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Judge gives state deadline on coal sublease

Judge gives state deadline on coal sublease

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A Cowlitz County judge Wednesday gave the state a deadline to act on an aquatic lands sublease that Millennium Bulk Terminals needs for its proposed $680 million Longview coal terminal.

Superior Court Judge Stephen Warning gave the state Department of Natural Resources 60 days to approve the sublease or explain its reasons for rejecting it.

Warning in October ruled that the DNR unfairly denied Millennium’s request for a sublease to build its terminal on state-owned aquatic lands. Warning said DNR acted in an “arbitrary and capricious” manner in January by rejecting Millennium’s request, but he stopped short of actually granting Millennium the sublease. That sent DNR, Millennium and the primary holder of the lease, Northwest Alloys, back to the drawing board, but Warning originally did not give them a deadline to find a resolution.

The judge has resisted granting or denying the sublease himself because he doesn’t want to infringe on a discretionary action taken by an executive agency. Instead, Warning is instructing DNR to either grant the sublease or provide more convincing arguments for why it should deny it.

Peter Bennett, vice president of business development for Millennium, praised the judge’s decision Wednesday.

“It is important for our company, our employees and the people of Cowlitz County that Millennium receives the approvals and permits to construct its planned coal export terminal,” Bennett said in a prepared statement.

“We stated consistently this should have been a straightforward administrative change to the sublease with Northwest Alloys. Today the judge recognized that Millennium is entitled to a timely remedy to DNR’s unlawful denial of the sublease,” Bennett said.

DNR said it is “reviewing the court’s decision and how it may or may not affect our options for the site moving forward.”

But Earthjustice attorney Jan Hasselman said he doubts DNR will back away from its original denial. (Earthjustice is intervening in the case on behalf of environmental groups supporting DNR.)

“This really puts Millennium back at square one,” Hasselman said. That’s because if the state rejects the lease again, Millennium and Northwest Alloys’ attorneys will wind up back in court again appealing the decision based on different arguments.

Millennium and Northwest Alloys have been negotiating with DNR for seven years over the matter, but former State Lands Commissioner Peter Goldmark denied the sublease days before leaving office in January. Goldmark argued that Northwest Alloys and Millennium did not provide enough information about Millennium’s finances or about Millennium’s sole owner, Lighthouse Resources.

Goldmark cast doubt on Millennium’s credibility and also questioned Millennium’s financial viability in the wake of volatile coal markets and the bankruptcy of its former part-owner, Arch Coal.

Millennium maintains that it was treated unfairly, pointing out that at the same time DNR was requesting more information about Millennium’s finances, it was simultaneously offering written comments against the project to the state Department of Ecology.

Even if Millennium prevails in the case, it faces another legal hurdle with DNR because the new public lands commissioner, Hillary Franz, in October rejected a request to build the Millennium docks on the state’s aquatic land. Under a lease agreement, Northwest Alloys must obtain authorization from the state before it builds any news structures on state aquatic lands.

The coal terminal developer needs a total of 23 permits from state, local and federal agencies. Earlier this year Cowlitz County granted Millennium a critical areas permit, but the company still has several legal challenges ahead, including two separate lawsuits against the Department of Ecology and an appeal of the shoreline permit from the Cowlitz County Hearing’s Examiner.

“The lack of sublease is the least of their (Millennium’s) problems,” Hasselman said.

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