Court rules that Oakland cannot ban coal shipments

May 28, 2020

A court ruling to strike down Oakland, CA’s ban on transporting coal through the city was affirmed by the Ninth Circuit Court of Appeals as two of three judges on the panel upheld a lower court’s finding that the city breached its contract with a developer by attempting to block shipments of coal through a bulk terminal under construction at the former Oakland Army Base.

In July 2016, Oakland’s city council voted to prohibit the storing and handling of coal within city limits. The East Bay Times reported that the unanimous vote was directly aimed at developer Phil Tagami’s $250 million bulk terminal, located on the outer harbor near the Bay Bridge Toll Plaza. It would halt the transportation for coal, largely from Utah, to be shipped to overseas markets.

Tagami, CEO of Oakland Bulk and Oversized Terminal (OBOT), filed a federal suit in December 2016, claiming the council ordinance violated his 2013 agreement with the city to develop the land.

The case was brought before the Ninth Circuit after Oakland appealed the 2018 ruling by U.S. District Judge Vince Chhabria. Chhabria ruled that the city’s justification for the ban was “riddled with inaccuracies, major evidentiary gaps, erroneous assumptions, and faulty analyses.”

“The district court issued a thorough, thoughtful and comprehensive ruling invalidating the city’s action,” Tagami said in a statement. “We remained confident that the Ninth Circuit would uphold that ruling, which they now have.”

Circuit Judge Kenneth K. Lee issued the opinion along with Judge Carlos T. Bea and District Judge Lawrence L. Piersol, who cast a dissenting vote. Piersol said that “based on the entire record before the city, a reasonable mind might accept as adequate the city’s conclusion that coal handling and storage at the terminal would pose a substantially dangerous threat to the health and safety to community members.”

In a statement, Robert Feldman of Quinn Emanuel Urquhart & Sullivan, the lead attorney for OBOT, said: “Now, after all this time and continued rejection by the federal courts, I would hope there is a responsible city official with whom OBOT can sit down and resolve its differences.”

Separately, attorneys for OBOT have filed a suit against the city seeking damages.

Earlier this year, the Richmond City Council approved an ordinance that prohibits storing and handling coal and petroleum coke in that city. In March, three companies — the Levin-Richmond Terminal Corp., which manages the only coal-handling facility in Richmond, coal export firm Wolverine Fuels and Phillips 66, which manufactures petroleum coke and exports it through the Levin Terminal — sued the city in federal court, alleging the ban violates their constitutional rights.

Levin and Phillips 66 also sued Richmond in state court, in Contra Costa County. All those lawsuits are pending.

 

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