The mayor and City Council of Richmond, California, have voted to phase out and prohibit the storage and handling of coal and petroleum coke (petcoke) in the city.
The city said that it has been receiving increased complaints about dust from coal and petcoke, which are loaded aboard ships at a privately owned facility operated by Levin-Richmond Terminal Corp. (LRTC) and which has been located on the port's main shipping channel for the past 37 years.
The terminal said in 2018 it handled 999,062 tons of coal, 267,854 tons of petcoke and 155,575 tons of scrap metal. The coal is transported by Union Pacific Railroad (NYSE: UNP) from mines operated by Wolverine Fuels in Utah and shipped to Japan for power generation. The Richmond terminal is used to "top off" — that is, load additional coal into ships that are partially loaded with coal in Stockton, California.
The petcoke arrives by truck from a Phillips 66 refinery in nearby Rodeo, California. The petcoke is exported to manufacturers of products such as aluminum and titanium dioxide, according to Phillips 66.
The council's January 14 vote in favor of the ordinance on first reading was a victory for environmental groups such as the Sierra Club and the community group No Coal in Richmond.
Council members said handling of coal in the city was harmful to residents because of fugitive dust from both the terminal and the railroads that deliver it. Richmond Pacific Railroad Corp., a short line railroad affiliated with LRTC, connects the Union Pacific to the terminal.
The ordinance provides a three-year "amortization period" to LRTC that the city staff said "provides a sufficient amount of time for the owners of nonconforming uses to recover investments specific to coal and/or petroleum coke storage and handling and to transition their operations to other commodities."
In a letter to the port's planning commission last July, Gary M. Levin, the president and chief executive officer of the terminal, said the facility "cannot be converted to other uses, if at all, within any period approaching the three years contemplated."
That was disputed by groups seeking to end the shipment of coal and petcoke through the city and pointing to a recent study for the San Francisco Bay Conservation and Development Commission that forecast over the next 50 years growing volumes of other bulk commodities in the San Francisco Bay area such as sand and gravel, gypsum, bauxite and slag and scrap metal.
Levin said in his letter there were many other potential sources of particulate matter in addition to coal dust near the terminal. Christopher Locke, an attorney for LRTC, had asked that adoption of the ordinance be delayed until a study provided "scientific evidence that fugitive PM 2.5 coal or petcoke dust from LRTC present a health risk."
But a letter to Richmond Mayor Tom Butt from the firm McCrone Associates said an analysis of samples collected in the city had detected coal dust at six residences within a mile of the terminal and at a school.
Locke told the council the ordinance would "violate ‘taking' protections under the California Constitution and the United States Constitution, the Commerce Clause of the United States Constitution, the Due Process and Equal Protection Clauses of the United States and California Constitutions." He also contended it was preempted by federal laws such as the Interstate Commerce Commission Terminal Act, the Hazardous Materials Transportation Act and the Shipping Act of 1984.
Attorneys for the Sierra Club, however, said the ordinance was "an entirely lawful exercise of the police power that does not run afoul of constitutional or statutory requirements," and Christiana Tiedemann, the former chief counsel for the California Environmental Protection Agency, wrote to the council saying that a threat of litigation because the city was unlawfully terminating the existing coal storage and handling land use in Richmond "has no merit."
Phillips 66 had said if the proposed ordinance was adopted it would have to truck the petcoke it currently sends to Richmond to marine terminals such as those in Stockton or Pittsburg, California, which would result in greater traffic congestion and additional fuel consumption and emissions from trucks and ships.
The nearby city of Oakland also is trying to prevent coal exports from its shores. The proposed Oakland Bulk and Oversize Terminal, which would be built on land leased from the city, would be located close to the existing Port of Oakland, which primarily handles containers.
After an outcry by community members opposed to the terminal, the Oakland City Council passed an ordinance to prevent the handling of coal at the facility. However, in May 2018, a federal judge struck the Oakland coal ban down, saying it was based on information "riddled with inaccuracies, major evidentiary gaps, erroneous assumptions and faulty analysis."
That decision was appealed to the 9th Circuit Court of Appeals, where arguments were heard in November. That decision is pending.
Image Sourced from Pixabay
See more from Benzinga
- Cass Freight Index Dips To 2019 Low In December
- Predicting The 2020 Housing Market
- Real Estate Roundup: Apparel Merchants Search For Best Logistics Formula
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.