U.S. District Judge Donald Molloy has vacated federal approval allowing Signal Peak to mine federal coal at its underground mine 40 miles north of Billings.

Signal Peak is Montana’s only underground coal mine. It had asked for permission to keep mining federal coal a while longer. 

The court had previously concluded that Signal Peak’s coal mining approval was based on bad permitting. Molloy’s order comes as Signal Peak prepared for a March expansion into 900,000 tons of federal coal, a first step in a planned 175 million-ton expansion. The company will now relocate its longwall mining equipment into a pocket of state and private coal.

“To be clear, prohibiting the mining of federal coal will yield no environmental benefit,” said Signal Peak CEO Parker Phipps in a letter outlining the court orders’ impact. “Signal Peak will continue to mine non-federal coal and will maintain historic production levels. On the other hand, this prohibition will cause significant and immediate harm, including increased risks to Signal Peak miners, increased greenhouse gas emissions and the loss of hundreds of millions of dollars in tax and royalty revenues for the state of Montana, the federal government and local communities.”

Most of the mine’s coal is burned in Japan, South Korea and South America. Signal Peak is owned by Ohio-based First Energy and international commodity trader Gunvor Group. The mine produced 7.4 million tons of coal in 2022, according to the federal Mine Safety and Health Administration. Mining has picked up since a low point brought about by the COVID-19 pandemic in 2020. The 10-year peak for production was 8.6 million tons in 2013.

Signal Peak had introduced testimony requesting that it be allowed to continue mining federal coal, but putting it in stockpile, a move that would save the company money but delay the impact of the order vacating the mining of federal coal.

Conservationists who challenged OSMRE’s light touch in permitting, argued that what Signal Peak was really asking for was “simply a request for the do-over.”

"They didn't do their job. They didn't provide the legal arguments that they should have, when the time was right. When the court asked them to provide a notice," said Anne Hedges, of the Montana Environmental Information Center, plaintiff in the case. "And now they want to go back and go, 'Wait a minute, we didn't know what you meant.' These are really high-priced attorneys. They know exactly what the court was asking for. They could have made these legal arguments at that time. They chose not to."

Molloy said the mine owner could have presented its options to continue mining back in January, but because it didn’t the court would deny entertaining the options late.

“Signal Peak feigns confusion by asking for remedies it knows were not previously ordered because it never presented them as options in the first instance,” Molloy ruled.

In court, Signal Peak indicated that relocating its equipment into state and private coal would take up 8 months.

Molloy’s ruling dealt specifically with a permit issued by OSMRE in 2018. The scope of the court’s work was narrowly defined last April by the 9th U.S. Circuit Court of Appeals, which concluded that OSMRE had ignored the climate impacts from burning the mined coal. The Appellate Court concluded that 190 million tons of carbon dioxide would be released when the coal was burned.

Federal approval of expansion of the mine has been under scrutiny dating back to decisions made the administration of President Barrack Obama, which like the administration of President Donald Trump, concluded that a months-long environmental study of the mine’s impacts was unnecessary.