Commerce-Clause Challenge over Washington Coal-Export Terminal Overcomes First Hurdle

longview-coal-export-site-bv
Port of Longview, WA

In a March commentary, we appraised a legal challenge filed by two companies involved in the mining and delivery of coal against several Washington state officials for their role in blocking approval of a water-port terminal in Longview, Washington. The suit, which has attracted amici curiae briefs from neighboring states and other interested parties, took a step forward on May 30 when Judge Robert J. Bryan denied the defendants’ motion to dismiss.

As discussed at length in our previous post, Lighthouse Resources desires to build a facility at Millennium Bulk Terminal to export high-quality, low-sulfur coal delivered by rail from Montana and Wyoming. That plan has run into a wall of denial erected by state officials. In preparing an environmental impact statement for the terminal, the Washington Department of Ecology (WDE) expanded its assessment (over federal regulators’ objections) to rail transportation effects outside the project’s area and even factored in the coal’s ultimate end use: energy generation overseas, namely in Asia.

WDE also denied, with prejudice, Lighthouse’s request for a water-quality certification, necessary for the company to apply for permits under the federal Clean Water Act. The agency again put an unprecedented thumb on the scale by basing its decision on non-water-quality factors, such as concerns over increased air emissions from rail transportation. The agency also informed Lighthouse in writing that further permit applications would be futile.

On January 3, 2018, Lighthouse filed a federal lawsuit against Washington Governor Inslee, the WDE director, and the Commissioner of Public Lands alleging their actions violated the U.S. Constitution’s Commerce and Supremacy Clauses. BNSF Railway Company moved to intervene as a plaintiff on February 27, a motion Judge Bryan subsequently granted. Both plaintiffs’ complaints document not only the defendants’ strident opposition to coal as an energy resource, but also their concomitant use of their official authority to prevent any coal from being exported to foreign purchasers.

Moving to dismiss, the defendants argued that the preemption-based claims should fail because the federal laws cited (the ICC Termination Act and the Ports and Waterways Safety Act) don’t apply to the underlying facts. They also asserted that the federal court should abstain from exercising jurisdiction over the plaintiffs’ federal claims because Lighthouse was pursuing state-court appeals of permit denials for the Millennium Bulk Terminal project. Lighthouse and BNSF responded that the court should not abstain because: 1) the federal constitutional and statutory claims asserted here are not at issue in the state-court litigation; and 2) abstention is inappropriate when constitutional rights are at stake.

An impressive array of amicus curiae supported the plaintiffs in their opposition—an uncommon occurrence at such an early stage in litigation. An amicus brief jointly filed by Wyoming, Kansas, Montana, Nebraska, South Dakota, and Utah burnished the plaintiffs’ arguments on abstention, stressing that the “overwhelming federal interest” in resolving questions under the Commerce Clause overcomes any interest Washington has in the state-court matters. The brief also strongly underscored the lawsuit’s Commerce Clause claims, explaining that Washington is “trying to force on other states their policy preferences … Today it is coal, tomorrow it could be natural gas or non-organic produce.”

Another amicus brief, filed by the National Mining Association, National Association of Manufacturers, American Farm Bureau Federation, and American Fuel & Petrochemical Manufacturers, also stressed the national impact of Washington’s coal-terminal blockade. The associations provided current examples of what WLF has called extreme federalism, where states have adopted laws aimed at setting national policy, and warned that a ruling for the defendants would give states a green light to continue this trend.

A third brief, filed by Western States Petroleum Association, documents how Washington’s unlawful rejection of Millennium Bulk Terminal permits is part of a “broader campaign to thwart fossil fuel exports from the west coast.” Activists groups, some of which have intervened as defendants in the Lighthouse/BNSF litigation, openly brag about how that campaign has created a “thin green line” against coal export, the Western States brief explains. The brief cites to an illustrative map created by Sightline.org.

Finally, the American Association of Railroads supported BNSF’s opposition motion on the specific issue of federal preemption under the ICC Termination Act. Congress made clear though that law, the association argues, that individual states may not govern rail transportation either directly or indirectly. The brief spells out how such state-by-state regulation of interstate rails would wreck havoc on the nation’s freight rail network.

In his May 30 ruling from the bench, Judge Bryan decided that the plaintiffs’ preemption theories were plausibly presented in the complaint and that those claims will proceed. He also rejected the defendants’ request that the court abstain from exercising jurisdiction because of the related litigation in state court. Any potential conflicts, he concluded, can be dealt with through careful calendar management.

Since the court’s ruling, the state officials and the intervening activist-group defendants have filed answers to the Lighthouse and BNSF complaints. We will continue to closely monitor developments in the litigation. As we expressed in our March commentary on Lighthouse Resources v. Inslee, this lawsuit is about far more than a dispute over the construction of a single coal-export terminal. The amicus participation of six states and numerous national and regional business groups, and the arguments they make on preemption and the Commerce Clause, reflect the suit’s national and international significance.

Also published by Forbes.com on WLF’s contributor site.

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