Saturday

07-05-2025 Vol 2012

Oakland Loses Legal Battle Over Coal Export Terminal Plans

Oakland’s ongoing legal struggles surrounding the proposed coal export terminal have taken a significant turn, as an appellate court recently upheld a ruling favoring the developers.

This development continues a troubling losing streak for the city amidst the high-stakes legal battle over coal shipping plans.

A recent decision from a three-judge panel of the state’s First Appellate District Court determined that an Alameda County judge did not err in her 2023 ruling that found Oakland had breached its contract with the developers.

The developers, led by Phil Tagami through the company Oakland Bulk and Oversized Terminal (OBOT), now have the option of extending their lease on city-owned waterfront land to revitalize the coal terminal project or abandoning the lease and seeking financial compensation from the city.

After Oakland appealed the ruling in January 2024, the city contended that Judge Noël Wise had misinterpreted provisions of the law related to unforeseen events, known as “force majeure,” among other criticisms.

However, the appellate court rejected these arguments, stating they lacked merit.

Phil Tagami expressed his eagerness to move forward, noting in an email that, “With the legal issues adjudicated we look to move the project forward with the city.”

The City Attorney’s Office did not respond to inquiries regarding Oakland’s plans following this latest ruling. Speculation remains about how the city might proceed in its ongoing legal challenges.

In a parallel case, another company involved in the coal terminal project has filed a lawsuit against Oakland in federal bankruptcy court in Kentucky, alleging breach of sublease regarding the terminal construction.

This case is still pending and adds another layer of complexity to Oakland’s situation.

Interestingly, executives from a Southern California hedge fund, which owns Insight Terminal Solutions, have made sizable campaign contributions to an independent committee supporting former judge Brenda Harbin-Forte in her recent bid for city attorney.

Harbin-Forte’s opponent, Ryan Richardson, notably distanced himself from coal industry contributions and assured voters he would abide by directives from the city council regarding coal-related lawsuits.

Despite the challenging legal environment, city officials remain steadfast in their commitment to blocking coal shipments through Oakland.

The most recent report from the City Attorney’s Office indicates that Oakland has invested $5.55 million in legal efforts concerning this matter during the fiscal year 2023-2024.

The controversy surrounding coal began in 2015 when residents learned of Tagami’s negotiations to ship coal from Utah via the terminal site near the Bay Bridge.

This revelation sparked outrage among Oakland residents, including then-Mayor Libby Schaaf.

According to court records, she warned Tagami to cease any plans to use the terminal for coal shipments, even reaching out to New York City Mayor Michael Bloomberg for support against the project.

In response to growing concerns, the Oakland City Council passed an ordinance in 2016 that banned coal handling and storage within city limits.

The developers, however, retaliated by suing the city in federal court and secured a ruling in 2018 that allowed them to proceed with the terminal despite the city’s ban.

While awaiting the outcome of the federal lawsuit, Oakland terminated Tagami’s lease, arguing he failed to meet key construction deadlines stated in their agreement.

This led Tagami’s company to sue the city for causing delays, prompting a counter-suit from Oakland in 2020.

A proposed settlement in 2022 aimed to permit the construction of a marine terminal that would, crucially, not handle coal.

However, negotiations fell through when Tagami accused city officials of interfering with a necessary labor agreement.

The legal saga culminated in an intense eight-week trial in late 2023, where Tagami and OBOT accused the city of actively blocking their terminal plans, leading to significant financial losses.

In response, Oakland’s attorneys asserted that the developers bore responsibility for their delayed construction, primarily due to their intent to finance the project through coal exports.

Judge Wise’s ruling pointed out that Oakland had legitimate options available, such as appealing the 2018 federal ruling or negotiating revised terms with the developers, yet chose a path that legally undermined their contracts.

In her October 2023 ruling, Wise stated, “What the city could not do was undermine or improperly terminate the contracts it had with OBOT — that was not a legal option.”

The ongoing legal disputes appear to be heading towards a resolution as city leaders continue to weigh the implications of the appellate court’s decision.

image source from:oaklandside

Charlotte Hayes