Supreme Court Passes On States’ Spat Over Columbia River Coal Export Terminal

A closely-watched fight over state authority to use its power to block a coal export terminal championed by other states reached its end on June 28 as the Supreme Court denied a request by Montana and Wyoming to sue Washington. The denial of leave to file a bill of complaint effectively means that the court will not soon decide whether the Constitution’s commerce clause poses a barrier to state water pollution rules that may cause adverse economic impacts elsewhere.

The two northern Rockies states objected to the Evergreen State’s denial of a permit for the proposed Millennium Bulk Terminals, a receiving point for coal from the Powder River Basin in Montana and Wyoming and from the Uinta Basin of Colorado and Utah and port for ocean-going vessels that would carry the fossil fuel source to Asia. The MBT would have been located adjacent to the Columbia River in southwestern Washington. 

The Washington Department of Ecology denied a permit to discharge pollutants to the river in September 2017, finding that MBT would cause “significant and unavoidable adverse impacts” to the riverine environment and would not meet the state’s water quality standards. The Department of Ecology also found that permitting MBT would be inconsistent with policies that implement a general environmental impact law. The Washington Pollution Control Hearings Board upheld the water quality permit denial in 2018. The operator of the proposed coal export terminal later sued Washington in both state and federal court, but those lawsuits failed when it filed a bankruptcy petition and both the 9th U.S. Circuit Court of Appeals and the Washington Court of Appeals held the cases to be moot.

While the operator’s two lawsuits were pending and before it sought bankruptcy protection, the nation’s two largest coal-producing states asked the Supreme Court on Jan. 21, 2020 for clearance to sue Washington. The neighboring states asserted that, unless the Supreme Court intervened, Washington would be in violation of the Commerce Clause. That section of the Constitution provides that Congress may “regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” The Supreme Court said it prevents states both from interfering with commerce outside the nation, but also limits their power to interfere with the opportunities of industry located in other states to engage in interstate commercial activity. 

Lawyers for the Equality State and the Treasure State alleged that Washington’s denial of the water quality permit needed to operate the coal export terminal was motivated mostly by “political opposition” to coal extraction and use and that its “discriminatory and protectionist actions” denied Montana and Wyoming “significant coal severance taxes.” “Washington State officials, especially Governor Inslee, have consistently used port access for Montana and Wyoming coal as a wedge issue to advance personal political ambitions.” the petition said, referring to the Evergreen State’s Democratic governor Jay Inslee. “Governor Inslee is not alone. Coastal state political leaders have vigorously worked to prevent coal export from California and Oregon as well.”

Their proposed complaint would have sought an injunction preventing Washington from denying the water quality permit, a power ordinarily granted to states by the Clean Water Act, “on grounds unrelated to water quality.” “Washington, Oregon, and California have already erected unreasonable barriers to coal exports,” wrote Montana Attorney General Timothy Fox and Wyoming Attorney General Bridget Hill. “Without this Court’s intervention, these States will be free to take additional discriminatory actions against Montana and Wyoming. While it is coal that is disfavored today, it will assuredly be another commodity tomorrow.”

Seventeen states, including Alaska, Arkansas, Indiana, Kansas, Kentucky, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah and West Virginia, supported the two states’ request to sue Washington. 

The Supreme Court asked the Department of Justice in October to advise the justices on the question of whether to grant the request for leave to file a bill of complaint. On May 25 the Biden administration told the court that the two coal advocate states did not have standing under the Constitution to litigate Washington’s decision. “After Montana and Wyoming sought leave to file their bill of complaint in this [c]ourt, Millennium filed for bankruptcy and divested itself of any interest in the property in question, wrote Acting Solicitor General Elizabeth Prelogar. “Accordingly, this suit would not redress Montana and Wyoming’s asserted injury from the denial of certification under Section 401.” Prelogar referred to the section of the CWA that provides states with the authority to deny water pollution permits. 

The federal government’s chief appellate lawyer explained that, while the justices could grant Montana and Wyoming permission to sue Washington in the Supreme Court and then decide the question of standing on a motion to dismiss, the court has in the past routinely denied a state permission to file a complaint when it is apparent that standing is not present. 

The vote to deny Montana and Wyoming permission to sue Washington was 7-2. Justices Clarence Thomas and Samuel Alito dissented without comment from the court’s denial of permission for the Montana/Wyoming lawsuit to proceed.

Article III, section 2 of the Constitution grants the Supreme Court original jurisdiction to hear lawsuits filed among the states.

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