Last Wednesday, CNX Coal Resources L.P. (NYSE: CNXC) began trading after pricing its initial public offering (IPO) of 5 million at $15 per common unit. The units closed the week at $15.36, after opening the first day at $15.25.

CNX Coal Resources was formed to manage and further develop all of CONSOL Energy Inc.’s (NYSE: CNX) active thermal coal operations in Pennsylvania. The IPO was delayed a week, finally pricing well below the expected range of $19 to $21 per common unit. The number of units included in the IPO dropped from an original total of 10 million to 8 million, before settling at 5 million.

In a separate transaction, David Einhorn’s Greenlight Capital purchased 5 million common units at $15 per unit. The transaction brought the total number of common units sold to 10 million and public ownership of CNX Coal Resources totals about 21.1% of the partnership (up to 24.3% if the underwriters exercised all their options). CONSOL owns 55.8% (52.6% if underwriters’ options exercised). Greenlight Capital’s stake is approximately 23.1% in either case. CONSOL retains ownership of CNX Coal Resources’ general partner, the 2% general partner interest and all the incentive distribution rights.

Let’s speculate for a moment. CONSOL may have delayed the IPO while waiting for the decision that came down from the U.S. Supreme Court on Monday, July 29. In that ruling, the Court invalidated the U.S. Environmental Protection Agency’s (EPA) mercury and air toxic standards because the EPA failed to consider how much the regulation will cost the power-generation industry.

ALSO READ: 5 Oil and Gas Stocks Analysts Want You to Buy Now

The EPA did, in fact, consider cost, just not early enough in the standards-making process to satisfy the Court. Justice Scalia’s majority opinion said:

EPA must consider cost — including cost of compliance — before deciding whether regulation is appropriate and necessary. It will be up to the [EPA] to decide (as always, within the limits of reasonable interpretation) how to account for cost.

The EPA estimated a cost to the power-generation industry of $9.6 billion and an estimated benefit of between $37 and $90 billion annually.

The case was remanded to the Circuit Court, which must now reconsider its original ruling in favor of the EPA. If it invalidates the ruling, then coal-fired power plants will not be subject to any limit on emissions of toxic materials until the agency is able to craft new regulatory guidelines.

But the coal industry may have shot itself in the foot. The EPA’s loss may turn out to have a silver lining. According to Bloomberg News:

The legal irony in this case is that when industry lawyers challenged another major EPA initiative — a proposal to also mandate cuts in carbon emissions from power plants — they argued that the Clean Air Act would preclude that regulation if the mercury rule is in effect. If the mercury rule were tossed out, that argument might go with it.

In other words, last week’s win may contain the seed of a larger victory for the EPA and a loss for the coal industry.

ALSO READ: The Worst Companies to Work For

By delaying its IPO until the Supreme Court ruling, CNX Coal Resources assured itself of at least $150 million in gross proceeds from the IPO. At a time when pure-play coal stocks like Alpha Natural Resources and Arch Coal are trading below $0.50 a share, even the lowered price for CNX Coal Resources is a huge win for CONSOL, which saw its shares rise more than 4% on Thursday.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.