By Rachel Swan
March 25, 2016
The developer behind a controversial plan to ship coal from Oakland’s port is a longtime friend and campaign supporter of Gov. Jerry Brown, who has emerged over the past year as a world leader in the fight against climate change.
As Brown attended last year’s United Nations Climate Change Conference in Paris, stoutly defended President Obama’s Clean Power Plan, and urged other world leaders to take action, Phil Tagami was been busy in the governor’s hometown pushing plans to export millions of tons of the black fossil fuel that scientists say is the leading cause of global warming.
“I can say he’s been a friend for the last 20 years,” Tagami said of Brown during a recent interview at his office in the Rotunda Building, a seven-story dome that he renovated in the late 1990s so it would gleam like a steel cathedral next to Oakland City Hall. Brown and his wife, Anne Gust Brown, were married there in 2005.
Tagami said that he and Brown have privately discussed the coal plan, which in recent months has roiled the city’s political establishment.
“Has he asked questions about what’s going on? He has,” Tagami said. He wouldn’t elaborate on the nature of those questions, and Brown declined to comment.
Still, the governor may eventually have to weigh in. A suite of bills by state Sen. Loni Hancock, D-Berkeley, would ban the export of coal from Oakland and cut off public funding for any port in the state that handles coal. If approved by the Legislature, the bills would arrive at the governor’s desk as early as June.
“I would be surprised if the governor wasn’t very concerned about how this undercuts and undermines his environmental legacy, and the environmental stature of the state of California,” Hancock said. “It’s one thing to go to Paris (Climate Change Conference) and talk about how state and local government is where the action is — but then to allow something like this to happen in his own backyard?”
The governor’s ties to Tagami date back to the days when Brown was mayor of Oakland and Tagami was a rising-star developer with an eye on the city’s downtown. In 2000, Brown appointed Tagami to serve as a commissioner for the Port of Oakland, one of the most influential positions in the city.
Three years later, the Oakland City Council picked Tagami to rehabilitate the Fox Theater, an Art Deco concert venue that would house Brown’s arts charter school and become the crown jewel of his downtown revitalization.
They remained closely aligned when Brown left city politics and made a successful bid for state attorney general, with Tagami contributing $11,200 to his campaign, records show. In 2011, Brown took office as governor, recruiting Tagami to serve on the California Lottery Commission in 2012 and on the state medical board in 2013.
Meanwhile, in 2008, Tagami entered talks with the city to develop a giant stretch of waterfront at the former Army base, adding a recycling center, maritime support services and a rail line, as well as the bulk terminal he’s building near the east end of the Bay Bridge — which stands to be the most lucrative portion of the project.
The entire 366-acre, $880 million development is expected to bring thousands of jobs to an area that was devastated when the Army base shut down in 1999. It requires about $387 million in taxpayer funding, most of it coming from the state’s Trade Corridor Improvement Fund. Tagami’s real estate firm, California Capital & Investment Group, will finance the $250 million Oakland Bulk and Oversized Terminal. In 2014, the firm signed a lease option with a shipping company called Terminal Logistics Solutions — run by former Port of Oakland executives Jerry Bridges and Omar Benjamin — to build and operate the terminal.
In March, Utah’s Legislature voted to spend $53 million in taxpayer dollars on the project, with the promise that coal mined in Utah would be exported from Oakland. That transaction makes sense to Stanford University economics Professor Frank Wolak: The domestic market for coal is sputtering, but overseas demand is going up.
“China consumes half the world’s coal, and there’s no sign of slowing down their demand,” Wolak said. “My feeling is look, that coal is going to come from the U.S. — where it provides high-wage jobs for people without a lot of education — or it’s going to come from other exporting countries.”
But the prospect of moving millions of tons of coal each year through West Oakland has prompted fierce opposition from environmentalists and elected officials. Many worry the coal, moved to the port by rail, would send dust into the surrounding neighborhoods, polluting the air and damaging people’s lungs.
Among the plan’s detractors are Hancock, Rep. Barbara Lee, D-Oakland, Assemblymen Tony Thurmond, D-Richmond, and Rob Bonta, D-Alameda, and Oakland Mayor Libby Schaaf. The mayor told Tagami to “stop it immediately” in emails obtained by the Sierra Club, which is leading a global crusade to stamp out coal.
In April the Oakland City Council will vote on whether to hire a consultant to study the hazards of transporting coal through the city and into the former Army base by rail. Hancock’s bills will go before the Senate Transportation and Housing Committee on April 5.
Tagami and his business partners say a coal ban could put their whole project at risk.
“If we say, ‘Whatever someone doesn’t want us to do, we won’t do it,’ then no one in the supply chain will take us seriously,” said Mark McClure, a principal at California Capital & Investment Group.
McClure and Tagami said the city of Oakland doesn’t have the authority to bar a legal commodity. They sent a team of three lawyers — as well as engineers and lobbyists — to a public hearing about the coal plan at City Hall on Sept. 22.
As the fight escalates, some political insiders have begun wondering what Brown will do.
“For him to be quiet on this coal issue is stunning,” said Joe Tuman, a former Oakland mayoral candidate and communications professor at San Francisco State University.
The governor may in fact be the only person who can sway Tagami, Tuman added.
“I think if there’s one person whose opinion and approval matters to Phil Tagami, it’s Jerry Brown,” he said.
Rachel Swan is a San Francisco Chronicle staff writer. Email:email@example.com Twitter: @rachelswan
By Amy Joi O'Donoghue, Deseret News
Published: Saturday, March 26 2016 4:00 p.m. MDT
SALT LAKE CITY — State and federal geologists say there's enough coal in the state to keep the coal mining industry running for 55 years, but few think that is a realistic projection given environmental pressure, increasing regulations and the pace of shrinking national demand.
Utah, like other U.S. coal-producing states, has turned its sights on ramping up foreign exports to meet demands in other countries, particularly to developing nations hungry to plug into a cheap form of electricity.
The move is controversial from a philosophical and environmental standpoint among opponents who decry the public health impacts of fossil fuels. But coal-producing communities say it is a matter of their survival.
"Nobody likes to relocate to a ghost town," said Carbon County Commissioner Jae Potter. "This buys us some time."
Potter's Carbon County, along with Emery, Sanpete and Sevier counties, are behind the successful push to invest $53 million for 49 percent access in a planned bulk terminal off San Francisco Bay at Oakland. The covered terminal would be built on land that once housed an Army base and is now owned by Oakland City.
No money has exchanged hands in the proposal — which still requires another $200 million to become a fiscal reality — but the financing mechanism approved by the Utah Legislature this month and endorsed by Gov. Gary Herbert stoked howls of protest from critics who described it in unsavory terms like "scheme," "shell game," or even "money laundering."
The funding mechanism established in Senate Majority Whip Stuart Adams'SB246 involves a three-way transfer of money.
This is how it will work. In the fiscal year that begins July 1, $26 million will be taken from a transportation sales tax fund and put into an enterprise fund for the export terminal. The same amount in mineral lease revenue — the money earned from oil and gas extraction and industries like coal mining and then returned to originating counties — will be transferred from the Community Impact Fund to a newly created account to spend on transportation projects.
The $26 million already set aside at the Community Impact Fund in a long-term infrastructure account will be repaid by the counties via a 30-year-loan at 2 percent interest, which is the fund's standard loan and repayment terms. The same transfers happen in fiscal year 2018 for $27 million.
"There is no risk to taxpayers' money," Adams said. "If I give you a $10 bill to hold on to for 10 minutes, and then exchange it with you for two $5 bills — all that has happened is the money has been changed."
Adams and the Community Impact Fund Board Chairman Keith Heaton said swapping funds to pay for community needs when there may be federal strings or limitations attached is not an unusual state practice, especially for transportation projects. Critics questioned the use of community impact funds in an out-of-state project, but Potter said that is why they ran the measure by lawmakers' scrutiny — for public accountability and legal review by the Legislative Office of General Counsel.
"Someone told us if this was such a good idea, we should run it through the Legislature," he said.
For the counties involved, it remains a local investment, he said.
"That has what has been the big lie, that this is a waste of taxpayer dollars," Potter said. "This is a trading of dollars that have already been set aside and paid to the counties because of mineral development."
Some California politicians, the Oakland mayor, the Sierra Club Beyond Coal Campaign and the "Keep it in the Ground," movement are trying to block Utah's planned export of coal. Earthjustice filed a lawsuit, and then withdrew it with a right to re-file as the city conducts a public health and safety review of the proposed terminal and rail shipments.
Hundreds of people packed an Oakland City-hosted meeting last fall, including opponents to the proposal and project developers who say the $250 million project will support an annual payroll of $120 million and provide transport for 20 different bulk commodities.
Sen. Loni Hancock, D-California, is running several bills which aim to stop the export of coal from what some say would be the West Coast's largest coal export facility if built. They are scheduled to be heard in a committee hearing in early April before the California Legislature.
Tapping local sentiment, the Sierra Club in the Bay Area did its own poll that showed 76 percent of Oakland voters are opposed to exporting coal from San Francisco Bay.
Bill Corcoran, Western director of the Sierra Club's Beyond Coal Campaign, said the railway transport of coal to the export terminal poses an immediate public health impact, adding more toxins to an area already "hammered" by industrial pollution.
The Sierra Club, in its campaign to stop the terminal, shows uncovered coal cars on its website and describes how toxic coal dust would result in more hospital trips for children with asthma.
The trains, however, would be covered and unloaded in a covered terminal that its developer, Terminal Logistic Solutions, said is designed to meet or exceed all California state environmental regulations. The project, the company adds, has to meet more than 660 mitigation mandates and conditions of approval with the city and the Port of Oakland.
But Corcoran said the export of Utah coal from California is fundamentally wrong.
"California has positioned itself as a leader in addressing climate change and Oakland as a city is committed to address climate change," he said. The idea that the "dirtiest fuel we use to produce electricity," would be shipped out of Oakland is an affront to the city's own aspirations and to the state more broadly, he said.
On the Utah front, the fight to stop the terminal includes Tim Wagner, a former Sierra Club staffer who now serves as executive director of the Utah Physicians for a Healthy Environment. He lobbied against Adams' bill on Capitol Hill, arguing among other things that it is a bad investment.
"It makes no financial sense whatsoever. Coal markets all across the planet are in a complete decline, with no sign of them coming back," he said. "I don't care if the Utah Legislature wants to throw $53 billion at this proposal, it is not going to revive the coal industry in this state."
A 2014 report on Utah coal issued by the state's Rural Planning Group predicts that for coal to thrive, a scenario has to play out that includes slowing advancement in renewable energy technologies and some sort of major disruptive and unfortunate accidents when it comes to the production and use of the cleaner natural gas. The market considers coal to be the lowest risk, highest return energy source and a major catastrophic event — such as war — keeps coal as an indispensable power source.
Those conditions are a tall order and Utah's coal country is facing very real and dramatic reductions of domestic demand. In Utah it is projected to be at 28 percent, caused by the 2015 closure of the Carbon power plant and the transition of the Intermountain Power Plant in Millard County moving to natural gas by 2027.
"That leaves us with a cliff coming that says, 'Hey, what do we do?" Potter said.
Why the port?
The report notes that there are three major hurdles Utah's coal industry needs to overcome in the years ahead and key among them is limited port capacity that constrains selling coal to markets abroad.
Last year, Utah exported nearly $169 million worth of coal to four foreign countries. Mexico was the top destination, receiving $143 million worth of coal.
Derek Miller, president and chief executive officer of World Trade Center Utah, said transportation is half the battle in getting Utah products to foreign markets, and the other half is port access.
"I think it will be a significant benefit to have these rights at this port," Miller said. The terminal would also provide a route for Utah grown hay, as well as salt and soda ash.
Miller said those other commodities don't have the same environmental constraints as Utah's coal, which he predicts may see an increased demand globally because it burns more efficiently and has a low sulfur and low mercury content.
"As you see environmental standards get higher in China and other markets, our coal would have a competitive advantage under those circumstances."
Coal critics cite China's sputtering demand for coal as the death knell for the industry, but the International Energy Agency predicts slowed, but continued growth in coal demand through at least 2020.
Jason Hayes, associate director of the American Coal Council, said coal — despite its critics — remains the cheapest form of reliable electricity and produces far fewer carbon emissions than open burning or incinerating dung, practices common in developing countries.
Major utility companies in Japan and South Korea, too, have indicated at coal conferences they're hungry for the U.S. commodity, Hayes added.
"They told us very plainly if we build port capacity on the West Coast and we ship it, they will buy it."
About 7 percent of Utah coal is currently shipped to foreign markets, so more port capacity would significantly expand that share.
An eight-week study by Deloitte Consulting that spanned the United States, South America, parts of Europe, Asia, Australia and South Africa concluded that deeper penetration into international markets could provide new revenue opportunities for savvy U.S. Coal producers.
While coal has traditionally been a "swing" option for excess coal, the study noted that some markets are "ripe" for expansion.
The four counties hope to export about 5 million tons of coal to foreign recipients.
"This extends our viability with the market," Potter said. "It gives us time to not only transition, but it gives our people hope. It provides us with a future and time for us to transition to other things. Without time to get that in place and attract those other companies, we'll all be living on the Wasatch Front."
By BRIAN MAFFLY The Salt Lake Tribune
(Francisco Kjolseth | The Salt Lake Tribune) Coal trucked from central Utah piles up at the Levan transfer station south of Nephi, where it is loaded on Union Pacific freight cars bound for California. Utah's Community Impact Board has awarded a $53 million loan to four coal-producing counties to invest in a deep-water port in Oakland, Calif. hoping to connect central Utah commodities with export markets. Bowie Resource Partners already exports about 1 to 3 million tons of coal from its Utah mines.
Utah’s largest coal producer is an investor in the project but says it will diversify exports.
As financier Jeffrey Holt urged Utah's Community Impact Fund to loan $53 million in public money to build an export shipping terminal in Oakland, Calif., he never said the word "coal" or mentioned Bowie Resource Partners.
Holt sought the loan at an April 2 meeting as an adviser to Sevier, Carbon, Emery and Sanpete counties — home to Bowie's Sufco, Dugout and Skyline mines. That same month, Bowie's chief commercial officer said the company did not have plans to use the proposed terminal.
"We have been advised the Oakland project is a multi-commodity terminal that will handle many different commodities such as potash, soda ash, and grain," Grant Quasha wrote to The Tribune in an April 22, 2015, email. "These facilities are 'purpose' built facilities and need to be tailored to types of commodities. That being the case it is not clear that it is commercially viable for our future needs."
But behind the scenes, Bowie and its Utah coal were at the center of the plan Holt was pitching to the counties.
Bowie would be "a Series A shareholder" in the terminal, according to a term sheet Holt provided to them in March 2015.
Terminal Logistics Solutions, the firm operating the terminal, "will be created as a part of the business arrangement between the Counties, Bowie, and any other users that can contracted ahead of time," it said.
Initially, up to 49 percent of the terminal's shipping capacity would be used to export coal — but that cap would only be an internal policy, not an official limit set in a permit.
"Presumably Bowie will get the throughput allocations to their mines in the Counties, at least for some number of years," the term sheet notes.
The sheet and other documents were recently acquired by Sierra Club through open record requests to the four Utah counties. Sierra Club and Bay Area climate and environmental health activists have been challenging the export terminal project since the inclusion of coal became public.
"This wasn't multi-commodity. This terminal is all about coal," said Jessica Yarnall Loarie, a lawyer with Sierra Club's Beyond Coal campaign. "Bowie went to great lengths to hide the ball from both Utah and California."
On Friday, Bowie's executive chairman John Siegel acknowledged his firm "has a vested interest in [Terminal Logistics Solutions] along with others and we are proud of that."
Despite Quasha's earlier assertion, Siegel said Bowie's interest in the Oakland terminal stemmed from its ability to move a variety of products.
"We are called Bowie Resource Partners for a reason. While coal is our central commodity, we are looking to diversify the company across all commodities that make sense for us," Siegel said. "That was central for our interest in the terminal."
Terminal questions • Last year, Siegel said, Bowie tried to acquire OCI Chemical Corp., a major soda ash producer that operates trona mines and processing plants in Wyoming. Soda ash, processed from tron, is a crucial ingredient in glass, detergents and other industrial products.
Bowie lost out to a Turkish firm. And now, the company is seeking to purchase three coal mines in Colorado and New Mexico from Peabody Energy, which is teetering on the brink of bankruptcy.
But Siegel said he will continue efforts to get into soda ash and other non-coal minerals.
"If and when it makes sense to export coal there [at the proposed terminal], we will do it," Siegel said, "but the focus shouldn't be on coal because it will never be the predominant commodity run through the port at Oakland."
Some Oakland city officials say they're surprised that coal may be shipped through their community at all.
The export terminal would occupy 30 acres of a 330-acre redevelopment project at the former Oakland Army Base, located at the foot of the Bay Bridge. Known as Oakland Global Trade and Logistics Center, the larger project is under construction.
City officials say master developer Phil Tagami verbally promised coal had no part in his plans, and they signed a 2012 contract with Tagami's firm that placed no restrictions on what commodities the port would move.
Terminal Logistics Solutions (TLS) incorporated in October 2014, according to California Secretary of State documents. Its top executives are former Port of Oakland officials Jerry Bridges and Omar Benjamin. Benjamin resigned as the port's executive director in 2012 amid allegations that the port covered a tab he helped run up at a strip club.
In a July 2015 letter to Oakland's mayor after the proposal to ship coal had been revealed, Bridges said the terminal will be engineered to the highest environmental standards, with coal and other commodities delivered in newly designed covered rail cars and transferred in an enclosed system.
But the status of the proposed terminal is unclear.
The TLS lease option for the terminal site initially was set to expire in July 2015, according to the documents acquired by the Sierra Club. It was extended a few months to Oct. 17, but TLS has yet to exercise its option, according to the Los Angeles Times.
Bridges did not respond to repeated requests for comment. The TLS office is located in the same Oakland building as Tagami's firm, California Capital Investment Group. That company's publicist did not respond to an e-mail.
Besides Utah, no other investors in the $275 million terminal are known. BMO Capital Markets, which employs Holt as an investment banker, is seeking $200,000 from private investors, and is marketing the opportunity to pension funds.
BMO also has a stake in the Central Utah Rail project — a proposed 48-mile line to connect Salina, near Bowie's Sufco mine, to the Union Pacific coal load out near Levan, which offers direct rail service to the Bay Area.
Without the Oakland terminal, the rail line will not be feasible, according to a memo Holt sent to the counties along with the term sheet.
"These two projects must be contractually linked in the negotiations," wrote Holt, a former member of Utah's Community Impact Board (CIB), the that group asked for the $53 million loan.
At the time he wrote the memo, Holt chaired the Utah Transportation Commission, which prioritizes projects for public funding. He had recently entered into a contract with Sevier County to secure financing for the rail project.
Once the $124 million rail line is operational, BMO will get a 2.5 percent "success fee," based on the value of the project — an additional $3 million incentive for BMO and Holt to ensure the Oakland terminal is funded.
Holt, who resigned his post on the transportation commission in December and moved to New York City, did not respond to an e-mail request for an interview.
'There should be absolute openness' • Meanwhile, Gov. Gary Herbert last week signed a bill that clears the way for Utah's investment.
CIB approved the $53 million loan in April 2015, but it later discovered that transferring the money — from federal mineral royalties — would require a new plan. Normally the funds are reserved for civic projects in the counties that produced the minerals. SB246 provided a way to work around funding restrictions.
Critics contend Utah's loan distorts markets by giving an unfair subsidy to a polluting energy source that the United States and many other countries are turning away from. Many suspect the terminal needs subsidies because private investors are wary of backing coal exports at a time of collapsing global demand.
Herbert's PAC landed half of Bowie's $29,000 in political contributions in Utah over the past two years, according to campaign finance disclosures. SB246 sponsor Sen. Stuart Adams, R-Layton, received $750 and similar donations went to numerous Republican lawmakers.
At his Thursday news conference, Herbert said he was unaware of Bowie's contribution, noting his PAC enjoys support from a variety of energy developers.
"That has nothing to do with the situation at hand. What we have is a group of rural counties — Emery, Carbon, Sevier, Sanpete counties — which have a significant economic concern about this war on coal," Herbert said.
"It's a very viable, legal, needed product in the world and we should have the right to export that product," he said. "And these counties have said, 'Hey, we have money involved, our [community impact] money, so let's pool that money and see if we can guarantee access to ship a legal product out of California.' Now we've set the money aside."
The Utah Attorney General's Office has previously remained silent about the deal, citing its client-attorney relationship with the CIB.
But Herbert assured reporters that his office will oversee the project and "there should be absolute openness and transparency at every step of the way."
Reporter Robert Gehrke contributed to this story. Brian Maffly covers public lands for The Salt Lake Tribune. Maffly can be reached at firstname.lastname@example.org or 801-257-8713. Twitter: @brianmaffly
By THE NEW YORK TIMES EDITORIAL BOARD, MARCH 26, 2016
The grave environmental damage from coal-fired power plants has done nothing to deter the Senate majority leader,Mitch McConnell, from decrying a “war on coal” and orchestrating his own war against the Obama administration’sclimate change agenda. But he and other coal-state Republicans would be foolish to ignore the growing consensus on Wall Street that King Coal, for all its legendary political power, has turned into a decidedly bad investment.
JPMorgan Chase announced this month that it would no longer finance new coal-fired power plants in the United States or other advanced nations, joining Bank of America, Citigroup and Morgan Stanley in retreating from a fuel that provides about one-third of the nation’s electricity and accounts for about one-quarter of the carbon emissions that feed global warming.
Cleaner and cheaper natural gas is fast becoming the preferred investment, a blunt marketplace reality that is sure to weaken coal’s grip on the planet as much as moral and environmental concerns. Last week’s announcement by Peabody Energy, the world’s largest private-sector coal company, that it may have to seek bankruptcy protection, just as three other major coal producers have done recently, provided a dramatic confirmation of this trend.
Main Street also seems to be getting the message. Two weeks ago, Gov. Kate Brown of Oregon signed ambitious legislation — agreed to by environmentalists, consumer groups and power producers — that requires the state’s two largest utilities to stop importing out-of-state coal-generated power by 2030 and to use renewable energy to meet half of the demand of their customers by 2040. Oregon’s only in-state coal-fired plant will close by 2020.
Even so, Mr. McConnell persists in his campaign to block the administration’s clean power rule, the centerpiece of Mr. Obama’s plans to reduce greenhouse gas emissions by steering power producers away from dirty coal-fired plants to cleaner sources of energy. Ever ready with new and more mischievous strategies, Mr. McConnell has encouraged court challenges to the rule and has gone so far as to tell Republican-led states to ignore it, further deepening his party’s sorry retreat into science denial.
Though reeling now, the coal industry insists it will rebound by selling more to markets like China. But this is little comfort to workers who can read the markets better than Mr. McConnell can. Rather than encouraging obstruction, the senator, who received $273,850 in campaign contributions from the coal industry for his 2014 re-election, should be taking the lead in crafting government programs to help the industry, miners and communities as they face a hard period of inevitable transition.
Even as the administration cracks down on coal — in recent weeks it has also suspended new coal leasing on federal lands — it has called for job training and other assistance to ease the pain. These are the types of creative adjustments that Mr. McConnell and his colleagues should be tackling, instead of clinging to King Coal’s fading past.
A version of this editorial appears in print on March 27, 2016, on page SR10 of the New York edition with the headline: Wall Street’s Retreat From King Coal. Today's Paper|Subscribe
By Ted Goldberg
MARCH 22, 2016
Utah Gov. Gary Herbert has signed a bill that approves $53 million in state funds to aid construction of a new Oakland cargo terminal that backers hope to use to export coal.
Herbert on Tuesday signed legislation authored by Republican state Sen. J. Stuart Adams that would help finance the project so Utah coal and other products reach overseas markets more easily.
Herbert’s spokesman linked the governor’s support for the bill to the national political debate over the future of the coal industry.
“Gov. Herbert is alarmed to hear the comments from presidential candidate Hillary Clinton when she said ‘We’re going to put a lot of coal miners and coal companies out of business,'” the spokesman, Jon Cox, said in a statement to KQED.
Cox was referencing remarks Clinton made earlier this month when she emphasized her commitment to policies that promote renewable energy.
“Utah will continue to pursue an all-of-the-above approach to energy development including one of, if not the largest, growth of solar development in America over the past two years,” Cox said.
The terminal and Utah’s role in financing it has outraged local environmentalists who have been working to stop the project. They say it will increase air pollution in West Oakland, which already has high asthma rates.
“They’re already experiencing a lot of health effects, so to bring a project that can worsen the effects of residents and potentially the workers — we’re opposed to that,” said Brittany King, a conservation program coordinator at the Sierra Club’s Bay Area chapter, in an interview.
Critics also say the project perpetuates dependence on fossil fuels, contributing to high levels of carbon dioxide in the atmosphere that scientists have identified as a key driver of climate change.
“I’m deeply disappointed in the decision by Utah’s lawmakers to use public funds to prop up a dying industry that will only pollute our planet and contribute to global warming,” East Bay State Senator Loni Hancock said in an email.
But Adams said the project will help in the global environmental battle.
“Utah has the cleanest coal on the planet,” Adams said in an interview earlier this month. “You actually may be improving the environment by allowing this.”
Adams said if India and China burned more clean coal from Utah, the earth’s environment could get better.
“As long as the rest of the world is using it, you ought to use a better product than dirty coal,” Adams said.
One of the Bay Area’s top energy experts disagrees.
“There is no such thing as clean coal,” said Daniel Kammen, a UC Berkeley professor of energy and co-director of the Berkeley Institute of the Environment, in an email. “When you burn coal you get carbon dioxide, no getting around that. Poison is poison. Adams is wrong.”
“Burning coal with less trace toxin elements in it is better than injecting it into a vein, but far worse than the many clean energy options that are available,” Kammen said.
Adams said California should return favors that Utah has done for the Golden State in years past.
“When there were power generation lines that needed to be run through Utah from Wyoming to California, we allowed those lines to be run through,” he said. “Most of the goods that come from the rest of the world come into California and travel through Utah through our freeways, with trucks and whatever else may pollute our air. And we’ve actually tried to accommodate California, tried to be neighborly.”
BY ERIC K. ARNOLD
TUESDAY, MAR 22, 2016, 1:30 PM
This post first appeared at RP&E.
Coal, once the staple of American industrial production, may be on its last legs. With domestic production showing a long-term decline, the fossil fuel’s days appear to be numbered.
According to the most recent annual report of the U.S. Energy Information Administration (EIA), in 2013, U.S. coal production fell below two billion short tons for the first time in two decades; coal mining capacity decreased, as did the average number of coal mine employees, the average sales price of coal, and total U.S. coal stocks. In April of 2015, the EIA projected coal would hit a 28-year low, reflecting significant drops in domestic demand and exports. A report by the Carbon Tracker Initiative (CTI) noted that 26 domestic coal companies have recently gone into bankruptcy proceedings.
According to CTI, domestic energy generation has remained flat for the past decade but energy sources have shifted: coal and oil are down, but natural gas and renewable energy are up. America’s largest coal producers are recording annual losses in the billions of dollars, while Chinese coal demand has slumped and new environmental regulations aimed at significantly reducing air pollution and increasing wind and solar consumption are being phased in by the Chinese government. Additionally, all federal coal leasing is currently under moratorium until a comprehensive review can be completed. As the Natural Resources Defense Council (NRDC) noted in its online magazine, OnEarth, “it would be difficult to overstate the industry’s current distress.”
This is scary news for the coal industry, yet a welcome announcement for environmentalists who have waged national campaigns against coal for decades. Coal producers’ last hope, it would seem, is to increase coal’s export capacity by transporting the black gunk through West Coast ports. But even there the pro-coal forces have met with unexpected resistance, as city after city in Oregon and Washington have mounted grassroots campaigns to deliver an emphatic message: “Say no to coal.”
Oakland’s “no coal” stance sends shock wavesA showdown in Oakland, California in 2015, over a proposal to convey coal via train to a planned marine terminal at the site of the old Oakland Army Base site, generated considerable controversy. Coal advocates based in Utah secured tens of millions in loans from an obscure public agency to dangle in front of Terminal Logistics Solutions (TLS) for the right to bring coal through West Oakland, one of the most polluted areas in the entire state. But a coalition of environmental advocates was ready with a grassroots campaign joined by numerous community organizations.
On February 16, the Oakland City Council voted to table a proposal to pay Environmental Science Associates $208,000 in consultant fees to determine whether the coal trains would pose significant health risks. The Council was reportedly set to approve the contract, but abruptly reversed its decision after Oakland Mayor Libby Schaaf urged them to delay the decision, and environmental advocates pointed to a recent Environmental Impact Report (EIR) authored by Environmental Science Associates for the city of Benicia, which significantly downplayed the health hazards of a proposed coal train project (though it did note significant risks of air pollution).
The Benicia EIR, prepared by a former employee of the American Association of Railroads, contradicted NRDC’s findings which stated that the aging train cars to be used in the project were not equipped to handle what the Wall Street Journal termed the equivalent of “two million sticks of dynamite” per car.
NRDC’s findings had raised concerns about a potentially lethal incident, such as what occurred in July 2013 in Lac-Mégantic, Quebec, when 69 crude oil-laden cars caught fire and exploded after rolling down a hill and derailing at a speed of 63 mph. The disaster killed 47 people, incinerated much of the town’s center, caused 36 of the 39 remaining downtown buildings to be demolished due to petroleum contamination, sent 26,000 gallons of oil into the Chaudière river (resulting in a swimming and fishing ban and causing deformities in almost 50 percent of the river’s marine life) and generated cleanup costs well in excess of $7.6 million, as well as insurance claims totaling $50 million.
Needless to say, Benicia rejected the proposal.
Furthermore, a poll conducted on behalf of the Sierra Club found that 76 percent of Oakland residents opposed the coal trains, while only 15 percent supported it. And on February 19, California State Senator Loni Hancock introduced four separate bills (SB 1277, 1278, 1279 and 1280) aimed at restricting coal in California and, specifically, keeping it out of Oakland.
If passed, the bills would declare shipping coal through West Oakland a health and safety hazard and prohibit coal from being shipped through the Port of Oakland; require comprehensive environmental data collection for coal projects by public agencies; prohibit the use of public funds to operate coal-exporting facilities adjacent to low-income communities; and require facilities which receive state funds to either prohibit coal altogether, or contribute to the state’s greenhouse gas reduction fund. In short, Hancock’s bills would close almost every loophole which has come to light in the Oakland coal train battle.
Hancock’s actions also sent a clear message to the Oakland City Council to take decisive action to prioritize the environmental health of a community already suffering from the double whammy of toxic levels of pollution and the lowest income levels in the entire city. This may prove to be the nudge Oakland city officials needed to firmly reject the coal proposal, after months of inaction and behind-the-scenes dithering over possible liability concerns.
Lies, deception and backroom deals push coal on OaklandOn September 21, 2015, almost 700 people signed up to speak at a public forum addressing a proposal to build a new coal handling facility at the former Oakland Army Base—a new record, according to clerk LaTonda Simmons. At the hearing, which lasted almost six-and-a-half hours, Oakland City Council members heard from concerned members of the community worried about the negative health impacts of fugitive coal dust residue, as well as several experts who offered testimony about environmental and public health factors. On the other side were allies of developer Phil Tagami’s California Capital and Investment Group and TLS, the company that would operate the proposed West Oakland terminal where the coal transported from Utah would arrive before being exported to China and other foreign destinations. The pro-coal advocates included several paid lobbyists and hired-gun consultants who insisted that this coal would be the cleanest coal available in the United States, as well as construction workers and church leaders who said the community needed the jobs.
Some of the most impactful testimony came from Katrina Booker, a former registered nurse who currently works as a longshorewoman at the port of Stockton. Booker’s first-person account of what it’s like to be a worker at a coal facility cut through all the rhetoric and dry statistical data to offer a dose of reality. “When the coal comes off the ships off the conveyor belts, you have the most dust there. When I work, I have to wear my mask, and that doesn’t keep the dust out. At the end of the day, my eyes are burning and red. I get nosebleeds, I have headaches, it’s hard for me to breathe. Whatever has gotten past that mask, I have already inhaled into my lungs.”
Christopher Christiansen, a 4th generation longshoreman with ILWU Local 1021, was more succinct in his assessment: “Coal is wrong for our community and our docks. The argument that we need coal… just doesn’t pass with a straight face.”
Margaret Gordon, an environmental activist based in West Oakland, warned “If coal comes in here, … there’s no more resiliency, it’s not sustainability, none of that is happening anymore. … That’s not what I have worked for [for] 20 years… cleaning up the air pollution in West Oakland.”
The Council hearing capped off a well-coordinated campaign against coal which resulted in what some long-term environmental activists are calling an unprecedented show of solidarity across demographic and ethnic lines. “It’s been a tremendous effort, probably the most powerful organizing effort I’ve seen in Oakland since I’ve been involved in environmental work,” said Brian Beveridge, who’s worked with Gordon for the past decade on the West Oakland Environmental Indicators Project (WOEIP), one of the core organizations which anchored the campaign, along with the Sierra Club, Earthjustice, Communities For a Better Environment, Baykeeper, Asian Pacific Islander Environmental Network and Sunflower Alliance.
“We’ve certainly seen powerful organizing around Black Lives Matter and some of the other social justice issues, but as far as the environment, this has really brought people together across the board. All races, genders, ages,” Beveridge said, adding that the engagement of young people and people of color, “feels like a sea change in the modern environmental movement. We’re just not that divided on it anymore. People are saying, if that’s the job they’re offering, we don’t need a job that bad. There are better jobs to be had than shoveling coal in an underground bunker. That is a really powerful thing. I don’t think the developers thought they were going to jumpstart a whole new element of the environmental movement. Talk about unintended consequences!”
The Oakland campaign began in 2013. At that time, CCIG’s Tagami insisted in a newsletter for the project that, “CCIG is publicly on record as having no interest or involvement in the pursuit of coal related operations at the former Oakland Army Base.”
But it soon became apparent that the coal industry was indeed targeting Oakland. After the Port of Oakland unanimously rejected three proposals to export coal in February 2015, Utah lobbyists visited the new terminal site in March 2015, just one month before securing a $53 million loan to help CCIG pay for the cost of constructing the facility. CCIG Vice President Mark McClure was present at a presentation before the Community Fund Investment Board (CIB), an obscure Utah state agency which granted the loan.
Opposition to coal creates unprecedented unity“When people started reading these articles from Utah, and hearing the quotes from Utah’s (CIB), and Mark McClure there talking about it, and the transcripts of those stories,” environmental activists were outraged, Beveridge said.
The first time the word “coal” appeared on a public document, “We got together and started talking about what we might do to stop it,” said Michelle Myers, president of the Sierra Club’s San Francisco Bay Chapter. Initial efforts included door-to-door canvassing in West Oakland, because, “it was important for us to start this campaign in communities that would be most impacted.”
From there, the efforts mushroomed. There were meetings at churches; flyers were circulated via a West Oakland food truck; and organizations, such as Bay Localize and the Rose Foundation, joined the campaign.
“We’re committed to a different future for Oakland which is all about clean energy,” said Bay Localize’s Colin Miller. “We don’t have to choose between good jobs and good health. We can actually have both.” Miller is one of the organizers for the Summer Climate Justice Leadership Academy, which helps train local youth “who have committed to a livable future for themselves and their families.”
One of those youth, 17 year-old Paulina Garcia, attended the City Council hearing and was prepared to speak against coal, “because I want to see better change in my community and find solutions for the younger generation to have a cleaner, better Oakland.”
Alvina Wong, APEN’s Oakland Community Organizer, said her organization has been involved in the No on Coal campaign for about a year. Many APEN members live in West Oakland and Chinatown, or along International Blvd where the density of air pollution is an ongoing concern. Wong has helped to mobilize hundreds of people—from monolingual Chinese to Pacific Islanders—and says that her constituents, who span the demographic gamut across age, gender, and race, have “so much energy and emotion on stopping coal!”
In addition to backing from a diverse range of environmental groups, key support also came from organized labor: the SEIU and the California Nurses Association—which provide care for people impacted by coal dust—also jumped aboard, as did the longshore workers of ILWU and the Alameda Labor Council. These were important allies, because their involvement directly countered the argument that coal was necessary to create jobs. Numerous petition campaigns demanding that Oakland ban coal circulated on social media, ultimately garnering over 10,000 signatures. A large rally before Oakland City Hall in July 2015 raised public awareness and initiated a flurry of media attention—creating a negative public perception of Tagami, who had gone to great lengths to keep his coal plans under the radar.
All’s fair in coal wars: “money laundering” to bolster coal?But the coal lobby won’t go down without a fight and an entrenched legal battle may lie ahead. In November 2015, CCIG filed a brief to dismiss the suit on the basis that the statute of limitations to contest a CEQA review expired in 2012, even though coal was not specifically mentioned in the original project proposal.
Meanwhile, the Sierra Club and the Center for Biological Diversity teamed up to petition the Utah courts to block the use of public funds intended for Utah communities in California. This action was followed by an op-ed in the Salt Lake Tribune which called the use of CIB funds for the crude-by-rail scheme “disturbing” and noted that the loan application wasn’t received until four weeks after the loan had already been approved. It went on to note conflict-of-interest concerns and the riskiness of using public funds for such a venture, echoing a Tribune editorial which also noted the lack of transparency and apparent attempt to hide the coal scheme from the public (“coal” was never mentioned during the CIB’s public hearing in April 2015). Furthermore, it noted, “There was no mention of the fact that the city of Oakland has a policy that opposes the shipment of fossil fuels through its ports, and lawsuits could ensue. There is no guarantee the port will be completed, and it's unclear how the loan would be collateralized.” At press time, the Utah Attorney General had not yet made public his review of the CIB loan’s legality.
Despite the recent victories for the environmentalists, the battle is far from over. On March 1, 2016, Utah State Senator Stuart Adams introduced a bill, SB246, which would reroute the $50-plus million loan through the Governor’s Office of Economic Development, essentially sidestepping the legal issue of using CIB funds for a purpose they may not have been intended for. Earthjustice lawyer Ted Zinkowski likened the new bill to a money-laundering scheme, noting, “All the questions we raised about this use of CIB money would remain.” But Utah officials seem willing to overlook those questions in the hopes that the loan will help stimulate rural counties which are highly dependent on coal mining.
Oakland activists ready to “Occupy” coal routeBig money, shady dealings, controversial politics, and a unified coalition of local grassroots activists and nationally-known environmental organizations: this story has all the trappings of the kind of movie Hollywood used to make in the post-Vietnam War era, when it still had a moral center. But this is no mere fictional account because real human lives and the survival of a disadvantaged community lie in the balance.
Should the City of Oakland put the kibosh on the coal proposal, it’s hard to imagine that the TLS, CCIG and Utah coal lobby would just skulk away without exhausting every possible legal avenue at their disposal. It’s possible that the coal proposal could be decided on in Oakland before Hancock’s flurry of bills wend their way through the legislative process, but it’s just as likely that any decision by the Oakland Council could be further delayed until state lawmakers vote on the proposed restrictions.
But even if the environmental argument ultimately loses in court, grassroots organizers are prepared to take actions to block the trains. As Al Weinrub of the Oakland Clean Energy Alliance said, “This has been so well-organized, it’s not going to go away. If they lose the fight here, they’ll take it to the streets. … People will lay down on the tracks. It’s gonna be another Occupy.”
Article text is available under a Creative Commons license from Race Poverty & the Environment (RP&E),
ERIC K. ARNOLDEric K. Arnold spent 20 years as a music journalist and documentarian before expanding his repertoire to include community-based reportage on topical issues, from energy to environment to police accountability. He was a New America Media Energy Reporting Fellow in 2013. Currently the Communications Director for Oakland-based urban forestry organization Urban Releaf, Eric also handles media outreach for muralist collective Community Rejuvenation Project. Additionally, his photography can be seen regularly on the Oakulture blog, of which he is the founder.
Why Oakland should divest from coal
In April 2014, the Utah Permanent Community Fund Board, a special state agency that makes grants to rural Utah counties for sewers, fire stations and other municipal improvements, quietly approved an unusual $ 53 million low- interest loan to Sever, Carbon, Emery and Sanpete counties. In a presentation to the board, Jeffrey Holt and several commissioners representing the four counties said the funds would contribute to a $ 200 million maritime terminal in Oakland that would export many different commodities. Appearing with Holt and county officials was Mark McClure, vice- president of California Capital Investment Group.
Utah SB246 would authorize $ 53 million in public funds for investment in an expansion of Port of Oakland and is intended to allow Utah to have an export portal to its sizable coal market to buyers on the Pacific Rim. Environmental groups in both Utah and California have launched an aggressive campaign in opposition to the proposed Oakland Coal Terminal and the Utah legislative manipulation of the $ 53 million dollar through SB246.
Additionally, in California, the call for divestment of funds from coal have come from the California Public Employees’ Retirement System and the state’s teachers retirement fund, and Insurance Commissioner Dave Jones has asked all insurance companies in California to voluntarily divest their funds in coal. Now, it’s time for California Attorney General Kamala Harris to contact Utah Attorney General Sean Reyes to advise Utah Gov. Gary Herbert not to sign SB246.
San Francisco Chronicle Late Edition21 Mar 2016 Page 11
By BRIAN MAFFLY | The Salt Lake Tribune
First Published Mar 18 2016 07:06AM
The Utah Legislature last week approved a $53 million investment in an Oakland, Calif., export terminal, but the state's coal-shipping aspirations may still be just a dream.
So far, Utah is the only entity that may pledge money toward building a $275 million bulk-freight terminal at the deep-water port under construction at the site of the former Oakland Army Base.
But Utah wouldn't pay up until $200 million in private financing is secured — and the identity of those investors and the status of their contributions is unknown.
Another hurdle: Utah's money wouldn't be released until the four rural Utah counties borrowing it for the investment have a plan to pay it back if the terminal can't move coal profitably. No plan has been offered.
Then there's opposition to overcome in California — the hoped-for source of more taxpayer money and construction permits.
Sen. Loni Hancock, D-Berkeley, is asking her state's transportation officials to withhold further public funding from the larger, $1.2 billion project of converting the military base into a port until questions about the coal-exporting terminal are resolved.
The California Transportation Commission has pledged $176 million to the broader port project so far, but Hancock suspects a coal terminal may violate the intent of the California ballot initiative that set aside billions with the aim of reducing pollution.
Hancock said she supports the terminal, but only if it does not move fossil fuels. She's introduced four bills that would restrict the transport of coal through California. Oakland city officials and others also oppose the coal shipping plan.
'House of cards'? • The coal-producing Utah counties of Carbon, Sevier, Sanpete and Emery initially secured a loan from Utah's Permanent Community Impact Fund to invest $50 million in the proposed terminal, in exchange for 49 percent of its 9.5-million-metric-ton loading capacity.
However, the Utah Attorney General's Office apparently declined to sign off on the loan, necessitating last week's passage of SB246 as a legal workaround.
Normally, money from the fund — derived from federal mineral royalties — is spent on civic projects in the counties where mining and drilling occur. But in recent years, county commissioners who run the Community Impact Board (CIB) have become interested in funding grander projects that would deliver commodities to market.
SB246, which Gov. Gary Herbert is expected to sign, circumvented limits on how counties may spend revenues from the fund. It cycles community impact revenue — critics call it "laundering" — through the state Transportation Fund and back to the CIB in a new pool of money known as the "Throughput Infrastructure Fund," which also can be tapped to build transmission lines, pipelines and rail.
When the CIB first approved the loan in April 2015, it included an additional $3 million to cover administrative costs — such as paying consultants like Jeff Holt, a former Utah Transportation Commission chairman who brokered the deal between the counties and the CIB.
The CIB's approval was premised on Holt's claim that the $200 million in private financing needed to build the Oakland Bulk and Oversized Terminal would be secured by June 2015.
"This benchmark has been missed. That means the only player in this transaction with an open checkbook and a deep pocket is the state of Utah," said critic Tom Sanzillo, director of finance for the Institute of Energy Economics and Financial Analysis.
"It's a house of cards built on public funding from various places," said Hancock, the California lawmaker. "This is a giveaway of public money for purposes for which it was not intended. ... Utah's money would go to a coal facility which would require more investment and local permits that it might not get. This is not a done deal in California. I think litigation is inevitable."
'A lot of interest' • During debate on SB246, critics argued that global demand for coal is tanking and the state is risking flushing millions in a vain attempt to save a moribund extractive industry. Coal exports were down 22 percent in the first three quarters of 2015 compared with the same period in 2014, according to the U.S. Energy Information Agency.
Utah lawmakers remained undaunted.
"There are many investors that wish they were ahead of us in line. Others have invested in this project because they feel it has validity," said bill sponsor Sen. Stuart Adams, R-Layton, during Senate debate.
In an interview, Adams could not identify any of these investors. Nor could Carbon County Commissioner Jae Potter, a key proponent of Utah's participation, though he noted: "There is a lot of interest. Even if we don't put money in, it will get built."
Canada-based BMO Capital Markets, Holt's employer, is packaging the needed $200 million in private investment as unrated debt to be sold to pension funds, according to Potter. Bank officials could not be reached for comment.
The terminal plan also calls for a final $25 million investment of taxpayer funds from California.
Holt has previously served on the CIB, and was chairman of the Utah Transportation Commission before he stepped down three months ago when BMO relocated him to the East Coast.
The investment banker is also acting as an adviser to Sevier County on a proposed short-haul rail project that complements the export terminal. The 43-mile Central Utah Rail would tie the Sufco Mine to a coal load-out near Levan on the Union Pacific line, serving direct access to Bay Area ports.
Holt did not return an emailed request for comment.
'It's not a misuse' • Backers of SB246 say the port investment is vital for the future of central Utah, where coal mining and power generation account for 80 percent of employment.
"This helps us shore up our community," Potter told lawmakers. "It gives the coal industry an opportunity to grow and adapt into the future. It's not a misuse of tax dollars."
The counties could use the port to move other commodities, such as soda ash, potash and salt, he added.
Once SB246 is enacted, the state will park the $53 million in an account. It won't be released until the counties have submitted plans for repaying it and the additional private funding is secured, said Nate McDonald, spokesman for the Department of Workforce Services, CIB's parent agency.
The counties would have 30 years to pay back the loan at 2 percent interest.
And SB246 would offer them a key loophole — the CIB may restructure or forgive all or part of a local entity's inability to repay loans due to "extenuating circumstances."
Sanzillo contends that provision was added to shift the risk.
"The local governments are saying, 'There is risk and we are unwilling to bear it,' so the politicians are saying, 'Let the CIB take the hit,' " said Sanzillo, who formerly served as a deputy comptroller for New York state.
"The changes recognize the risk and move it from something that looks like a loan to something that looks like a sham transaction," he said. "They call it a loan, but there is little requirement that it be paid back, and that's a misuse of state and federal resources."
Brian Maffly covers public lands for The Salt Lake Tribune. Maffly can be reached at email@example.com or 801-257-8713.
Spat over long-approved coal at terminal is overblown
By Mark McClure
March 13, 2016
The planning and development of the Oakland Bulk Export Terminal, a rail-to-ship transfer facility, has been an open and transparent process that the Oakland City Council approved as part of the Army Base Redevelopment process in 2012.