Between Utah’s rich coal beds and potential markets overseas lie 850 miles of rail track and 5,000 miles of ocean that converge in the California port city of Oakland.
A proposed Oakland export terminal once promised an economic lift for distressed portions of California’s prosperous East Bay — and a new conduit for Utah’s coal to reach Asian markets. But the controversial project is now mired in a legal swamp, as one of Northern California’s most prominent developers takes on his own city over a coal-handling ban Oakland leaders enacted in 2016.
Key adversaries in the drama include Utah’s leading coal producer Bowie Resource Partners and activist groups looking to reduce global reliance on the carbon-heavy fuel most closely linked to climate change.
And according to court filings, the firm that would operate the Oakland export station is a wholly owned subsidiary of Bowie Resource Partners, which is bankrolling Tagami’s suit to the tune of at least $1.7 million.
New markets vs. health worries
But Oakland’s legal rationale for blocking coal is strictly about local impacts to public health as opposed to broader climate concerns, according to Aaron Reavin, an Oakland schoolteacher.
Reavin’s is among a host of groups — including the California Attorney General’s Office — filing briefs in the lawsuit in support of the coal ban. The Sierra Club, an environmental group, has intervened on Oakland’s side, along with San Francisco Baykeeper, which advocates for ecosystems and communities relying on the bay.
On Wednesday, U.S. District Judge Vince Chhabria will wade through a series of court motions seeking quick resolution to the case. Both sides are asking the federal judge for summary judgments in their favor without a two-week trial, which is now scheduled to begin Jan. 16.
Oakland and its allies say by enacting the coal ban, the city exercised its duty to protect residents from coal dust that would waft off trains, conveyors and loading pits and potentially accumulate to explosive levels in the terminal’s containment structures.
The ‘hidden‘ Utah link
In April 2015, a state panel called the Utah Permanent Community Impact Board (CIB) let the cat out of the bag when it approved an unusual $53 million loan to Sevier, Carbon, Emery and Sanpete counties to invest in the project. The investment guaranteed 5 million to 10 million tons of Utah coal would move through the California terminal every year.
The revelation stunned Oakland city leaders, who opened a formal inquiry into the environmental and health impacts of processing coal.
The city’s subsequent ban on coal handling, however, runs afoul of the law on three grounds, according to Tagami’s suit. It poses an unconstitutional restraint on interstate commerce; it is trumped by three federal laws regulating rail transportation; and it breaches various agreements between Oakland and Tagami’s development firm.
The terminal would be designed to keep coal dust from escaping into the environment, Tagami’s lawyers argued in court filings, while existing laws and a permitting process for the project would protect the health and safety of nearby residents and workers.
“While the Terminal has always been planned as a multi-commodity bulk terminal,” Tagami’s lawyers wrote, “such terminals often require an ‘anchor tenant’ to make the terminal financially feasible; Bowie’s bituminous coal from Utah is currently the ‘anchor tenant.’ ”
Project in detail
Rail cars carrying the coal would be specially equipped with covers, although such cars are not currently in use. Railroad giant Union Pacific would ship the coal in 100-plus-car “unit trains” from Utah sites to Oakland, where an intermediary carrier called Oakland Global Rail Enterprises would perform “last mile” services.
OGRE would break the trains into 26-car sections that would be unloaded in enclosed dump pits, according to Tagami’s filings. OGRE would then reconnect the emptied cars, air test and inspect them before sending them back to Utah. Bowie would own the coal all the way through transport from the mines, processing at the terminal and loading onto ships before setting sail.
Bowie has already been exporting some of its Utah coal through other California ports in Richmond, Stockton and Long Beach, but those shallow-water terminals can’t handle the deep-drafting freighters coal producers need to export profitably.
In the meantime, some Utah officials have tempered their enthusiasm for the Oakland project. Carbon County Commissioner Jae Potter declined to comment on his county’s current interest in the terminal while the litigation remains unresolved.
State lawmakers have since diverted the $53 million initially slated for the export terminal to a special revolving-loan program supporting “throughput infrastructure.” That new program’s goal is to spur rural economic development by building facilities to deliver commodities extracted in Utah to out-of-state markets.
The Oakland terminal could still be eligible for state money, but it would be in competition with other proposals.
”If there is a viable application that provides benefit to the people of Utah and the [community impact] board approves it, there would be interest,” said CIB chairman Jonathan Hardy. “There are other projects that could be funded if [the export terminal] doesn’t pan out.”
Proposals in the works that could qualify for CIB money include an oil pipeline, a rail project and a power transmission line, Hardy said, but none has yet applied for a loan.
California’s AG weighs in
Becerra accused the developer of trying to expand the reach of federal laws “to prevent Oakland from exercising its police power to protect some of its most vulnerable residents from dangerous pollution.”
The ban does not restrict rail transport of coal through the city, but rather its unloading, loading, storage and intermodal transfer.
Opponents of the coal terminal argue no amount of mitigation would prevent the release of harmful dust into a neighborhood that has been burdened with industrial pollutants for years. West Oakland residents suffer from higher rates of asthma and other chronic illness and can expect shorter lives than residents of more affluent neighborhoods, Becerra wrote.