Western U.S. coal producers are increasingly coming under fire by environmental groups that see a chance to fight climate change by curbing output from the nation's largest coal basin.

For years environmentalists have lobbied for tougher limits on the emissions of heat-trapping gases blamed for climate change from power plants, vehicles and other direct sources. But the collapse of federal climate-change legislation in recent weeks and growth of coal exports to Asia is leading some groups to look past the smoke stacks and aim to quash emissions by stymieing production of fuel.

The Powder River Basin , which underlies Wyoming and Montana , is one of the country's largest sources of fossil fuel, accounting for about 40% of U.S. coal output. Combustion of this coal in power plants accounts for about 13% of all U.S. carbon dioxide emissions each year, according to the U.S. Bureau of Land Management. Most of the basin's coal is mined through federal leases by the largest U.S. producers such as Peabody Energy Corp. (BTU) and Alpha Natural Resources Inc. (ANR).

Groups including the Sierra Club and WildEarth Guardians, a New Mexico-based environmental group, are challenging the legality of a series of new leases the Bureau of Land Management, or BLM, has begun issuing. They say the leases could open up as much as 5.8 billion tons of coal reserves for mining, ensuring the basin's dominance for years to come. The environmentalists claim the BLM isn't properly taking into account the impact of burning the coal on the climate.

"We are interested in getting to the heart of the problem," said Jeremy Nichols, climate and energy program director of WildEarth Guardians. "What goes on in the Power River Basin is of national interest."

Last month, a coalition of environmental groups sued in the U.S. District Court for the District of Columbia to stop the first of what's expected to be a series of BLM lease decisions, marking a rare challenge in the Powder River Basin . Environmental groups say they plan to file additional lawsuits in the coming months as the bureau backs additional leases. WildEarth Guardians also sued Interior Secretary Ken Salazar last month over the lease process as a whole, alleging it neither fosters competition among coal producers nor requires a comprehensive assessment of the environmental impacts.

Coal producers warn a slowdown in replacing their reserves could eventually hamper U.S. electricity supplies. Last week, Alpha Natural Chief Executive Kevin Crutchfield described the opposition effort as in its infancy, not seeing any impact on mining in the near term. Cloud Peak Energy Inc. (CLD) Chief Executive Colin Marshall said the lawsuits could slow--but won't stop--the company's efforts to add new reserves.

Environmental groups have found some success curbing eastern coal production, particularly from mountaintop-removal mining in Appalachia , whereby the tops of mountains are blown off to expose the coal seams below. Western U.S. coal production has largely stayed out of the spotlight, but this is changing as environment advocates begin to zero in on the new leases and growing exports of Powder River Basin coal to Asia from the U.S. West Coast. Exports are a particular concern because the sale of U.S. coal overseas undercuts domestic effort to reduce emissions and weakens international cooperation on climate change, environmental groups say.

"That is a very serious line in the sand," said Bruce Nilles, director of the Sierra Club's Beyond Coal Campaign, of efforts by Western U.S. miners to grown Asian exports.

In addition to disputing individual leases, environmental groups sued separately in federal district court to challenge the overall leasing process, saying the bureau should take a broader view of the environmental impact of coal mined in the Powder River Basin . Also, the suit contends coal companies should no longer select the particular areas they want to lease. Companies are allowed to pick out desirable acreage to increase the size of their existing mines, but the groups allege the process prevents competition and keeps the BLM from capturing the full value of the reserves.

BLM officials in Wyoming said the environmental reviews connected to the leases are already comprehensive. Furthermore, the nomination process ensures robust demand for federal acreage, and producers are required to pay full market value for access to the reserves.

Challenges to the bureau by environmentalists have proved effective in the past. Earlier this year, the BLM delayed the sale of oil and natural gas leases in Montana and North and South Dakota to allow additional environmental reviews after advocates filed lawsuits raising concerns about the climate change impact.

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