Deal resolves lawsuits over Bay Area coal exports, but future of Utah’s coal industry remains in doubt

Wolverine Fuels may ship coal to Japan from Richmond until end of 2026.

(San Francisco Baykeeper) An aerial photo of the Levin-Richmond Terminal in Richmond, California. The shipping of coal and petcoke dust from the Richmond terminal will phased out of 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.

Utah’s fight with a Bay Area city over coal exports was resolved last month with a federal judge’s signature on a settlement that halts coal shipments through Richmond, Calif. by the end of 2026.

The deal allows Wolverine Fuels, Utah’s main coal producer, nearly four additional years of using the Levin-Richmond Terminal as its main conduit to the Japanese utilities it supplies. Meanwhile, its options for exporting Utah coal through West Coast ports appear to be narrowing.

For the past several years, Wolverine has been exporting about 3 million tons a year through port cities Stockton and Richmond, but in 2020, Richmond City Council banned coal and petcoke handling on that city’s waterfront, citing the public health effects of airborne coal dust.

That ordinance spurred five lawsuits in federal and state courts seeking to invalidate the council’s decision, including one filed by Wolverine, which Utah joined with the plaintiffs.

The Sierra Club and San Francisco Baykeeper sided with Richmond in the suits.

Under a deal signed May 20 by U.S. District Judge Yvonne Gonzalez Rogers, the phaseout period was extended by nearly 4 years to the end of 2026 to give Levin additional time to shift its operations from coal and petcoke to other bulk commodities.

“This amortization period is intended to strike a proper balance between protecting the public from the health hazards of coal and petroleum coke storage and handling,” the settlement states, “while also protecting existing jobs and providing sufficient time for businesses to transition.”

The deal also gives Wolverine more time to secure another location to transload coal from rail cars to ships on the West Coast. Currently, it partially loads 66,000-ton capacity vessels at an inland port in Stockton. From there the ships sail down the San Joaquin River to the Levin terminal where the ships are topped off at Richmond’s deepwater wharf.

Absent working in tandem with a deepwater port, shipping coal out of Stockton alone may not be an economically viable option. According to the Port of Stockton’s annual report, about 1.3 million tons per year on average has passed through that port.

Prior to loading at the Richmond terminal, the coal is piled high in an enclosure formed by shipping containers stacked three or four high where the pile is somewhat protected from the wind. Conveyors move the coal onto the ships which depart at the rate of nearly one a week for Japan.

While Utah coal has been reaching international markets this year through Houston, trans-Pacific exports are crucial to the survival of Utah’s coal industry, according to Brian Somers, executive director of the Utah Mining Association. Mexico’s Pacific ports at Ensenada and Guymas are also possibilities, but both are hobbled with logistical challenges.

“Stockton has plenty of space to store coal, but it doesn’t have the [water] depth to fill the ships up all the way,” Somers said. “The challenge with Ensenada [on the Baja coast] is there isn’t rail that goes all the way to the port. We have shipped a decent amount of coal from Houston this year. That’s because there is so much demand in Europe.”

But shipping coal by rail to Houston is far more expensive than to the Bay Area, and Europe’s interest in Utah coal may not last, he added, noting that Utah coal can now fetch upwards of $200 to $300 per ton on the international market.

“There are good long-term prospects in the Pacific market, especially in Japan where the power plants are designed for low-sulfur and high-Btu coal, like what we have here,” Somers said. “A lot has changed in the last year and a half because of disruption in the energy markets. Coal is selling at a premium all over the world right now.”

Meanwhile, the domestic market for coal is contracting. Intermountain Power Project in Delta, Utah’s largest coal-fired plant, is planning to convert from coal to natural gas and hydrogen in 2025, reducing demand for coal from Utah mines by around 3 million tons a year.

In response to that lost business, Wolverine would need to expand its exports or slow production.

Despite these market difficulties, the company is developing plans to open new mines in Emery County and is expanding its Skyline Mine, according to filings with the Utah Division of Oil, Gas and Mining.

A phone message left with Wolverine’s general counsel Brian Settles was not returned. Levin-Richmond officials declined to comment.

In court filings, lawyers for Wolverine and the terminal argued that shipping Utah coal through Richmond has environmental upsides.

“If LRT [the Levin-Richmond Terminal] were not available as a result of the Ordinance, coal exports to Japan would need to be shipped from Utah through a more distant marine terminal, potentially in Mexico, with increased emissions resulting from much longer rail transport,” Wolverine’s lawyers wrote in one filing. “And if Wolverine cannot find a suitable alternative marine terminal, Japan would replace the high BTU, low-sulfur Utah coal that Wolverine ships with lower quality coal on the international market.”

This sentiment is apparent in a letter to Richmond Mayor Tom Butt from the U.S. Department of Energy while it was under the control of former President Donald Trump.

“The coal exported from the United States is the cleanest coal in the world,” states the letter, which is included in the court record. “Prohibiting the export of U.S. coal will only lead to further increases in the consumption of lower quality non-U.S. coal, increasing global emissions.”

The relative cleanliness of Utah coal is a red herring as far as environmentalists are concerned. Exporting it just spreads around the harm it can cause, they argue.

Shipments harm communities near the rail facilities where the coal is unloaded and loaded, according to Ben Eichenberg, a lawyer for San Francisco Baykeeper.

This is a big victory for the people of Richmond. It started with a grassroots movement and some really brave city council members who championed this issue, and they fought for the health of their citizens,” Eichenberg said. “There were some big companies that were opposed to it, a lot of money fighting them. A lot of lawyers coming in. Brave little city of Richmond, which doesn’t have a lot of money, stood up to these guys and carried the day.”

Under the hard-negotiated agreement, which was filed with the court in December, Wolverine and the terminal operators committed to additional dust control measures. They are to build a canopy over the rail conveyances and wind fencing to shield the piled coal from the elements as it awaits loading onto ships. Terminal operations are to cease if wind speeds reach 18 mph, half the previous shut-down threshold.

“Each of these measures would prevent harmful dust from leaving the facility and affecting adjacent neighborhoods,” city officials wrote in a statement announcing the settlement.

On the Utah end, Wolverine is to continue applying a binding agent called Crown PDC 8020 to its coal as it’s loaded onto trains.

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