The latest battle in Oakland’s long-running coal war got underway Monday in Alameda County Superior Court with the start of a trial pitting the city against a developer who has sought for about a decade to build a fossil fuel export terminal near the Port of Oakland.
Developer Phil Tagami and his company Oakland Bulk and Oversized Terminal claim that Oakland officials deliberately sabotaged his company’s efforts to build a marine export terminal at the old West Oakland Army Base. According to the lawsuit, filed by Tagami and his associates in 2018, the city “engaged in an uninterrupted pattern of delay and interference, all with the objective of preventing OBOT from completing this project.”
Oakland argues that the developers tanked their own project by missing construction milestones, partly because they were single-mindedly focused on obtaining a lucrative deal with other companies to export coal mined in Utah to distant foreign markets.
On Monday, attorneys for both sides laid out the arguments and evidence they intend to share as the trial proceeds over the next few weeks.
A staggering amount of money is riding on the case. According to Tagami and his associates, the city’s actions have cost his companies millions in lost profits. According to court records, the developer claims to have missed out on upwards of $148 million in earnings.
But the potential consequences are broader. If the developer wins, the court may grant Tagami’s company permission to build the terminal in West Oakland. The project’s boosters claim it will energize Oakland’s economy by creating jobs for locals.
But environmental advocates and scientists who have studied the plans for the terminal and impacts of shipping coal to it on trains say the facility would contribute to global warming and blanket communities in West Oakland and elsewhere with toxic coal dust.
“As someone who has fought off four rounds of cancer myself, I want to make sure that mile-long trains of open coal cars don’t invade West Oakland, spewing toxic coal dust that will further harm the health of our parishioners and neighbors,” said Rev. Ken Chambers of the West Side Missionary Baptist Church, which is located near the rail line that would transport coal cars. Chambers is part of a coalition of groups that have fought since 2015 to stop the coal export project.
A controversial plan, multiple lawsuits
The events leading to this week’s trial started about a decade ago. In 2013, Oakland officials struck a deal with Tagami, a successful Oakland developer, to build a marine terminal on city-owned land near the port. The agreement didn’t restrict what commodities could come through the terminal, but Oakland officials claimed they had a verbal agreement that coal wouldn’t be included. The deal also allowed the city to impose new restrictions on the developer’s plans for the facility to protect Oakland residents and workers’ health and safety.
In 2015, news broke that Tagami was in talks with coal producers to transport coal from Utah through the terminal. The following year, the Oakland City Council banned the transportation and storage of coal within Oakland.
In response, Oakland Bulk & Oversized Terminal sued Oakland in federal court. In 2018, a U.S. District Court judge ruled in Tagami’s favor, striking down the ability of Oakland to apply its new coal ban to the project.
But in the meantime, Oakland terminated Tagami’s lease to the property, claiming he failed to meet construction milestones set forth in the development agreement. Tagami filed another suit in state court, blaming the construction delays on the coal ban. Oakland countersued for breach of contract in 2020.
A possible settlement scuttled, the latest legal dispute barrelled forward
As recently as last summer, it looked like the city and the developer might settle their differences and allow a marine terminal to be built, but one that would not allow coal as a commodity. The prospect of a settlement faded last July when the developer complained that city officials had stalled and interfered with a labor agreement.
On Monday, Barry Lee, an attorney representing the developers, argued that Oakland officials knew prior to 2015 that coal was one of the commodities that would travel through the terminal. He said the trial will reveal evidence that Oakland officials stonewalled the developer to avoid honoring the contract. He cited a long-range property management plan established in 2013 between the parties that specified coal could be transported through the terminal.
“Politics drove this decision,” Lee said.
Oakland officials “knew how to choke this project off” and allegedly did so by refusing to grant building permits for railway infrastructure, said Lee. The result, he added, is that the port now has several tracks “to nowhere.” He pointed to a memo from an Oakland city official that allegedly forbade staff from issuing permits to Tagami’s firm unless approved by senior city officials.
Oakland claims it wanted the terminal to succeed and worked with Tagami in good faith for years to try to develop the land and use the facility to ship other kinds of materials.
Attorney Daralyn Durie, a partner with Morrison Foerster, which represents the city, said Tagami explicitly said in a newsletter that Oakland Bulk & Oversized Terminal didn’t intend to export or import coal through the terminal.
Even after the coal news came to light, the city leased the land to Tagami’s company in 2016 because it expected to find a path forward for the project, one that wouldn’t include fossil fuels. According to Durie, Tagami tanked the construction deal by missing development deadlines because he was focused on maintaining a lucrative potential coal deal with John Siegel, a Kentucky coal executive. Insight Terminal Solutions, a company created by Siegel, went bankrupt and was later taken over by JMB Capital, which is represented at the trial by lobbyist Greg McConnell.
“He had signed a very lucrative deal with Mr. Siegel and he hoped to hold onto it,” Durie said.
Danielle Leonard, an attorney with Altshuler Berzon who also represents Oakland, said Oakland Bulk and Oversized Terminal failed to apply for various permits, undercutting the company’s argument that it was blocked by bureaucrats. Leonard also said the developers’ obligation to build certain railway improvements did not need to hold up the rest of the project.
“The city wanted this project to move forward,” Leonard said.