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Plans falter for West Coast coal terminals

12/13/2016

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Plans falter for West Coast coal terminals
​
Coal companies look to Asia, but face port challenges.

Sarah Tory Dec. 12, 2016
Rev. Ken Chambers has lived in West Oakland for all of his 50 years and grappled with air pollution the entire time. The neighborhood, on the eastern shore of San Francisco Bay, is surrounded by three major highways, an active railroad, and the fifth-busiest port in the country. Chambers’ four children showed symptoms of asthma, he says, a common condition among their neighbors. And although air quality has improved since then — thanks to new laws regulating emissions — the neighborhood’s mostly black, low-income residents still suffer from asthma rates up to three times higher than other parts of Oakland.

Last April, Chambers and his neighbors caught wind of a plan to redevelop the old Oakland Army Base, located along the waterfront in West Oakland, including a major new terminal for shipping coal to Asia. Proponents said that it would bolster the neighborhood’s struggling economy, and that coal exports were a necessary component, because they would provide revenue to operate the terminal. Critics, however, including Chambers, argued that fugitive coal dust blowing from trains headed for the port would further deteriorate West Oakland’s air quality, and that burning the coal overseas would exacerbate climate change.

And then, in late July, opponents scored a major victory when the Oakland City Council voted to ban shipments of coal from the city, citing the “false choice” between jobs and the environment — and halting the multimillion-dollar coal export proposal in its tracks.
​
The decision, which came after more than a year of feisty debate, placed Oakland at the center of a growing battle over the fate of the coal industry. Domestic demand for coal has collapsed in recent years, displaced by cheap natural gas, along with wind and solar power. As U.S. coal companies look to overseas markets for salvation, plans for the necessary West Coast export terminals have been blocked by local communities and environmental groups worried about climate change and human health and safety. Taken together, says Sierra Club attorney Jessica Loarie, the long-term market forces and growing public opposition “do not bode well for the coal industry.”
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The former Oakland Army Base pier at the Port of Oakland in Oakland, California, where the plans for a bulk shipping terminal for coal and other commodities have stalled. ___________________________________ Eric Risberg/ The Associated Press
None of this bodes well, either, for places like Carbon County, Utah, which got its name from its vast seams of coal. This rugged landscape southeast of Salt Lake City was already heavily mined by the late 1880s. It entered Old West history in 1897, when legendary bank robber Butch Cassidy and his partner, William Ellsworth “Elzy” Lay, stole the Pleasant Valley Coal Company’s $8,000 payroll. Later, nearly 400 miners died in two underground explosions, in 1900 and 1924.

Despite that early tumult, Carbon County grew to depend on coal. For most of the last century, coal supplied the vast majority of Utah’s energy needs and attracted the attention of other states as well. In the early 1980s, a Southern California electrical utility cooperative helped persuade the state to build a massive power plant, the Intermountain Power Project, in western Utah, promising to buy its coal-generated electricity.

But things changed as utilities increasingly switched to cheaper natural gas and renewables. In 2013, Los Angeles, which had a contract with IPP, voted to end its reliance on coal-fired electricity by 2025, in favor of natural gas. The decision stunned Carbon County, 75 to 80 percent of whose jobs depend on coal mining and power generation. Hundreds of locals have lost their jobs as coal-fired power plants have closed and mines have shuttered. “It put us into a tailspin,” says County Commissioner Jae Potter. “What do you do?”

That trend has rippled across the Interior West, from Colorado to Montana, amid plummeting U.S. demand for coal. After declaring bankruptcy, major firms like Arch Coal and Peabody Energy are downsizing — cutting jobs, closing unprofitable mines, and taking on less debt.

In the early days of coal’s decline, however, the industry still looked profitable to the private equity industry, which buys up troubled businesses, restructures them and sells them at a profit. Although the U.S. market was collapsing, Asia’s demand for coal appeared insatiable. Private equity firms, such as Salt Lake City-based Lighthouse Resources, bought mines in Montana and Wyoming and began pushing export projects in Washington and Oregon. And in 2013, Galena Asset Management invested over $104 million in Bowie Resources, a Kentucky-based coal company, to create Bowie Resource Partners. Backed by more than $800 million in private equity money, Bowie went on a spending spree, buying three Utah mines owned by Arch Coal. The company later bought three more mines — two in New Mexico and one in Colorado from Peabody Energy, another coal giant on the verge of bankruptcy. In a press release, Galena CEO Jeremy Weir heralded the Bowie partnership’s opportunity to “reshape the Western U.S. coal paradigm.”
​
In its financial documents, Bowie outlined plans to export its landlocked coal through West Coast ports. But it glossed over a major problem: The existing marine terminals in California and other West Coast states were too small to export the millions of tons of coal that its Utah mines could produce. A new larger terminal planned for West Oakland, however, could provide the opportunity Bowie needed.
When the marine terminal proposal for West Oakland first surfaced in 2013, coal was not mentioned. Instead, the developer said the terminal would ship bulk goods like iron ore, corn, wind turbines and auto parts. Chambers, like many of his neighbors, supported the project, which would help replace some of the 7,000 blue-collar jobs lost when Oakland Army Base closed in 1999.

Then, last April, a local Utah paper, the Richfield Reaper, broke a story that the developer had tried to keep under wraps: Four counties in Utah, where Bowie’s coal mines were located, intended to invest in the proposed Oakland terminal, with the intent of shipping their coal out of it.

The city’s vote against coal stalled the plan, and other blows soon followed, including new legislation banning state funding for bulk-coal terminals. In the signing letter, Gov. Jerry Brown highlighted California’s recent moves to replace coal with cleaner energy sources. “That’s a positive trend we need to build on,” he said, calling Oakland’s ban an important step that other localities — and the state — should follow.

By the end of August, things were looking even worse for the terminal: The four Utah counties where Bowie owns mines withdrew their application for the $53 million state loan to invest in the project, and Bowie canceled its IPO, citing poor market conditions.

In early November, construction began on the first phase of the Army base redevelopment, but whether or not the bulk terminal will still be part of the project remains uncertain. The developer, California Capital & Investment Group, and its terminal operator, Terminal Logistics Solutions, declined to be interviewed for this story.

One thing, however, is certain: The long-term economics of big export projects no longer appear as promising as they once did. Transporting coal by rail 1,500 miles from Utah to the West Coast is expensive, says Anna Zubets-Anderson, a senior analyst at Moody’s Investor Service. Add the cost of shipping it to Asia, and it’s tough for U.S. producers to compete with countries like India and Indonesia, which have much lower labor and transportation costs.

International coal prices have spiked recently, but Zubets-Anderson says the uptick is temporary, largely due to the Chinese government’s attempt to cut its own coal production and consumption. Heavy rain and flooding in other parts of Asia have also disrupted coal supplies. “When those issues are resolved, prices will go back down — likely by the middle of 2017.”
Elsewhere in the West, other export projects are facing a similar fate. Since 2007, the six coal terminal proposals slated for the Pacific Coast have dwindled to just one — the Millennium Bulk Terminal in Longview, Washington — after Lighthouse announced it was no longer supporting the Morrow Pacific Project in Oregon. In November, the project was terminated.
​
The proposed Millennium terminal in Washington is on similarly unsteady ground. After declaring bankruptcy last January, Arch Coal, a major investor in Millennium, sold its $57 million stake in the project, leaving Lighthouse as the sole backer. Meanwhile, hundreds of residents from across the Pacific Northwest testified against the project during the last round of public hearings in October, echoing the concerns expressed by other West Coast communities and Indigenous groups, such as Washington’s Cowlitz Tribe, who argue that coal export projects threaten cultural and economic resources like salmon, violating their treaty rights.

Other West Coast cities are also following Oakland’s lead. On Nov. 16, the Portland City Council voted 3-0 in favor of a resolution that would halt new fossil fuel infrastructure, such as export terminals, and expansions to existing facilities. A final vote is scheduled for Dec. 8.

For the industry, this combination of grassroots resistance and political opposition is creating financial risks — like a “one-two punch,” says Clark Williams-Derry, an energy expert at the Sightline Institute, an environmental think tank. And the uncertainty makes big projects harder and harder to justify.

Even President-elect Donald Trump’s campaign pledge to revive the ailing U.S. coal industry and put miners back to work is unlikely to turn things around. Increasing anti-coal activism and cheaper natural gas are discouraging utilities from investing in coal, says Zubets-Anderson — not just in the U.S., but around the world. “I don’t foresee the new administration being able to change that,” she says.

Though Chambers applauded Oakland’s decision to ban coal exports, he feels badly for places like Carbon County that hitched themselves to a single commodity. “They’re struggling, too,” he says. West Oakland can empathize. Like Carbon County, it needs jobs — but not, Chambers believes, at the expense of human health.

Correspondent Sarah Tory writes from Paonia, Colorado, covering Utah, environmental justice and water issues. 

http://www.hcn.org/issues/48.21/plans-falter-for-west-coast-coal-terminals​

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Coal Terminal Developer Suing City of Oakland, Seeking to Overturn Ban on Fossil Fuel Exports

12/8/2016

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Coal Terminal Developer Suing City of Oakland, Seeking to Overturn Ban on Fossil Fuel Exports

​By Darwin BondGraham
THURSDAY, DECEMBER 8, 2016
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Oakland real estate developer Phil Tagami filed a lawsuit against the City of Oakland yesterday in federal court arguing that Oakland officials broke their contract with his company, the Oakland Bulk Oversized Terminal (OBOT), when they passed a coal ban earlier this year.

Tagami wants a judge to overturn the city's ordinance and allow his business to ship potentially millions of tons of coal through the city each year to overseas markets.

Attorneys representing OBOT argue that Oakland's coal ban violates federal laws that regulate interstate trade and the regulation of maritime shipping and rail transportation.

The attorneys argue that the city is guilty of an "unconstitutional abuse of its power."

Oakland Mayor Libby Schaaf opposed coal shipments through Oakland and supported the city council's ban on the grounds that it would protect public health and safety. Schaaf's spokesperson Erica Derryck told the Express that the mayor's office cannot comment on pending litigation.

Environmental groups that support the city's ban say they plan to support the city in fighting the lawsuit.

"Over 75 percent of Oaklanders oppose shipping coal out of the Oakland Bulk and Oversized Terminal," said Jessica Yarnall Loarie, staff attorney for the Sierra Club Environmental Law Program. "We plan to stand shoulder to shoulder with the city to make sure that this terminal never ships coal."

"It is truly regrettable that the City has left us no alternative but to take this action," said Tagami about the lawsuit. "We applied for and the City approved and vested exactly what the market demands: a terminal capable of being fully responsive to market demands for global transport of legal commodities over its 66-year useful life. Restricting any commodity on political grounds puts a cloud of uncertainty over the entire project going forward."

A letter sent to Schaaf and Council President Gibson McElhaney yesterday by Tagami's attorney claims that Oakland officials have been meeting privately with Tagami for "many months" about the coal ban and the possibility of reaching some kind of deal short of a lawsuit.

OBOT signed a development agreement with the city in 2013 to redevelop land at the old Oakland Army Base on the city’s waterfront. When plans to build a coal export terminal were revealed for the first time in April 2015 Oakland residents pressured the city council to pass the ordinance banning coal handling and storage inside the city. The city council unanimously approved the coal ban on June 27 of this year.

Tagami, a politically connected businessman who is close friends with California Governor Jerry Brown, has warned the city council repeatedly that he would sue if a ban was implemented. He has called the city's ordinance a "political stunt."

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http://www.eastbayexpress.com/SevenDays/archives/2016/12/08/coal-terminal-developer-suing-city-of-oakland-seeking-to-overturn-ban-on-fossil-fuel-exports
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Governor’s friend sues to lift coal-shipping ban in Oakland

12/8/2016

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GOVERNOR’S FRIEND SUES TO LIFT COAL-SHIPPING BAN IN OAKLAND

By Bob Egelko
​
Updated 5:30 pm, Thursday, December 8, 2016
The would-be shipper of coal from the Port of Oakland, a company controlled by a longtime friend of Gov. Jerry Brown, has sued Oakland for outlawing coal handling and storage within its borders, saying the ban interferes with interstate commerce and with federal authority over the transportation of hazardous substances.

The City Council unanimously passed the ordinance in July with the support of environmental groups, who said coal trains emit hazardous dust particles, and burning coal releases carbon dioxide that worsens global warming. In August, Gov. Jerry Brown signed legislation by Sen. Loni Hancock, D-Berkeley, prohibiting the state Transportation Commission from funding future coal-handling ports, though it would not affect Oakland.

The suit was filed in federal court Wednesday by a company called Oakland Bulk and Oversized Terminal, which had signed a contract with the city in 2013 to build a $250 million shipping terminal as part of a 130-acre development at the site of the former Oakland Army Base. The coal would be shipped by rail from Utah and could amount to 10 million tons a year, more than three times as much coal as California ports now send overseas.

“Restricting any commodity on political grounds puts a cloud of uncertainty over the entire project,” said Phil Tagami, chief executive of California Capital and Investment Group, which controls the shipping company. “What will be the next commodity to which the council objects?”

Tagami has been a friend of Brown’s for 20 years and owns the seven-story building near Oakland City Hall where Brown and his wife, Anne Gust Brown, were married in 2005. As mayor of Oakland, Brown appointed Tagami to the Oakland Port Commission in 2000, and as governor he has named Tagami to the California Lottery Commission and the state medical board.

Brown has also been a leader in California’s efforts to combat global warming by reducing carbon pollution. In signing the ban on state funding of future coal ports, he praised Oakland’s action and said the state’s goal should be to “eliminate the shipment of coal” through its ports.

The lawsuit contends opponents’ fears of coal-dust pollution are exaggerated.

The ports of Long Beach, which exports coal, and Pittsburg, which ships the coal product petcoke, have kept emissions in check by using insulated coverings on their shipping terminals, lawyers for Tagami’s company said. They said pollution-control technology would keep emissions from the Oakland port “negligible.”

By prohibiting the local export of coal, one of the most commonly transported commodities in the United States, Oakland is imposing unconstitutional “burdens on interstate commerce,” the lawyers argued. They also said the ban violates exclusive federal authority over rail transportation and the designation of hazardous substances.

The Sierra Club, which backed the Oakland ordinance, denounced the lawsuit.

“Private developer Phil Tagami wants to overturn the will of the people so that he can make a profit on coal, which poses a health, safety and climate risk to Oakland,” said Jessica Yarnall Loarie, a lawyer for the environmental group. “We plan to stand shoulder-to-shoulder with the city to make sure that this terminal never ships coal.”

Oakland Mayor Libby Schaaf declined to comment on the lawsuit. But in a May 2015 letter to Tagami, quoted in the suit, Schaaf told the developer he should “respect the owner and public’s decree that we will not have coal shipped through our city.”

Bob Egelko is a San Francisco Chronicle staff writer. Email: begelko@sfchronicle.com Twitter: @egelko

http://www.sfgate.com/bayarea/article/Governor-s-friend-sues-to-lift-coal-shipping-10784276.php​


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Oakland Terminal Developers Sues Oakland for Blocking Coal Exports

12/8/2016

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161207.obot_compliant_press_response_statement.pdf
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    Gene Hazzard

    Don't Be Envious of Evil Men
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