US Coal Exports
Exports Economic Contributions Report
Mar 31 2015

Montana Lawmakers Gear Up to Fight for Coal Exports (SNL)

Posted in All News, U.S. Ports

Mont. lawmakers push back on West Coast coal opponents
Montana lawmakers have unveiled a pair of bills aimed at pushing back and punishing coal opposition in West Coast states.

The bills come in response to recent setbacks and opposition to coal-related projects in Washington and represent a more aggressive response from state leaders advocating on behalf of Montana’s coal interests.

On the House side, three lawmakers have presented a bill that would allocate $1 million toward “litigation to improve and protect the state’s access to and growth in domestic and international markets for its products and natural resources, including energy and other legislation.”

While not explicit in its text, one of the co-sponsors of the bill recently wrote in an editorial that it is intended to challenge any “attempts by states like Washington to undermine our industries,” specifically mentioning the state’s coal industry. In recent months, Washington and Oregon have proposed bills that would limit each state’s coal consumption, leading to sharp responses from Western coal-producing states like Montana and Wyoming.

The House bill comes alongside Senate legislation aimed at introducing financial consequences to recent opposition to coal-fired plants and export terminals in Washington. State Sen. Duane Ankney, R-Colstrip, introduced a bill on March 16 that would require Washington utility customers to shoulder the financial impact of any possible facility closures as a result of new legislation or opposition campaigns.

Ankney’s Montana Energy Accountability Act is a response to growing opposition to coal usage and transport in Washington and Oregon. Most importantly for the senator’s own district, the bill is a response to a Washington Senate bill that would study the costs associated with the closure of a coal-fired plant located near Colstrip, Mont., that serves Washington.

Washington’s Puget Sound Energy Inc. is a partial owner of the Colstrip plant, and earlier legislation explored the possibility of expanding that ownership, clearing the way for the utility to eventually close the plant.

Opposing ‘hostile maneuvers’

Calling coal opposition in Washington “hostile maneuvers” in a March 30 editorial, Ankney promoted his bill as a necessary response to protect Montana’s coal-producing regions. In addition to requiring advance notice of any possible coal plant closures, the bill would require any electricity company, supplier or public utility that shuttered a coal-fired generating plant to pay a “coal country impact fee” to mitigate any financial impact on the relevant communities.

The fee would be paid annually for 20 years and could cost Washington stakeholders hundreds of millions of dollars, according to critics of the bill.

The funds would go toward local services that would be most affected by the loss of tax revenue.

“Under my Senate Bill 402, those Washington utilities would be on the hook for an annual fee of five times the taxable value of Colstrip for 20 years in order to offset the economic and tax-base impacts of a premature closure,” Ankney wrote.

In his March 30 editorial, Ankney expanded the focus of his proposed legislation by targeting recent opposition to a coal export terminal in northwest Washington, arguing that any delays in the project would hinder Montana producers’ ability to reach the Asian coal market.

The controversial Gateway Pacific coal terminal has faced a series of state and federal setbacks in recent months, including permitting delays and protests from local community and tribal groups. The delays have added to project costs and strengthened arguments against the project’s financial feasibility.

Montana’s Crow Nation has offered strong support for the Gateway terminal, pushing back on protests by Washington’s Lummi Nation, arguing that the failure to move the project forward would make new coal production financially infeasible.

Legal standing?

Locally, it is not yet clear how much authority Montana could have over other states’ energy or financial decisions.

Calling it unprecedented, Kyla Maki, clean energy program director for the Montana Environmental Information Center, told SNL Energy, “I don’t know if outside the halls of the Montana capital whether it’s thought of as feasible, but they definitely feel it’s feasible to force another state or business to make decisions that are not economical.”

Mark Squillace, University of Colorado law professor and former member of the U.S. Department of the Interior’s solicitor’s office, questioned the legal authority of Montana over other states’ decisions.

“I don’t think you need a legal expert to tell you that Montana has no right to impose a fine on a neighboring state,” Squillace told SNL Energy. “Washington is free to do what they want on regulatory matters as long as it doesn’t violate the state or U.S. Constitution.”

Squillace also challenged the litigation strategy that would be funded by the House bill. “I just don’t see what their strategy is going to be. I haven’t heard any credible argument that is likely to be persuasive in a federal court,” Squillace said. “I am really skeptical of these … efforts. It just seems like they’re throwing money down a rat hole if they’re going to spend all this money on litigation.”

While Maki allowed that the state reserved some authority to address how a company or utility exited a production agreement, she said both bills stood on shaky ground. “What that money is used for and whether the resources in Montana should be spent on suing other states for decisions that they’ve made — whether that’s worth it — is questionable,” Maki said.

Ankney and State Rep. Jeff Essmann, R-Billings, who sponsored the House bill, did not respond to requests for comment on the legislation.

The Montana legislative approach mirrors similar efforts in neighboring Wyoming, the country’s largest producer of coal and the one most likely to be affected by a decision to halt export terminal plans.

The state’s Legislature recently passed a bill that expanded the bonding authority of the Wyoming Infrastructure Authority by $1 billion to finance infrastructure projects outside of the state. While the WIA has said the funds are available for all qualifying projects, much of the discussion surrounding the bonding authority has focused on proposed coal export terminals along the West Coast.

See article here.

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