Wyoming, Utah explore funding legal challenges to West Coast coal policies

By Valerie Volcovici

WASHINGTON (Reuters) - Lawmakers in coal-producing Utah and Wyoming, faced by a shrinking market for the fuel, this week introduced laws to fund legal challenges in California and Washington of policies that they believe hurt coal sales.

A Utah lawmaker on Monday proposed allocating $2 million to cover legal fees to private attorneys that would challenge a California surcharge on Utah coal, imposed as part of a cap-and-trade system to cut greenhouse gas emissions there.

In Wyoming, a Republican lawmaker on Monday introduced a bill in the state's Republican-controlled lower house that would let the legislature hire and pay for its own outside lawyer to sue Washington state for denying permits for an export terminal.

In both efforts, lawmakers argue the moves interfere with their states' economies, which rely heavily on coal mining. Both bills have passed subcommittees and political observers expect them to have a good chance of passing their Republican-controlled legislatures.

Western coal mining companies have already filed lawsuits against Washington state and the city of Oakland, California challenging local decisions to block export facilities on environmental grounds. The industry is also lobbying the Trump administration to override the local decisions, though it is unclear what policy options are available to the White House.

The strategy to pursue legal challenges could be a long shot. Courts have tended in the past to side with local authorities in similar cases.

The U.S. coal mining industry has been in decline over the past decade as utilities retire aging coal-fired plants and switch to facilities powered by cheaper and cleaner natural gas - a trend that has been helped by efforts to combat global warming. President Donald Trump has promised to revive the coal industry, in part by rolling back Obama-era climate change rules, but the effort has had little impact so far.

The Wyoming bill says Washington state is interfering with Wyoming's economic interests by denying permits for a Longview, Washington terminal proposed by Lighthouse Resources, that would give Powder River Basin coal producers access to more lucrative Asian markets.

In Utah, Republican state lawmaker Mike Noel, who proposed the bill targeting California, said that state's environmental policies "control" Utah's rural coal economy.

Environmental groups said such efforts were a waste of taxpayer money. "Forcing Utahns to invest $2 million into this industry is asking them to take on incredible risk that will yield no long-term benefits," said Ashley Soltysiak, Utah chapter director for the Sierra Club.

The coal industry has eyed the West Coast as a gateway to the global market for years, with plans for as many as seven terminals a decade ago. But five of those projects were cancelled amid volatile Asian demand and bitter opposition in left-leaning California, Washington and Oregon.

(Editing by Cynthia Osterman)