The Oakland coal wars may not be over.
Five months after City Attorney Barbara Parker announced that a deal was in the works to end the longstanding saga over a proposed coal terminal in West Oakland, the developers are now backing out of settlement negotiations.
The settlement agreement was designed to enforce Oakland’s coal ban while allowing for the development of the large terminal on the former Army Base to proceed. It now appears that the case will head to a trial, putting the project’s fate in the hands of the court.
Attorneys representing the Oakland Bulk & Oversized Terminal and developer Phil Tagami, whose company is behind the project, filed a court motion this month asking Alameda County Superior Court Judge Delbert C. Gee to reopen discovery in Tagami’s lawsuit against the city of Oakland.
The motion, if granted, allows the developer’s legal team to resume taking depositions of city employees and collecting documents and other evidence from the city to use at a trial scheduled for April 2023. In a game of finger pointing, Tagami’s attorneys and a consulting and lobbying firm representing the project’s tenant now say the city dragged its feet on finalizing a settlement agreement.
“The result of the litigation will likely be that the court will rule the developers have the right to build their terminal and federal courts already have ruled they may ship all commodities, including coal, if they so choose,” according to a press release from Greg McConnell of The McConnell Group, which represents the project’s tenant. “The developers gave Oakland what it asked for and the city declared victory only to blow the chance to settle by inaction and now Oakland again faces the risk of coal shipments at the West Gateway Terminal.”
Parker, in turn, said in a statement issued Thursday that the city remains committed to “continuing confidential negotiations to reach a successful resolution well before the April 2023 trial date.”
“The city remains committed to securing a comprehensive settlement that is in accord with the settlement framework that the parties agreed to in January—and hopeful that it has negotiating partners in OBOT,” Parker wrote.
Reached by The Oaklandside, Tagami referred questions to his attorneys but said the court motion speaks for itself. “You are entitled to your own opinion and your own beliefs but you are not entitled to your own facts,” Tagami said.
A long fight over coal in Oakland
The apparent stalemate is the latest twist in a political and legal battle that dates back to 2016, when the City Council approved a citywide ban on the transportation and handling of coal. Since 2013, Tagami’s OBOT has planned to construct a marine export terminal on city-owned land on the port’s Outer Harbor, near the Bay Bridge toll plaza.
The 2013 development agreement did not restrict what commodities could be shipped through the terminal, although some Oakland leaders said the developers verbally acknowledged that coal would not be part of the project. In 2015, it was reported that Tagami and others were planning to transport millions of tons of coal by rail from Utah to Oakland, storing it at the terminal before it would be loaded on ships bound for Asia.
Local environmental groups fiercely objected to the idea, worrying that coal dust would blow off trains and out of the terminal and into neighborhoods in West Oakland and Richmond with already dangerous levels of air pollution.
Multiple lawsuits followed the council’s 2016 ban. OBOT sued Oakland in federal court arguing the city breached its contract. U.S. District Court Judge Vince Chhabria ruled against the city in 2018, allowing the coal terminal to move ahead.
The same year as the court ruling, Oakland terminated Tagami’s lease and sought to take control of the land, claiming the developer had failed to meet construction milestones specified in the development agreement. In response, Tagami filed a lawsuit in state court blaming construction delays on the coal ban and arguing that the city wrongfully terminated the lease. Oakland filed a countersuit against Tagami in 2020 for breach of contract.
Those two lawsuits are what city officials had hoped to resolve with the recent round of settlement talks. In February, Parker announced the two sides had agreed to key terms of a settlement framework. Those terms included ensuring that no coal would be transported, stored, or unloaded at the terminal, resolving two lawsuits to allow the project to proceed, and ensuring the city receives payment under the ground lease; the property is on public land.
But in the July 13 court filing seeking to reopen discovery, attorney Barry W. Lee claimed the city obstructed the development during settlement negotiations. Lee cited examples of the city opposing the developers’ petition to operate a rail line at the terminal and interfering with “established labor agreements in place to operate” the facility.
“Rather than finalize the deal so both parties could move forward and development could continue as agreed, the city—true to form—did nothing to finalize the settlement agreement and continued, in bad faith, to stall development and undermine plaintiffs’ project,” Lee wrote.
Oakland environmental activists told ‘coal is back on the table’
The City Attorney’s Office disputes acting in bad faith. “The city has actively and responsively engaged in settlement efforts with OBOT regarding language that will provide an enforceable coal prohibition without loopholes for OBOT or their successors-in-interest over the 66-year term of the ground lease,” Parker wrote in the statement. “An enforceable and loophole-free coal prohibition is and has always been a cornerstone of the settlement framework and agreement, consistent with the city’s commitment and duty to protect Oaklanders’ health and safety.”
Environmental activists are watching each development in the case closely. “We knew the framework was only the beginning of the details and it is possible that things broke down over some of these concerns—what would be the oversight, how much money do they want from the city, how do they want the lease modified,” said Margaret Rossoff of No Coal in Oakland.
Rossoff believes the city has a better chance in state court than it did in federal court. “It’s also possible they are going to go back into settlement” talks, she said.
In an earlier meeting with activists, terminal tenant Vikas Tandon, who runs a Los Angeles-based hedge fund, said he wasn’t wedded to the idea of coal. Tandon became a partner in the project after Tagami’s former partner, Insight Terminal Solutions, fell into bankruptcy. A judge stripped ownership of the company from Kentucky-based coal industry executive John Siegel and gave it to Tandon.
This week, McConnell, who represents Tandon, sent a letter to the Sierra Club and West Oakland environmental activists warning them that “coal is back on the table.”
“The developers offered to take coal off the table and ensure that it would not be a commodity handled at the West Gateway Terminal,” McConnell wrote. “Now the courts will decide if the Terminal is built and the federal courts have already decided that coal can be shipped if the developer so chooses. If this makes you mad, blame the city, not the developers. The developers agreed to remove coal but the city did not agree to settle.”
If the confidential negotiations do not resume, the next court date would be a mandatory settlement conference in March 2023, ahead of a pre-trial conference the following month.
News editor Darwin BondGraham contributed to this report.
