Levin Richmond Terminal Corp. v. City of Richmond, Case Nos. 20-cv-01609-YGR

Decision Date27 August 2020
Docket Number20-cv-01643-YGR,20-cv-01614-YGR,Case Nos. 20-cv-01609-YGR
Citation482 F.Supp.3d 944
CourtU.S. District Court — Northern District of California
Parties LEVIN RICHMOND TERMINAL CORPORATION, et al., Plaintiffs, v. CITY OF RICHMOND, et al., Defendants, Wolverine Fuels Sales, LLC, Plaintiff, v. City of Richmond, et al., Defendants, Phillips 66 Company, Plaintiff, v. City of Richmond, et al., Defendants.

Ronald Edward VanBuskirk, Margaret Nell Rosegay, Stacey C. Wright, Pillsbury Winthrop Shaw Pittman LLP, San Francisco, CA, for Plaintiffs.

Robert Steven Perlmutter, Edward Terry Schexnayder, Shute Mihaly & Weinberger LLP, Ellison Folk, Attorney at Law, Rachel Hannah Sommovilla, Bingham McCutchen LLP, San Francisco, CA, for Defendants.


Yvonne Gonzalez Rogers, United States District Court Judge

Plaintiffs Levin Richmond Terminal Corporation, Richmond Pacific Railroad Corporation, and Levin Enterprises, Inc. (collectively, "Levin"); Wolverine Fuels Sales, LLC ("Wolverine"); and Phillips 66 Company ("Phillips 66") bring these related actions seeking to invalidate and enjoin an ordinance adopted by defendants City of Richmond and City Council of the City of Richmond, entitled "Prohibition on the Storage and Handling of Coal and Petroleum Coke" (the "Ordinance"). Now before the Court are defendantsmotions to dismiss, as well as motions to intervene and separate motions to dismiss brought by proposed intervenors Sierra Club and San Francisco Baykeeper. The motions came on for hearing on August 18, 2020. Having carefully considered the papers submitted, the arguments of the parties at the hearing, the admissible evidence, and the pleadings in this action, and for the reasons set forth below, the Court hereby (1) DENIES the motions to dismiss, except with respect to the Hazardous Materials Transportation Act claim, which is DISMISSED WITH PREJUDICE ; and (2) GRANTS the motions to intervene, subject to the conditions set forth herein.1


The complaints allege as follows:2

Richmond, California is a city located along the San Francisco Bay. Since 1981, Levin has operated the Levin-Richmond Terminal, a port and marine terminal located in Richmond, where a range of commodities are received, stored, handled, and transferred for shipment overseas. For the past six years, petroleum coke ("petcoke") and coal have accounted for more than 80 percent of the terminal's transloading business. The terminal currently is the only coal and petcoke bulk handling facility and transfer point for marine shipment in the Bay Area.

Phillips 66 operates a nearby oil refinery, where it produces petcoke. Phillips 66 transports its petcoke to Levin-Richmond Terminal by way of covered trucks. At the terminal, petcoke is transferred from the trucks to ocean-going freighters for shipment to customers in Australia, Asia, Europe, and other locations. Similarly, Wolverine mines and sources thermal coal, which it transports from its Utah headquarters to the Levin-Richmond Terminal, via the Union Pacific Railroad, for transshipment by merchant vessel to customers in Japan. Some temporary indoor storage and handling is incidental to product transfer from trucks and rails to marine vessels.

In 2015, the Richmond City Council adopted a resolution banning the storage and export of coal and petcoke on city-owned property. The resolution included a non-binding statement that the Richmond City Council opposed the transportation of coal and petcoke along California waterways, through densely populated areas, and through the city on existing rail lines and roadways. Five years later, after receiving complaints from residents and conducting numerous public hearings, and notwithstanding the Richmond Planning Commission voting unanimously against it, the City adopted the Ordinance, which extended the prohibition on coal and petcoke storage and handling to all property in Richmond. The "whereas" clauses in the Ordinance noted, among other things, that the dust from coal and petcoke storage and handling was associated with negative health and safety impacts on disadvantaged communities in Richmond that were disproportionately burdened by and vulnerable to multiple sources of pollution. Thus, the stated purpose of the Ordinance was to "protect and promote the health, safety and welfare of the City's citizens, visitors, and workers by reducing the release of pollutants into the environment" and "reduce the public health, safety, or welfare impacts" caused by the storage of handling of coal and petcoke. The Ordinance also provided a three-year amortization period "intended to strike a proper balance between protecting the public from the health hazards of coal and petroleum coke storage and handling, while also protecting existing jobs and providing sufficient time for businesses to transition." The Ordinance required the City to extend the amortization period if an applicant demonstrated that three years was insufficient to prevent a taking of its property.

Plaintiffs claim that the Ordinance violates their constitutional rights and is preempted by federal law. Specifically, Phillips 66's complaint alleges that the Ordinance (i) places an undue burden on interstate and foreign commerce in violation of the Commerce Clause ( U.S. Const. art. I, § 8, cl. 3 ); and (ii) infringes on its contracts with Levin and others in violation of the Contracts Clause ( U.S. Const. art. 1, § 10, cl. 1 ). Wolverine's complaint alleges Commerce Clause and Contracts Clause claims, as well as (i) preemption under the Interstate Commerce Commission Termination Act ("ICCTA"), 49 U.S.C. § 10101, et seq. ; (ii) preemption under the Hazardous Materials Transportation Act ("HMTA"), 49 U.S.C. § 5101, et seq. ; (iii) preemption under the Shipping Act of 1984 (the "Shipping Act"), 46 U.S.C. § 40101, et seq. ; and (iv) violation of the Due Process Clause ( U.S. Const. amend. XIV, § 1 ). Levin's complaint alleges claims under the Commerce Clause, Contracts Clause, ICCTA, Shipping Act, and Due Process Clause,3 as well as (i) violation of the Takings Clause ( U.S. Const. Amend. V ; Cal. Const. art. I, § 19 ); and (ii) violation of the Equal Protection Clause ( U.S. Const. amend. XIV, § 1 ; Cal. Const. art. I, § 7, subd. (a)).


Defendants seek dismissal of all causes of action brought by all plaintiffs in this action. A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims alleged in the complaint. Ileto v. Glock, Inc. , 349 F.3d 1191, 1199-1200 (9th Cir. 2003). To survive a motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1990). All allegations of material fact are taken as true and construed in the light most favorable to the plaintiff. Johnson v. Lucent Techs., Inc., 653 F.3d 1000, 1010 (9th Cir. 2011). However, the Court "need not accept conclusory allegations of law or unwarranted inferences." Perfect 10, Inc. v. Visa Int'l Serv. Ass'n , 494 F.3d 788, 794 (9th Cir. 2007).

The Court addresses each cause of action in turn.

A. Commerce Clause (All Plaintiffs)

Plaintiffs’ complaints allege that the Ordinance places a significant burden on interstate and foreign commerce by effectively prohibiting marine shipments of coal and petcoke through the Levin-Richmond Terminal, which is critical for transshipment to national and overseas markets. Plaintiffs claim violations of the dormant Commerce Clause and the foreign Commerce Clause.

1. Dormant Commerce Clause

The Commerce Clause provides that "Congress shall have Power ... [t]o regulate Commerce with foreign Nations, and among the several States." U.S. Const. art. I, § 8, cl. 3. The so-called dormant Commerce Clause—the implied, negative aspect of the Commerce Clause—prohibits states and local governments from enacting laws "unjustifiably to discriminate against or burden the interstate flow of articles of commerce." Or. Waste Sys., Inc. v. Dep't of Envtl. Quality , 511 U.S. 93, 98, 114 S.Ct. 1345, 128 L.Ed.2d 13 (1994) (citing Wyoming v. Oklahoma , 502 U.S. 437, 454, 112 S.Ct. 789, 117 L.Ed.2d 1 (1992) ). "The ‘central rationale’ of the dormant Commerce Clause ‘is to prohibit state or municipal laws whose object is local economic protectionism.’ " S.D. Myers, Inc. v. City & Cty. of San Francisco , 253 F.3d 461, 466 (9th Cir. 2001) (quoting C & A Carbone, Inc. v. Town of Clarkstown , 511 U.S. 383, 390, 114 S.Ct. 1677, 128 L.Ed.2d 399 (1994) ). In considering a dormant Commerce Clause claim, the court first must determine whether the challenged action "directly regulates or discriminates against interstate commerce, or its effect is to favor in-state economic interests over out-of-state interests." Chinatown Neighborhood Ass'n v. Harris , 794 F.3d 1136, 1145 (9th Cir. 2015) (alteration and citation omitted). If the challenged action is nondiscriminatory—that is, it regulates in-state and out-of-state economic interests evenhandedly—it still violates the Commerce Clause if "the burdens of the statute so outweigh the putative benefits as to make the statute unreasonable or irrational." Id. (citation omitted).

Plaintiffs assert two theories for recovery thereunder. First, Levin and Wolverine allege a per se violation under the extraterritoriality doctrine, namely that the Ordinance discriminates against interstate and foreign commerce by regulating transactions beyond the City's borders. All plain...

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