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Wyoming, Montana appeal Wash. coal terminal case to US Supreme Court

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Wyoming, Montana appeal Wash. coal terminal case to US Supreme Court

Montana and Wyoming are seeking a judgment from the U.S. Supreme Court in a case against Washington state for its role in blocking a coal export terminal.

The Powder River Basin states are asking the high court for original jurisdiction to allow the dispute to bypass lower courts, Montana Attorney General Tim Fox announced in a Jan. 21 release. Washington has 60 days to file a response to the petition.

Lighthouse Resources Inc. aims to build a coal export terminal in Washington through subsidiary Millennium Bulk Terminals-Longview LLC. Washington denied a critical water quality permit for the project and the developers sued, arguing that the state's actions preempted federal law.

There are four court cases related to the terminal in various stages of judicial proceedings, but the overarching federal case regarding constitutional issues was stayed until the lower courts rule.

The proposed coal terminal would give Powder River Basin coal producers better access to Asian markets, which experts project will contribute to the bulk of future thermal coal demand growth. The coal region has suffered in the last few years, notably in 2019, when major producers Cloud Peak Energy Inc. and Blackjewel LLC filed for bankruptcy protection and sold off assets.

Montana and Wyoming claim that Washington's permit denial violated the Dormant Commerce Clause and the Foreign Commerce Clause under the U.S. Constitution.

"Montana's access to growing overseas markets shouldn't be dictated by the latest political fads on the west coast," Fox said. "As we are telling the court, the framers of the United States Constitution wrote the Commerce Clause to prevent the very harms that Washington state is inflicting upon Montana and Wyoming today."

Wyoming Gov. Mark Gordon said in the Jan. 21 release that he did not make the decision lightly but that one of the coal state's "greatest natural resources is being blocked unlawfully." The Clean Water Act is "not a tool to erect a trade barrier based on political whims," he said. Gordon has considered taking legal action for some time.

In the petition, the coal states called Washington's denial "discriminatory."

"This case implicates an important purpose of the Commerce Clause: prohibiting coastal states from blocking landlocked states from accessing ports based on the coastal states' economic protectionism, political machinations, and extraterritorial environmental objectives," the petition states.

Earlier this month, six coastal states filed a legal brief backing Washington's decision, saying that accepting the developers' legal rationale would limit their ability to protect the health and safety of their citizens and environment.

Jan Hasselman, an Earthjustice attorney representing the environmental and health groups opposed to the terminal, said he does not view the coal states' move as a serious legal effort, calling it "political posturing" by elected officials. It is unusual for the high court to bypass the lower courts and take up a case, he said.

"All of these claims are currently being litigated in the lower courts," Hasselman said. "There's no reason for the Supreme Court to reach out and take this up right now. There may be a day where some of these get to the Supreme Court, but not like this."

The state ran a "rigorous process" under its environmental laws when examining the project, according to Mike Faulk, deputy communications director for Washington Gov. Jay Inslee.

"This project was rightfully denied under state and federal authority because it failed to meet water quality and other environmental standards," Faulk said in an email. "It was proven to have multiple, unmitigated adverse impacts that would devastate Washington's waters, surrounding communities, and the environment."

Millennium said in a Jan. 21 statement that it supports the coal states' right to petition the Supreme Court to protect their constitutionally-protected commerce rights, adding that the issue is "larger than any one company, or any one state."

A district court ruled in late 2018 that Washington officials did not violate federal regulations, denouncing some of the developers' preemption claims. Paul Seby, an attorney with Greenberg Traurig LLP who has counseled clients in the energy and mining sectors, said at the time that the court's ruling seemed to decide the big issues in the case.