By John H. Cushman, Jr.

September 17, 2017 - A federal appeals court in Denver told the Bureau of Land Management on Friday that its analysis of the climate impacts of four gigantic coal leases was economically "irrational" and needs to be done over.

When reviewing the environmental impacts of fossil fuel projects under the National Environmental Policy Act (NEPA), the judges said, the agency can't assume the harmful effects away by claiming that dirty fuels left untouched in one location would automatically bubble up, greenhouse gas emissions and all, somewhere else.

That was the basic logic employed by the Bureau of Land Management (BLM) in 2010 when it approved the new leases in the Powder River Basin that stretches across Wyoming and Montana, expanding projects that hold some 2 billion tons of coal, big enough to supply at least a fifth of the nation's needs.

The leases were at Arch Coal's Black Thunder mine and Peabody Energy's North Antelope-Rochelle mine, among the biggest operations of two of the world's biggest coal companies. If these would have no climate impact, as the BLM argued, then presumably no one could ever be told to leave coal in the ground to protect the climate.

But that much coal, when it is burned, adds billions of tons of carbon dioxide to an already overburdened atmosphere, worsening global warming's harm. Increasingly, environmentalists have been pressing the federal leasing agency to consider those cumulative impacts, and increasingly judges have been ruling that the 1970 NEPA statute, the foundation of modern environmental law, requires it.

The appeals court ruling is significant, as it overturned a lower court that had ruled in favor of the agency and the coal mining interests. It comes as the Trump administration is moving to reverse actions taken at the end of the Obama administration to review the coal leasing program on climate and economic grounds.

"This is a major win for climate progress, for our public lands, and for our clean energy future," said Jeremy Nichols of WildEarth Guardians, which filed the appeal along with the Sierra Club.  "It also stands as a major reality check to President Trump and his attempts to use public lands and coal to prop up the dying coal industry at the expense of our climate."

But the victory for the green plaintiffs may prove limited. The court did not throw out the lower court's ruling, a remedy that would have brought mining operations to a halt. Nor, in sending the case back for further review, did it instruct the lower court how to proceed, beyond telling it not "to rely on an economic assumption, which contradicted basic economic principles."

It was arbitrary and capricious, the appeals court said, for BLM to pretend that there was no "real world difference" between granting and denying coal leases, on the theory that the coal would simply be produced at a different mine.

The appeals court favorably quoted WildEarth's argument that this was "at best a gross oversimplification." The group argued that Powder River coal, which the government lets the companies have at rock-bottom prices, is extraordinarily cheap and abundant. If this supply were cut off, prices would rise, leading power plants to switch to other, cheaper fuels. The result would be lower emissions of carbon dioxide.

For the BLM to argue that coal markets, like a waterbed, would rise here if pushed down there, was "a long logical leap," the court ruled.