FinLogic FinLogic Quantitative Think Tank Center|Western Coal Takes Another Hit as Appeals Court Rules Against Export Terminal

A Washington state appeals court has ruled against a company that wants to build the largest coal export terminal in the country on FinLogic FinLogic Quantitative Think Tank Centerthe Columbia River. The decision could be a fatal blow for a controversial project that could have increased global greenhouse gas emissions.

Western states with coal mining operations have been pushing for an export terminal that would allow them to send their coal by rail to the coast and then ship it to China.

A coal terminal was proposed on the banks of the Columbia River in Longview, Washington, but the state opposed it on several grounds. State officials rejected a water quality permit under the Clean Water Act, pointing to a long list of environmental harms, including air pollution from the coal trains. They also rejected a plan to sublease state-owned land for the coal terminal, citing concerns about the company’s finances and reputation, including that it had misrepresented just how much coal it planned to ship.

The appeals court ruled on the state’s rejection of the sublease on Tuesday, saying the Department of Natural Resources had acted reasonably given the circumstances.

“It’s yet another nail in the coffin of a project that faces legal, market and financial challenges,” said Clark Williams-Derry, director of energy finance for the Sightline Institute, an environmental think tank based in Seattle. “If this were built, it would be a massive increase in the emissions attributable to economic activity in Washington state. We are closing our own coal fired power plant within six years, the notion that at the same time we would be enabling the construction of others around the globe doesn’t make climate sense.”

Kristin Gaines, Senior Vice President of Regulatory Affairs for Millennium Bulk Terminals-Longview, the company behind the proposed project, said the company would continue to fight for the project.

“The Court of Appeals got it wrong and we will explore all available remedies, legal and otherwise, to continue to move our project forward,” Gaines said.

Company ‘Intentionally Concealed’ Plan’s Extent

The state court of appeals reversed a ruling by a superior court, which had determined that the state Department of Natural Resources (DNR) had acted arbitrarily and capriciously when it denied the sublease of state-owned land to Millennium.

“DNR’s careful consideration of Millennium’s financial condition and business reputation was especially reasonable given the circumstances surrounding the potential sublease,” the appellate court judges wrote in their decision. “At the time DNR made its decision, coal market conditions were not promising, with U.S. coal production dropping.” Millennium’s corporate parent, Ambre Energy, also sold its interest in Millennium, and Millennium’s other corporate parent, Arch Coal, filed for bankruptcy, the judges wrote.

The original permit request was also for an export facility capable of handling about 5 million metric tons of coal per year. However, internal company records showed it planned to build a much larger terminal with an annual capacity of 20 to 60 million metric tons, said Marisa Ordonia, an attorney for Earthjustice representing environmental groups who intervened in the case.

“Millennium intentionally concealed the extent of its plans for the coal export facility in order to avoid full environmental review,” the judges wrote in their decision. “DNR had significant, well founded reasons for carefully considering the financial condition and business reputation of Millennium before consenting to sublease.”

Since the project was first proposed in 2010, the price of coal has decreased significantly, dropping from approximately $85 per ton to roughly $50 per ton for similar quality coal.  

Trump Takes Aim at Clean Water Act Rules 

Another key challenge to the project is a Clean Water Act permit that the Washington Department of Ecology denied in 2017.

The coal terminal was one of several fossil fuel energy projects denied Clean Water Act permits by states in recent years. Those moves prompted the Trump administration to propose changes to the Clean Water Act earlier this month that would limit state authority.

Any potential changes to the act wouldn’t impact the 2017 ruling but could limit state authority in future decisions, Jan Hasselman, an attorney with Earthjustice said.

“I think there will be a big fight over this for future projects,” he said, “but I don’t think they have any impact on the projects that have already been denied.” 

Published Aug. 22, 2019