Lighthouse Resources, Inc. v. Inslee, a federal lawsuit of great national consequence pending in the U.S. District Court for the Western District of Washington (here and here are our past posts on it), has reached a critical point after a year of pre-trial developments. In its January 3, 2018 complaint, Lighthouse Resources (LHR) and BNSF Railway (which intervened as a plaintiff) allege that several Washington State officials, including Governor Jay Inslee, violated the U.S. Constitution and federal laws by blocking approval of a water-port terminal in Longview, Washington. Earlier this month, the plaintiffs moved for partial summary judgment on their claim that the officials intruded on the U.S. government’s exclusive authority over foreign commerce.
Given the lawsuit’s enormous implications for the American economy and federal foreign-affairs power, the U.S. government should file a “statement of interest” with the court urging it to enjoin Washington’s actions. Those actions—motivated, LHR and BNSF assert, by state officials’ desire to block foreign sales of a single disfavored commodity, coal—contravene a federal directive encouraging U.S. exports of energy resources to U.S. allies in Asia.
Washington’s unprecedented denial of a federally required water-quality certificate for construction of the Millennium Bulk Terminal with prejudice (meaning LHR can never reapply for certification) ended the last viable option for shipping western U.S. coal to willing buyers in Japan and South Korea. Defeating the terminal was a crowning achievement for west-coast environmental extremists and politicians (at least one of whom has his eye on the White House) who have used regulation and litigation to draw a “thin green line” against coal exports.
Besides environment impacts beyond the state’s jurisdiction (Asian nations’ burning of coal), Washington regulators cite as reasons for the denial a litany of harms and risks—none of which, curiously, involve water quality—tied to the terminal and its railway deliveries. They have not explained, however, why the same or similar environmental concerns did not derail approval of eight new daily roundtrip passenger-train trips on the rails near the port or a new grain export terminal in 2011. State environmental officials even sought expedited approval for development of another terminal close to Millennium Bulk Terminal for export of such commodities as bio-diesel, crude oil, and methanol.
While LHR and its railway partners can largely mitigate the overblown harms and risks of the Millennium Bulk Terminal, the projected economic impacts of the project’s demise would be significant and irreversable. An expert’s report introduced by LHR forecasts that the four coal-rich states most impacted by Washington’s actions—Montana, Wyoming, Colorado, and Utah—would suffer combined annual losses of 4,200 existing jobs. Combined gross domestic product would shrink by over $19 billion in two decades. The report also notes the expected loss of thousands of new jobs each year in those states, as well as a considerable amount of foregone local, state, and federal tax revenue. And because the loss of coal production without the terminal “will not be made up elsewhere in the U.S. or by other fuels produced in the U.S., there will be no offsetting domestic gains.”
Those lost jobs and economic-growth opportunities are a serious setback for U.S. trade and foreign-relations policy. LHR has coal-export deals with two South Korean government-controlled utility companies. But without access to a port as large as Millennium Bulk Terminal, the contracts will go unfulfilled. Those companies and others in Asia won’t simply “move on” from coal as the commodity’s enemies in Washington State hope. They will continue to purchase coal from other sources, potentially those with interests adverse to the U.S.
A U.S. government brief could fortify LHR and BNSF’s argument that under U.S. Supreme Court precedent, Washington’s water-quality certification denial “implicates” foreign policy issues in a way that prevents the federal government from speaking with “one voice” about international trade. It could authoritatively detail how energy-commodity exports’ figure into foreign relations and stress private export facilities’ pivotal role in advancing national security strategy.
Federal statements of interest—amicus curiae or “friend of the court” briefs representing the views of the U.S. government—are a powerful, largely overlooked tool the Justice Department and its “client” agencies use to impact the outcome of private litigation. A 2017 law review article identified 156 instances in which the government filed statements of interest at the trial-court level in cases involving foreign policy. WLF publications and blog posts have addressed other, more recent filings, including in cases involving asbestos-bankruptcy trusts and drug and device regulation.
Beyond advancing its constitutional authority under the Foreign Commerce Clause, a trial-court-level amicus brief in Lighthouse Resources, Inc. would make a strong U.S. government statement against what WLF calls extreme federalism. Often at the behest of special-interest activists and plaintiffs’ lawyers, states and localities are increasingly asserting control over areas of commerce that either federal law or the U.S. Constitution reserve for uniform federal regulation. Left unchecked, extreme federalism will either create an unwieldy patchwork of rules or will empower one state to set standards for the entire country. Such a policy-making approach can be nothing but counterproductive when addressing a global concern like climate change.
Also published by Forbes.com on WLF’s contributor page.