New settlement in Oakland will derail plan to export Utah coal through California

Utah lawmakers have already set aside $53 million for the project in the Infrastructure Throughput Fund which will need to be reallocated

(San Francisco Baykeeper) An aerial photo of the Levin-Richmond Terminal in Richmond, California. The shipping of coal and petcoke from the Richmond terminal will be phased out by the end of 2026. At a proposed terminal in Oakland, shipments of the materials have been nixed, according to a settlement framework announced by the City of Oakland on Feb. 2, 2022. The agreement would mean coal from Utah could not be shipped out of the port.

A controversial plan by Utah officials to export Utah-mined coal through Oakland has been derailed by an agreement between the California port city and developers resolving years of litigation.

No coal will ever pass through the bulk terminal under development at a decommissioned Army base on the San Francisco Bay, according to a settlement framework announced Feb. 2 by Oakland City Attorney Barbara Parker.

“The settlement of these lawsuits, once finalized, will allow development options to realize the West Gateway’s economic potential and, importantly, preclude transferring or handling coal and other commodities that are harmful to City residents,” Parker’s office said in a news release referring to the long-stalled port project.

Utah coal producers have long hoped to export the fossil fuel to Japanese power plants through Oakland, a major shipping avenue connected to Asian markets. Besides shutting the door on those plans, the new agreement would resolve a seven-year legal morass that began after Utah coal producers’ secret arrangement with the port developer, Phil Tagami, was exposed in 2015 by The Salt Lake Tribune and other Utah news outlets.

The Utah Legislature has since set aside $53 million to invest in the proposed Oakland Bulk and Oversized Terminal, or OBOT, which had planned a state-of-the-art rail-to-ship loading facility capable of handling 10 million tons of coal a year at the city-owned site at the foot of the Bay Bridge. OBOT was secretly controlled by Utah’s largest coal producer Bowie Resource Partners, now known as Wolverine Fuels, according to court filings.

When Oakland officials got wind of the port developer’s true intentions, they adopted ordinances banning the handling of coal and coke.

“After studying the health and safety risks associated with handling coal at the terminal over a nearly year-long public hearing process, the evidence before the City Council revealed that OBOT’s plans posed serious health and safety risks to West Oakland, a community that has long suffered systemic environmental racism,” Parker’s release said.

A federal court subsequently ruled that the city’s development agreement with Tagami barred it from applying the ordinance to the port project. But then the city revoked a 66-year lease with Tagami and his subtenants for failure to meet construction milestones. That action spurred a lawsuit and countersuit in state court that were to go to trial next month.

Last week’s agreement, if it sticks, would settle those cases and allow progress to resume on the stalled West Gateway project at the former Oakland Army Base.

Utah coal has still been reaching Asia through California ports in Stockton, Richmond and Long Beach, but those pathways remain uncertain in the face of increasing public opposition in West Coast communities to the handling of coal. In addition, climate activists have long sought to undermine exports of U.S. coal, the fossil fuel with the biggest emissions of greenhouse gases linked to global warming.

Wolverine has been moving a few million tons of coal annually through the Levin-Richmond Terminal, located just north of the West Gateway project on the Oakland waterfront, but in 2020 the Richmond City Council approved its own anti-coal ordinance and gave the terminal three years to find a different commodity to ship.

Another wave of lawsuits ensued, with Utah intervening on the side of Wolverine against the city of Richmond, who was and backed by the Sierra Club. Those suits were resolved in November with an agreement giving the terminal an extra three years to drop coal. In other words, no coal can pass through Richmond after 2026, foreclosing another pathway to Japan for Utah coal.

These settlements now leave the Mexican port city of Ensenada as the most likely option for exporting this resource, which fetches a higher price abroad than it does in the United States, where coal demand had steadily declined until last year.

The death of the Oakland project now raises other questions, namely, what to do with the $53 million in federal mineral royalties the Legislature parked in the so-called Infrastructure Throughput Fund. Established in 2016, this fund is to support the construction of big projects aimed at moving Utah-extracted minerals to market.

Last week, Sen. Wayne Harper, R-Taylorsville, quietly amended his SB51, a bill to regulate high-emissions pre-1980 automobiles, to enable the infrastructure fund to support “a highway used primarily for the transportation of hydrocarbons.”

Coincidentally, such a highway through Utah’s Book Cliffs has been proposed and is getting serious consideration. While that controversial road project would connect the Uinta Basin’s oil and gas production with Interstate 70, backers claim their real interest is to support tourism in eastern Utah.