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

Utah’s dispute with a Bay Area city over coal exports was settled last month with a federal judge’s signature on a settlement stopping coal shipments through Richmond, California, until the end of 2026.

The deal allows Wolverine Fuels, Utah’s top coal producer, to continue using the Levin-Richmond terminal as its primary link to the Japanese utilities it serves for nearly four more years. Meanwhile, its opportunities for exporting Utah coal through West Coast ports appear to be narrowing.

In recent years, Wolverine has exported about 3 million tons per year via the port cities of Stockton and Richmond, but in 2020 the Richmond City Council banned the handling of coal and petroleum coke on that city’s waterfront, citing the impact of coal dust in the air the public health.

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

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

Under an agreement signed May 20 by U.S. District Judge Yvonne Gonzalez Rogers, the phase-out period was extended by almost 4 years to the end of 2026 to give Levin additional time to transition its operations from coal and petcoke to other bulk commodities.

“This payback period is intended to strike an appropriate balance between protecting the public from the health hazards of storing and handling coal and petroleum coke,” the settlement reads, “while protecting existing jobs and allowing companies ample time to transition.”

The deal also gives Wolverine more time to secure another location to offload coal from railroad cars to West Coast ships. It currently partially loads ships with a capacity of 66,000 tons at a river port in Stockton. From there, ships travel down the San Joaquin River to the Levin Terminal, where ships are dropped off at Richmond’s Deepwater Wharf.

Without working with a deep sea port, moving coal from Stockton alone may not be an economically viable option. According to the Port of Stockton Annual Report, an average of about 1.3 million tonnes passed through the port each year.

Before loading at the Richmond terminal, the coal is piled high in an enclosure consisting of three or four shipping containers stacked one on top of the other, where the pile is somewhat sheltered from the wind. Conveyor belts transport the coal onto the ships that depart for Japan almost once a week.

While Utah coal has reached international markets via Houston this year, transpacific exports are critical to the survival of Utah’s coal industry, according to Brian Somers, executive director of the Utah Mining Association. Mexico’s Pacific ports of Ensenada and Guymas are also possible, but both present logistical challenges.

“Stockton has plenty of room to store coal, but it doesn’t have that [water] depth to fill the vessels completely,” Somers said. “The challenge with Ensenada [on the Baja coast] Isn’t there a rail that goes to the port? We shipped a fair amount of coal out of Houston this year. This is because there is so much demand in Europe.”

But transporting coal to Houston by rail 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 is now worth 200 to 300 in the international market dollars per ton upwards.

“There’s good long-term prospects in the Pacific market, particularly in Japan, where the power plants are designed for low-sulphur, high-Btu coal like we have here,” Somers said. “A lot has changed in the last year and a half due to disruptions in the energy markets. Coal is currently sold at a premium around the world.”

Meanwhile, the domestic coal market is shrinking. The Intermountain Power Project in Delta, Utah’s largest coal-fired power plant, plans to convert from coal to natural gas and hydrogen in 2025, reducing demand for coal from Utah’s mines by about 3 million tons per year.

In response to this lost business, Wolverine would have to expand exports or slow down 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 Brian Settles, Wolverine’s general counsel, went unanswered. Levin-Richmond officials declined to comment.

In court filings, attorneys for Wolverine and the terminal argued that there were environmental benefits to shipping Utah coal through Richmond.

“If LRT [the Levin-Richmond Terminal] unavailable under the regulation, coal exports to Japan would have to be shipped from Utah via a more distant sea terminal, possibly in Mexico, with emissions increased by the much longer rail journey,” Wolverine’s attorneys wrote in a filing. “And if Wolverine cannot find a suitable alternative sea terminal, Japan would replace the high-BTU, low-sulfur Utah coal that Wolverine is shipping with lower quality coal in the international market.”

That sentiment is evident in a letter to Richmond Mayor Tom Butt from the US Department of Energy while under the control of former President Donald Trump.

“The coal exported from the United States is the cleanest coal in the world,” said the letter accompanying the court filing. “The ban on US coal exports will only result in a further increase in the consumption of low-grade coal outside the US and increase global emissions.”

The relative cleanliness of Utah coal is a red herring for environmentalists. Exporting only spreads the harm it can cause, they argue.

According to Ben Eichenberg, an attorney for San Francisco Baykeeper, the shipments are harming communities near the railroad facilities where the coal is unloaded and loaded.

This is a great victory for the people of Richmond. It started with a grassroots movement and some really brave city council members standing up for this issue and fighting for the health of their citizens,” Eichenberg said. “There were some big companies that were against it, a lot of money was fighting it. Many lawyers come in. The brave little town of Richmond, which doesn’t have a lot of money, stood up to these guys and came out victorious.”

As part of the hard-negotiated agreement, filed with the court in December, Wolverine and the terminal operators committed to additional dust control measures. They are to erect a canopy over the railroad equipment and wind fences to protect the piled coal from the elements while it awaits loading onto ships. Terminal operations are scheduled to cease when wind speeds reach 18 mph, half the previous shutdown threshold.

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

On the Utah side, Wolverine will continue to apply a binder called Crown PDC 8020 to its coal when loading it onto trains.

Editor’s Note • This story is available only to Salt Lake Tribune subscribers. Thank you for supporting local journalism. Deal resolves lawsuits over Bay Area coal exports, but future of Utah’s coal industry remains in doubt

Joel McCord

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