TACOMA — A federal judge Wednesday declined to dismiss a lawsuit that accuses Washington Gov. Jay Inslee’s administration of interfering with foreign and interstate trade by denying key permits for a proposed coal terminal in Longview.
The ruling by U.S. District Court Judge Robert J. Bryan means parties to the suit will continue to spar over whether the state’s permit denials for Millennium Bulk Terminals’ $680 million project violated the Commerce Clause in the U.S. Constitution.
“The state sent somebody up in the first inning to try and hit a home run and struck out,” Millennium President and CEO Bill Chapman told The Daily News outside the courtroom following Wednesday’s ruling.
The suit was originally filed in January by Millennium’s parent company, Lighthouse Resources, Inc. The complaint names Inslee, state Commissioner of Public Lands Hilary Franz and state Director of Ecology Maia Bellon as defendants for allegedly blocking the Millennum project based on a bias against coal.
While Bryan seemed skeptical of some of the suit’s claims, the federal case will now proceed as a series of state-level challenges to various permitting decisions plays out.
The suit also accuses Washington of illegally attempting to use the project’s environmental impact statement to regulate railroads and shipping. The states of Montana, Wyoming, Nebraska, Utah, South Dakota and Kansas filed a brief in support of the suit earlier this month.
But Inslee’s lawyers have argued permits for the project were appropriately denied by state agencies in part because Millennium failed to show it could compensate for a wide range of unavoidable adverse environmental impacts.
During oral arguments Wednesday, Judge Ryan wondered aloud how the federal lawsuit can be resolved while state courts are still deciding whether decision-makers abused their discretion.
“I guess I wonder whether the federal Commerce Clause issues raised here can be resolved without resolution of the state issues that are pending,” he said.
Jay Johnson, an attorney for Lighthouse, responded that the company would seek to introduce evidence showing decision-makers intended to interfere with foreign and interstate commerce when they denied Millennium’s permit applications. Lighthouse will also attempt to show that blocking the project has already affected foreign and interstate trade, he said.
The proposed terminal would allow Lighthouse to ship coal to Asia from its vast coal mines in the Powder River Basin, which stretches from southeast Montana to northeast Wyoming. The 15 million-acre expanse produces about 40 percent of all coal mined in the United States. At full buildout, the terminal would export up to 44 million metric tons of coal per year.
But Laura Watson, an attorney representing the state, argued that decision-makers’ motives are also a central issue in the state-level proceedings. Lighthouse's federal claims could be rendered moot if state courts decide Bellon and Franz acted appropriately, she said.
Meanwhile, BNSF Railway has also intervened as a plaintiff against the state, arguing Ecology’s denial of a water quality permit based on the effects of increased train and vessel traffic represents an illegal attempt to regulate railroads and ports.
“They’re trying to regulate rail transportation by denying this bridge to Asia and citing rail impacts in the process,” argued former Washington Attorney General Rob McKenna, who now represents BSNF.
Judge Bryan later countered: “I have a lot of doubts about that because the (the proposed coal terminal) is not a railroad and not a tank vessel.”
Nevertheless, he said BNSF’s claims were plausible.
A trial date has been set for May 2019, but Bryan encouraged the parties to argue the various claims separately in the coming months to make the suit easier to resolve in a series of summary judgments. That could produce pivotal rulings throughout the summer and fall.
“The bottom line is we didn’t win on the motion to dismiss, but this really affects none of the issues that are raised and we’re going to go forward and fight every one of them on the merits,” said Kristin Boyles, an Earthjustice attorney representing a coalition of environmental groups that have intervened as defendants.