(Bloomberg) -- A federal judge struck down a local ban prohibiting companies from transporting coal though an Oakland, California, export terminal that U.S. miners see as a key link to overseas markets.
The ban enacted by the city in 2014 violates a development agreement, U.S. District Judge Vince Chhabria said Tuesday in a 37-page ruling.
As demand for coal in the U.S. declines, miners depend increasingly on overseas markets. Yet Wyoming and Montana’s Powder River Basin, home to the nation’s largest reserves, is largely cut off from the world market without West Coast ports.
Oakland is among several terminals in California and the Pacific Northwest that environmentalists have pushed to close to miners in an effort to keep U.S. coal off the international market. Reversing the ban could increase exports by as much as 19 percent, according to the Sierra Club.
The National Mining Association cheered the ruling. “It is gratifying to see a case where the judge ruled on the facts,” Ashley Burke, a spokeswoman for the group, said in an email. “Local governments, working with activist environmental groups, cannot be allowed to obstruct and steer interstate and foreign commerce decisions on behalf of the country.”
The legal dispute hinged on whether the coal ban violated an agreement between the city and a company developing a bulk loading terminal near the city’s port. The developer, Oakland Bulk & Oversized Terminal LLC, argued the city had no substantial evidence that shipping coal through the terminal would endanger the health of workers or surrounding communities.
“On the primary question presented by this lawsuit, Oakland is wrong,” Chhabria wrote.
The ruling is an “unfortunate setback,” according to The Sierra Club.
“This decision is just one step in what we expect to be a long legal process,” Luis Amezcua, of the Sierra Club’s San Francisco Bay Chapter, said in a statement.
Even without the ban at the Oakland terminal, miners may still face obstacles trying to ship coal through the West Coast, according to Jeremy Sussman, an analyst at Clarksons Platou Securities.
“Most realists have come to the conclusion that West Coast states such as California, Washington and Oregon simply aren’t going to allow a lot of coal exports, now or in the future,” he said in an email.
The case is Oakland Bulk & Oversized Terminal LLC v. City of Oakland, 3:16-cv-07014, U.S. District Court, Northern District of California (San Francisco)
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