MONTANA SUPREME COURT REJECTS CONSTITUTIONAL CHALLENGE TO LARGE STATE COAL LEASE

Posted on January 2, 2013 by Stephen R. Brown

Montana’s state constitution contains what is arguably the most stringent environmental protection clause of any state.  Article II, Section 3 of the Montana Constitution guarantees all persons “the right to a clean and healthful environment.”  This provision is paired with Article IX, Section 1, which says the “state and each person shall maintain and improve a clean and healthful environment in Montana for present and future generations.”  Although these clauses have been in the state constitution since 1972, they rarely have been applied by the Montana Supreme Court to invalidate legislation, overturn state action or to provide a private remedy.  In October, 2012, the Montana Supreme Court rejected the latest attempt to apply these provisions.

Montana is a coal-rich state.  The State of Montana owns significant quantities of this coal.  The State Land Board controls the leasing of state-owned coal.  In 2010, the land board approved a massive lease to Arch Coal.  Montana received an $85 million bonus payment for this lease. 

In addition to the environmental-protection provisions of the state constitution, Montana has a state environmental policy act, structured similarly to the National Environmental Policy Act (NEPA).  The Montana Environmental Policy Act (MEPA) contains a number of exemptions from environmental review that would otherwise be required.  One of these provisions exempts the land board from the obligation to undertake environmental review at the leasing stage, so long as a lease contains a provision stating that actual mining is subject to further environmental permitting.  The land board relied on this exemption to issue leases to Arch Coal without first undertaking MEPA review.

Several environmental groups challenged the land board’s leasing action, arguing that the application of the MEPA exemption violated the Montana Constitution on an as applied basis.  They argued that the leasing decision opened the door to the mining and burning of large quantities of coal without environmental review.  A state district court found that mining and burning coal could exacerbate global climate change, which in turn could adversely affect water, air and agriculture in Montana.  Based on this finding, the district court declined to dismiss the case, but it also refused to grant summary judgment to the NGO plaintiffs on the constitutional claim.  The district court concluded that the State retained sufficient environmental protection mechanisms at the mine permitting stage to meet its constitutional obligations.

The NGO plaintiffs appealed the case to the Montana Supreme Court.  In Northern Plains Resource Council v. Montana Board of Land Commissioners,  the Supreme Court upheld the district court and rejected the constitutional challenge.  Although the Supreme Court confirmed the fundamental right to a clean and healthful environment and acknowledged potential global climate change implications of further coal development, the Court held that it was not required to apply a strict scrutiny analysis to the statutory exemption from MEPA.  The Court concluded that “the act of leasing” did not interfere with the exercise of a fundamental right requiring “demonstration of a compelling State interest.”  Instead, the Court applied a “rational basis” test to conclude that the potential for additional environmental review at the permitting stage was sufficient.  On that basis, the Supreme Court held that the exemption from MEPA review did not violate the Montana Constitution.