West Coast Mayors' Coal-Port Fight Threatens Inland Economies

  • Resolutions target rail shipments from Wyoming and Utah
  • Governors say push could cut them off from Asian markets

West Coast mayors’ efforts to block fossil-fuel shipping terminals in the name of environmentalism threaten jobs and budgets in far-away coal-producing states such as Utah and Wyoming.

The City Council in Oakland, California, wants to prevent coal from being ferried through a planned $250 million terminal that Utah may subsidize. Portland, Oregon, is drafting rules to bar new fossil-fuel infrastructure. Cities in that state and Washington have passed resolutions opposing mineral shipments, arguing that carcinogenic coal dust will harm residents and that burning the fuel overseas will contribute to climate change.

The coordinated effort is a new tactic in the battle over global warming and comes on the heels of the Paris accord that committed the U.S. and other nations to lower emissions from carbon-based fuels. It pits liberal urban enclaves against resource-dependent Republican-leaning states ready to finance shipping terminals hundreds of miles away to sustain ailing industries and workers at home.

“The net effect of these actions is something of a green wall along the West Coast,” said Portland Mayor Charlie Hales. “It’s not just symbolic. It’s a deliberate turn toward public policy that strands much of the fossil fuel already discovered in the ground by not facilitating its movement to market.”

The U.S. exports about 125 million tons of coal annually, and West Coast coal-shipping terminals are at capacity. Blocking construction of terminals that would allow overseas expansion could further diminish the industry in states that depend upon it, said Dale Hazelton, an Annapolis, Maryland-based senior research manager with Wood Mackenzie, which provides intelligence for the energy, metals and mining industries.

“Coal-burning in the U.S. is going to go down, and the export market is going to be the only place to go with it,” Hazelton said. “Coal’s heyday is in the past in the U.S. In other countries it’s just building up.”

Helping Hand

Wyoming, which produces 40 percent of all coal dug in the U.S., faces a $638 million decline in revenue over the next three years, thanks in part to falling use of the fuel. Coal accounts for 14 percent of Wyoming’s gross state product and 6 percent of its jobs.

To lessen the impact of declining domestic demand, the state wants to help companies within its borders that operate the largest U.S. coal mines, such as Peabody Energy Corp., Cloud Peak Energy Inc. and Arch Coal Inc. In March, the legislature authorized issuing up to $1 billion of bonds through the Wyoming Infrastructure Authority to finance construction of coal terminals in the Pacific Northwest.

Republican Governor Matt Mead said these facilities are critical to a state that relies on commodities for 70 percent of its revenue. Not only are the West Coast cities threatening his state’s economy, but they are meddling with interstate commerce, he said.

“If I on my own, or a community in Wyoming decides they don’t want Washington apples, or don’t want Boeing aircraft flying in our airspace, the consequences of that lead to a corruption of interstate commerce,” Mead said in an interview. “I am concerned about that on the legal front.”

Millennium Bulk Terminals-Longview LLC, which wants to build a terminal for Wyoming coal in Washington, says regional trade would be revitalized by transforming a former Reynolds Aluminum smelter to a port handling up to 44 million metric tons a year. Railroads and the company have promised that cars bound for the site on the Columbia River about 130 miles (210 kilometers) south of Seattle, would receive a dust-suppression topping, Millennium’s president, Bill Chapman, said in an e-mail.

The project is still in the permitting process and the sale of the Wyoming debt will depend upon whether the company needs the financing if the terminal is approved.

“This is putting investors on notice that this is going to be difficult,” said Hazelton, the analyst from Wood Mackenzie. “These cities have learned from environmentalists that if you delay these projects it’s almost as good as getting them canceled. You draw the costs up so much and get so much push-back, you stop these things from happening.”

Oakland Resists

In Utah, four coal-dependent counties in April offered $53 million to Oakland, California-based Terminal Logistics Solutions in exchange for shipping rights at its planned deep-water terminal, which will handle 9 million metric tons annually. The loan is still under review by Utah officials.

“This year, the oldest coal-fired power plant in the area shut down and we lost a major coal mine and 300 jobs,” said Jae Potter, a Carbon County commissioner. “This bulk terminal is an opportunity to mitigate the impact and help us plan into the future.”

The facility is part of a 15-year effort to revitalize the waterfront through redevelopment of a former Army base. The Utah counties’ investment prompted the Oakland City Council to consider modifying its development agreement to ban coal from the facility.

“We will have the opportunity to do something that will protect the public’s health and safety,” said City Councilman Dan Kalb. “It’s risky to hang your hat on coal. It’s a dying industry.”

Environmental groups say Utah shouldn’t be allowed to use the $53 million for the terminal because the money came from federal mineral royalties handed back to the state to relieve the impacts of mining.

“This investment makes worse the very harms it’s supposed to alleviate,” said Aaron Paul, a Denver-based staff attorney for the Grand Canyon Trust.

Before it's here, it's on the Bloomberg Terminal.