
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Market Vectors-Coal ETF(NYSEARCA:KOL) was up 0.53% to $24.57.
Peabody Energy Corporation(NYSE:BTU) closed up 85 cents, or 3.7 percent, to $23.79. The shares still are down about 45 percent in the last year.
Alpha Natural Resources, Inc.(NYSE:ANR) closed up 40 cents, or 6 percent, to $6.90. The shares are down 76 percent in the last year.
James River Coal Company(NASDAQ:JRCC) ended up 15 cents, or 5.8 percent, to $2.72. The shares are down 74 percent in the last year.
CONSOL Energy Inc.(NYSE:CNX) that has seen a 20 percent decline in the past year was up 39 cents, or 1 percent, to $33.45 on Tuesday.
The EPA has been trying to reduce pollution by power plants situated in upwind states in more than 24 states, more than a year ago. The rule was expected to be effective from January this year but several large power companies went to court and got the rule stayed by the appeals court, which agreed to it until a review was done.
Globally coal producers have been affected by stringent environmental pollution norms as countries have become stricter about it, with increasing concerns over global warming and the health hazards posed by such pollution. Any clampdowns on industries that use coal as their primary fuel have had an effect on the coal industry.
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Shares in these companies have also been under pressure as availability of alternative and cheaper sources of fuels such as natural gas and the prospect of more stringent regulations on environmental pollution has led to a slump in demand.