Federal Judge Gives Big Coal a 170,000-Ton Victory in Montana

MISSOULA, Mont. (CN) — A federal judge this week modified his injunction to allow Signal Peak Energy to continue developing one of the world’s largest underground coal mines, under federal land, so long as it doesn’t ship the coal, most of which is destined for China.

In a special hearing Tuesday, attorneys for Signal Peak asked U.S. District Judge Donald Molloy to tailor his hold on coal production in the Bull Mountain mine north of Billings.

They asked to be allowed to continue developing coal tunnels but not completely mine the coal. Any coal extracted would be stockpiled, Signal Peak attorney John Martin said.

“We’d be willing to accept a tailored injunction that not only stockpiles the federal-development coal but also stockpiles the private-development coal for the duration of your injunction. We would not ship it; it would not be burned and it would not give rise to the risks and pollutants that are at issue in this litigation. If it’s tailored in that way, I don’t know that the plaintiffs have a legitimate objection,” Martin said.

Late Tuesday, Molloy modified his injunction, to allow Signal Peak to “displace” no more than 170,000 tons of “federal coal,” which “must be stockpiled and stored at the Mine, and shall be neither sold nor shipped.” The rest of his original injunction remains in effect.

The Montana Environmental Information Center, the Sierra Club and Montana Elders for a Livable Tomorrow sued the U.S. Office of Surface Mining in 2015, saying its environmental assessment of the mine expansion failed to consider the effects of coal on waterways, air pollution and the health of people living along the coal shipping routes. Ninety-five percent of Bull Mountain coal is shipped to Asia.

Molloy agreed on Aug. 15 this year that the government’s 75-page environmental assessment was inadequate because it overestimated the economic benefits of the mine and downplayed the costs associated with climate change. He blocked Signal Peak Energy from producing any more coal from under federal land until a new environmental study is completed.

Signal Peak uses an underground mining technique called “long-wall panels,” in which parallel tunnels are mined in sequence. The proposed expansion would open up a 176-million-ton coal reserve, and the tunnels would run under several sections of land, a scattered few of which are federal land.

Signal Peak CEO Bradley Hansen told the court Tuesday that development operations came to a standstill eight days previously because the crews ran into one of the federal parcels. Development of each tunnel includes digging enough space to install infrastructure such as conveyor-belt lines and ventilation equipment. So development crews have to prepare a tunnel at least a month before any coal is extracted, Hansen said.

Last Friday, Signal Peak filed an emergency motion asking the Ninth Circuit to intervene, saying the company had installed the infrastructure for the last long-wall panel the injunction allowed and would have to lay off 30 engineers if Molloy’s injunction stood.

Martin said he would cancel the appeal of the injunction was modified.

But Montana Environmental Information Center attorney Shiloh Hernandez argued that Signal Peak would not lose money because it already has enough tunnels ready to go under private land so its coal production can continue until the new environmental study is issued. The government has not decided whether to do another environmental assessment or a more intensive environmental impact study. In either case, a report should be completed by June 2019.

Hernandez said Signal Peak should not be allowed to continue to develop under federal land because the new environmental study may end up rejecting the mine expansion, in the public interest.

“If they’re allowed to keep moving the mine forward and treat NEPA [the National Environmental Policy Act] as a dead letter, just a paperwork exercise, then the outcome is predetermined,” Hernandez said.

“As they’re doing this, the decision is already made. It’s assumed that they’ll just keep going through there. It’s also going to limit NEPA alternatives.”

Signal Peak has laid workers off in the past, so the injunction shouldn’t have to be tailored to save the company from having to make similar employment decisions, Hernandez said.

Signal Peak is partly owned by Gunvor, one of the world’s largest energy traders, and Ohio-based First Energy.

Molloy said his injunction was not intended to be a judgment of the mining company’s credentials, but to hold federal agencies accountable.

“The question isn’t about whether the mills or the mines are good people, whether the workers are good people. That’s not the issue. The question is, ‘Did the agency do what they should have done?’ I don’t think they did,” Molloy said.

“Then the question that I have to resolve is: I’ve issued an injunction and is it too broad? Or is there a way that I can balance the equities in a way that keeps things in the status quo?”

In his order issued late Tuesday, Molloy decided his injunction was indeed too broad, and modified it.

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