Washington state deals blow to plan for coal export terminal

The port of Longview on the Columbia River at Longview, Washington, is pictured in this file photo. Washington state has effectively blocked a proposed coal port there by denying a water quality permit necessary for the project to move forward.

Wyoming’s dream of getting Powder River Basin coal to Asia drifted farther away Tuesday when the company proposing a coal port in Washington state lost an important legal battle against the coastal state.

Washington has effectively blocked the proposed coal port by denying a water quality permit necessary for the project to move forward. Lighthouse Resources, parent company of the Millennium Bulk Terminals, sued the state and Gov. Jay Inslee over the permit. The railroad BNSF, noting the importance of the port to help its coal-reliant rail business survive in a declining market, also sued.

Judge Robert Bryan of the U.S. District Court in Tacoma knocked down the companies’ argument that the state had preempted federal laws in denying the water permit.

A spokeswoman for Lighthouse Resources noted that the next steps were being considered by the company’s legal team.

"Lighthouse is obviously disappointed in today’s ruling, but remains confident that it will prevail on its core claim: the State of Washington is violating the U.S. Constitution’s dormant commerce clause by preventing coal exports to Asia," the company said in a statement. "We look forward to our day in court."

Millennium has been working towards permitting approval since 2012, a time when the coal industry was in healthier shape than it is today. But both the project and the coal market have languished in political and legal battles in the years since.

Wyoming and five other states intervened in the case, arguing that Washington’s permit denial would have adverse effects on their economies. Six other states, including California and Massachusetts, intervened on behalf of Washington.

The Washington port battle has become a proxy war in the coal debate. It’s been watched closely in the coal industry and supported by Wyoming state officials.

Gillette-based Cloud Peak Energy is the only Wyoming operating coal firm sending coal to Asia, but the firm has used its Montana operations for that purpose. Cloud Peak was once affiliated with the Millennium Bulk project. It has since had to write off those investments and currently ships its coal exports through Canada.

Though the Cowboy State does not currently send its coal to Asia, the potential of a new overseas market for Wyoming coal has been a political goal for many years. The coal port lawsuit came up in the Wyoming Legislature earlier this year when some lawmakers sought funding to hire a private lawyer to fight alongside Lighthouse Resources in favor of the port. That bill was shot down early on, but the Wyoming Attorney General’s office did decide to intervene in the case shortly after the session.

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The coal port -- and other discussion of how to get Wyoming resources to other countries -- was also an energy talking point in the election season, as various governor hopefuls vied for Matt Mead’s seat in Cheyenne.

In a recent interview with the Star-Tribune, the outgoing governor noted that the port was in a political bind, with local interests braced against Washington’s position.

“The people, they were hurting and they wanted the jobs,” he said of the coastal community where the port would be located. “The large population areas, like Seattle, have a different point of view.”

A port on the West Coast wouldn’t meet all of Wyoming coal’s challenges, but it could help offset the decline from shuttered coal plants and utilities -- including Wyoming’s largest utility Rocky Mountain Power -- that are gradually moving away from coal-fired power, Mead said.

The coal port has also attracted attention from groups that want coal to be replaced with greener energy sources. They see the port as problematic both in the battle against climate change and in terms of where resources should be invested -- into a troubled coal industry or into growing renewable industries.

“This ruling is just further evidence that the headwinds against coal exports won't be overcome,” Steve Charter, a board member of the Western Organization of Resource Councils and a rancher in Montana, said in a statement provided to the Star-Tribune Wednesday. “Instead of playing impossible odds to export coal at any costs, we should be getting serious about economic diversification and transition.”

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