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Federal judge strikes down ban on coal shipments in Oakland, Calif.

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Federal judge strikes down ban on coal shipments in Oakland, Calif.

A federal judge in California struck down Oakland's ban on coal shipments, saying that it is a "breach of the development agreement" in a case between the city council and a developer of a proposed export terminal.

The City of Oakland in 2013 approved the proposed Oakland Bulk and Oversized Terminal, or OBOT, as part of a redevelopment of a former Army base. The plan also includes a proposal to ship millions of tons of Utah-produced coal by rail to the port for export to Asia.

When the plan faced strong pushback from politicians and environmental groups, the city responded by adopting two measures including an ordinance that bans coal operations at "bulk material facilities" in Oakland and through a finding that coal operations at the terminal would pose a "substantial danger to the health and safety of people" in the city. There were also efforts to halt the project on the state level.

The multicommodity port developer responded by filing a lawsuit in December 2016, saying the city's ban on shipping coal from the terminal is an "unconstitutional abuse of its power."

"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," U.S. District Judge Vince Chhabria wrote in a May 15 ruling for the U.S. District Court Northern District of California. "In fact, the record is 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."

The decision "renders the coal ordinance a nullity, because the only reason the city adopted it was to restrict OBOT's operations, and OBOT is the only facility in Oakland to which it could conceivably apply," he added.

The proposed Oakland project is one of a handful of coal export projects that have faced legal and regulatory challenges in recent years. The resulting delays in completing these projects have limited the port capacity for U.S. coal producers hoping to reach the Asian market.