(Adds comment from Millennium in paragraphs 5-6)
By Valerie Volcovici
WASHINGTON, Sept 26 (Reuters) - Washington state on Tuesday rejected a key permit needed for a proposed terminal to export coal to Asia, another blow to companies eager to sell Wyoming and Montana coal to Asian markets and to the Trump administration's policy of global energy dominance.
Washington's Department of Ecology rejected a water quality permit for the Millennium Coal Terminal, one of several permits sought by the company to build what would be the largest coal export terminal in the United States.
The state agency rejected the permit on grounds it caused environmental harm in nine key areas, from air quality to vessel traffic.
"There are simply too many unavoidable and negative environmental impacts for the project to move forward," said Washington state Ecology Director Maia Bellon.
Millennium said it would appeal the decision, and accused the state agency of being biased against the project.
"Ecology appears to have intentionally disregarded decades of law defining the Clean Water Act to reject the water quality certification requested for Millennium's project," company president William Chapman said in a statement.
The terminal would export up to 44 million tonnes of coal mined in Wyoming and Montana's Powder River Basin each year from companies such as Cloud Peak Energy CLD.N and the coal-producing Crow tribe of southeastern Montana.
The proposed terminal would offer coal mining companies an alternative to exporting coal through the Westshore terminal in Vancouver, British Columbia.
It is the last of six proposed coal terminals in the Pacific Northwest that have been denied approval by state regulators or the Army Corps of Engineers amid opposition from states and the Lummi Tribe, who argued that coal terminals interfered with their fishing rights.
The United States has been in a trade spat with Canada over exports of softwood. In response, British Columbia threatened to halt exports of U.S. coal through Canada.
President Donald Trump's administration has touted a goal of turning the United States into an "energy-dominant" power through exports of energy produced domestically.
U.S. coal exports have jumped more than 60 percent this year because of soaring demand from Europe and Asia, according to a Reuters review of government data in the first half of the year.
Some analysts say the trend may be temporary, depending on coal price trends in Asia.
Millennium said the project could create 2,650 direct and indirect jobs and $680 million private investment in Cowlitz County, Washington.
The terminal needs over 20 permits before the project can be built.