Lawmaker wants $500K to sue Bay Area city to keep Utah coal flowing to Asia

Francisco Kjolseth | The Salt Lake Tribune Crews move coal at the Levan transfer facility along Interstate 15, south of Nephi, where a steady flow of trucks unload it before it is transferred to train cars. Utah lawmakers want to set aside $500,000 to sue Richmond, Calif., to overturn its recent ordinance banning coal from its export terminals on the San Francisco Bay.

A key Utah lawmaker is pressing the state to file a federal suit to overturn a Bay Area city’s recently enacted ban on the handling of coal, which could effectively cut off the Beehive State’s largest coal producer from its Asian customers.

The state reaps up to $4 million annually on royalties associated with the 3 million tons of Utah-mined coal that pass through two California ports. That revenue stream and hundreds of coal jobs are under threat from the Richmond’s coal prohibition, according to Sen. David Hinkins, R-Orangeville, who is seeking a $500,000 appropriation to bankroll the suit.

Calling Richmond’s ordinance “a slander on Utah,” Hinkins made the request this week before the Legislature’s Executive Offices and Criminal Justice Appropriations Subcommittee.

"It's very important we get this lawsuit started," Hinkins, whose district covers most of Utah coal country, told the committee.

For the past several years, Wolverine Fuels has shipped its coal from its Utah mines by rail to the Bay Area. It is loaded at an inland port in Stockton on ships, which then travel down the Sacramento River to be topped off at the Levin-Richmond Terminal on the San Francisco Bay. Nearly once a week, a 66,000-ton-capacity freighter full of Utah coal passes under the Golden Gate Bridge headed to Japan.

Under Richmond’s ordinance, the Levin-Richmond terminal has three years to phase out its handling of coal and petroleum coke. Its operators have warned that requirement will drive it out of business, taking down 60 high-paying union jobs.

The ordinance will block Utah coal exports through California because Richmond is a key loading stop, according to Brian Somers, president of the Utah Mining Association.

“This makes it uneconomical for us to export through those California ports since we would be sending ships that would be only half full,” he told Utah lawmakers.

“The coastal states are using their zoning ordinances, and the Clean Water Act in the case of a port in Washington, to stop these shipments,” Somers added. “They are essentially interfering with interstate commerce. You have a city, in this case Richmond, that is dictating to Utah what commodities it can export.”

Levin-Richmond and Wolverine Fuels have both announced intentions of suing Richmond to overturn the coal ordinance as an unconstitutional barrier to commerce.

Now lawmakers from rural Utah want to jump into the legal fray, but it is unclear if the Utah attorney general’s office is on board. Spokesman Richard Piatt said he was unfamiliar with the matter.

In an interview, Hinkins said Utah Attorney General Sean Reyes would control how the $500,000 appropriation is spent, whether that is hiring outside legal counsel or using his own lawyers to fight Richmond.

Hinkins believes that an important precedent is at stake.

If the federal government fails to uphold constitutional protections of interstate trade, he argued, cities or states could interfere with the free passage of any commodity.

“If they stop [coal], then what’ll they stop next?” Hinkins asked. “We could stop [California's] oranges going through Utah.”

With legislative leaders predicting a tight budget, chances are his proposed appropriation won’t make the cut this year, Hinkins acknowledged. The appropriations subcommittee is expected to vote on it Friday. The state still has three years to press a legal challenge before Richmond’s coal ban is fully phased in.

Utah lawmakers previously have set aside money to sue California over its “cap-and-trade” policies that they say unfairly reduced demand for Utah’s coal-generated electricity. Utah also has filed amicus briefs on the side of a coal company fighting Washington state over its refusal to allow a massive coal-export terminal on the Columbia River.

The Beehive State, however, did not participate in a port developer’s successful suit against Oakland challenging that California city’s coal ban enacted in 2016. The coal-loading terminal proposed for the former Oakland Army Base would create a clear path for Utah’s coal to reach Asian markets. Despite a legal victory, however, the fate of that project, which would be built with $53 million the Utah Legislature diverted from the state’s Community Impact Board, remains uncertain.