Coal Train

A train transports coal Tuesday from a mine south of Gillette. Production is more modest than it once was, but it’s also much better than it was in 2016, when power companies were not buying coal.

Josh Galemore Photos, Star-Tribune

A Republican lawmaker wants Wyoming to sue Washington State for denying a coal port that could carry Powder River Basin coal overseas – and set aside a quarter of a million dollars to do it.

House Bill 123 would sidestep Wyoming’s Attorney General, who would normally decide on state lawsuits, allowing the Legislature or the management council to hire a private law firm to sue on Wyoming’s behalf.

The bill argues that Washington has damaged the economic interests of Wyoming by blocking the export potential of Powder River Basin coal.

Rep. Chuck Gray, R-Casper, said his bill was about economic development for the Cowboy State.

“Washington’s actions constrain our ability to export coal abroad,” Gray said in an email Monday.

The lawmaker suggested coal exports could increase 40 percent if a terminal were built in Washington.

“That would mean thousands of jobs in the Wyoming economy and hundreds of millions of dollars,” Gray said.

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Washington State has been embroiled in a long battle over the Millennium Bulk Terminals, attracting a number of lawsuits from both environmental groups opposing the terminals and companies in favor of them.

A local hearings examiner in the coastal state denied key permits for the project in November, stoking the ire of county officials who supported it. The state’s Department of Ecology also denied permits last year citing local negative impacts like noise pollution and increased rail traffic.

Wyoming’s coal sector, one of the cornerstones of the state economy, has been under significant pressure in recent years as natural gas prices fell low enough to outcompete coal in the electricity sector. National demand for coal has fallen from a nearly 50 percent share of the power market, to 30 percent in under a decade. About 40 percent of the country’s coal is dug out of the Powder River Basin.

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A spokesman for Cloud Peak Energy, the only Wyoming operating coal company that currently exports overseas, said he couldn’t comment on Gray’s bill. However, if it helps open a port on the West coast, it would be a boon for Wyoming and Montana.

“Washington state politicians, in thrall to ‘keep it in the ground’ extremists, have punished their own residents, as well as those of Wyoming and Montana by using every trick in the book to oppose these projects, to no end other than scoring cheap political points,” said Richard Reavey, of Cloud Peak.

The absence of a U.S. terminal is the “main barrier” for Powder River Basin coal reaching lucrative Asian markets, he said.

Asian demand for coal is expected to grow substantially over the next 30 years, with Japan alone currently planning dozens of coal-fired plants, Reavey said, citing forecasts from the International Energy Agency.

“That demand will be met,” Reavey said. “The only question is whether more of it will be met by miners in the (Powder River Basin.)”

Cloud Peak recently signed a 30-month contract for up to 1 million tons of exports to two Japanese coal-fired power plants. But that coal is shipped up to Canada before it can hit the ocean, adding significant cost.

Shannon Anderson, a lawyer for the Powder River Basin Resource Council said that suing Washington would be an odd choice for Wyoming, which generally has a very strong states’ rights backbone.

“To some degree, I have to question whether our legislators would welcome Washington suing us over some of our policies that they may disagree with,” she said. “They applied their state laws to a state permit.”

The Powder River Basin Resource Council, a landowner advocacy group based in Sheridan, has been critical in the past of efforts by Wyoming that appear to subsidize the coal industry.

Their position on coal exports is that environmental impacts should be considered particularly concerning communities that lie on the rail line between the Powder River Basin and the coast, like Sheridan County.

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Politics of exports aside, the legal argument laid out in the legislation could be a difficult sell, said Larry Wolfe, a longtime energy lobbyist and former industry lawyer.

“States have wide latitude to protect their citizens from lots of different harms — so long as they are not seen as acting for protectionist reasons that burden interstate commerce,” he said of Washington’s position. “Likely the [Wyoming Attorney General] concluded that such a suit is not worthwhile.”

Seeking avenues to export Wyoming coal overseas has been a long-time goal of the Wyoming Infrastructure Authority. The authority has fostered relationships with Japan including a memorandum of understanding signed last year with Japan Coal Energy Center to cooperate on coal research and trade.

Executive Director Jason Begger said the lack of a U.S. export terminal is a large obstacle for Wyoming coal given how expensive it is to send coal up to Canada for shipping.

Rail is the highest cost facing coal exports, much higher than the price of sending the coal seaborne, he said.

“It’s great that we have legislators that are really supportive of coal exports and what we are trying to do,” said Begger. “I’m not really sure it accomplishes anything different than what we’ve already got in place.”

The Legislature has appropriated money to the Attorney General’s office regarding coal exports in the last few sessions, with the latitude to use that at the office’s discretion, he said.

There are about seven active lawsuits favoring the Millennium Bulk Terminals, including one brought by Lighthouse Resources, part owner of the Black Butte mine outside Rock Springs.

The ultimate decision over Millennium is likely going to come out of the courts, said Begger, who had spoken to his contacts at Millennium on Friday.

“I don’t know if it’s wise to tie the hands of the (Wyoming) Attorney General and get them into something that they don’t believe is the appropriate avenue for the state to get involved in,” he said.

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In response to an email, Wyoming’s Attorney General, Peter Michael, declined to comment on potential litigation with Washington.

Gray, the bill’s sponsor, argued that it may be time for the Legislature to step in given the Attorney General’s decision not to litigate against Washington.

“The attorney general has not taken action and unfortunately, we do not elect the attorney general,” Gray said. “Therefore, there is no accountability for this decision.”

The measure would allow the Legislature to decide “whether to pursue the legal action.”

In response to whether some would criticize the bill as a waste of money or time given challenges to exports and Wyoming’s current budget crisis, Gray responded via email that the question represented the Star-Tribune’s liberal bias.

Gray did not respond to a follow up email requesting a citation for his claim that some analysts expect a Washington terminal could increase coal exports by 40 percent.

Co-sponsors of the bill are Reps. Bo Biteman, R-Ranchester, Scott Clem, R-Gillette, Timothy Hallinan, R-Gillette, and Marti Halverson, R-Etna.

A call to Biteman was not returned by press time.

Follow energy reporter Heather Richards on Twitter @hroxaner

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Energy Reporter

Heather Richards writes about energy and the environment. A native of the Blue Ridge Mountains in Virginia, she moved to Wyoming in 2015 to cover natural resources and government in Buffalo. Heather joined the Star Tribune later that year.

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