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Opponents of Oakland, Calif., coal exports weigh options after ban struck down

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Opponents of Oakland, Calif., coal exports weigh options after ban struck down

Opponents of a proposed coal export project in Oakland, Calif., are weighing their legal options after a judge struck down an ordinance that banned transporting the commodity through the city.

Passed by the Oakland City Council in 2016, the ban was challenged in a suit filed by the developers behind the proposed Oakland Bulk and Oversized Terminal, a multicommodity port planned for the site of the former Oakland Army Base. Local political leaders expressed concern over the project's potential environmental impact on the city.

The Oakland project is intended to provide access to the export market for Utah coal producers.

In a May 15 decision, U.S. District Judge Vince Chhabria sided with the port, saying "the record before the city council does not contain enough evidence to support the conclusion that the proposed coal operations would pose a substantial danger to people in Oakland."

Despite the setback, project opponents said there are still legal options for halting it or supporting a reinstatement of the Oakland city ban, though no firm decisions have been made.

Colin O'Brien, staff attorney for Earthjustice, the legal advocacy group that intervened in the case in support of the city, said appealing the decision is possible but not necessary to reinstate the ban. O'Brien cited a section of the decision that stated that the city's evidence in support of coal's health hazards was insufficient as an opening for further investigation into the issue.

In his ruling, Chhabria called the city's record on the matter "riddled with inaccuracies, major evidentiary gaps, erroneous assumptions, and faulty analyses, to the point that no reliable conclusion about health or safety dangers could be drawn from it" but said "perhaps a more thorough investigation could result in a lawful determination that coal operations may be restricted at the facility."

O'Brien told S&P Global Market Intelligence that the judge's caveat provided the city with an opportunity to gather more evidence to support a new ordinance banning coal or to appeal his decision.

"The judge did not rule that coal was not dangerous," he said.

The city's legal team told S&P Global Market Intelligence that the decision was "disappointing" and that it would need to consult with the City Council on how to proceed.

Oakland enacted the ban "pursuant to its police powers to regulate threats to health and safety," said Alex Katz, chief of staff for the Oakland city attorney's office. "The city takes its responsibility to protect the health and safety of residents very seriously, particularly children whose health will be directly impacted by storage, handling and shipping of coal and coke through our neighborhoods."

Matt Preston, research director for North American thermal coal markets for Wood Mackenzie, said an appeal of the decision is almost a certainty, but any action is expected to be strongly opposed by coal advocates and industry groups.

"Industry groups and states are beginning to push back on the idea that a locale can halt international trade," Preston said. "They are concerned that a dangerous precedent may be set if a given locality can single out and ostracize an otherwise lawful exporting activity."

The Oakland case is one of a handful of proposed coal export projects along the U.S. West Coast that have faced legal and regulatory challenges in recent years. Similar projects in Oregon and Washington have been slowed or halted entirely, limiting access to the Asian market for U.S. producers.

One of these projects, the proposed Millennium Bulk Terminals-Longview LLC coal facility in northern Washington, has resulted in a challenge in federal court after the state denied certain permits. The suit has gathered steam in recent weeks, with several states and the American Railroad Association filing briefs in support of the terminal developers.

If opponents of the Oakland port project fail to reverse the court's decision, the effort will still face a number of local challenges, including opposition to the facility on the state level and finding sufficient financing to complete it.