Oakland Might Have Lost Its 'Coal War' — and Could Have to Pay Millions

A years-long battle over a plan to build a terminal for exporting coal near the Port of Oakland is now in the hands of an Alameda County Superior Court judge, who will decide whether the project can move forward or if Oakland will have to pay millions for developers’ lost profits.

The day before Thanksgiving, Judge Noël Wise ruled that the city thwarted the project, siding with developers including Phil Tagami, who wants to build the export terminal at the West Oakland Army Base. Tagami runs companies affiliated with the project, including Oakland Bulk and Oversized Terminal, or OBOT.

Meanwhile, local environmental justice advocates continue to push back against it over concerns that the project would further degrade air quality for the community of West Oakland.

Tagami has said Oakland breached its contract with him and previously sued the city for allegedly blocking necessary documents related to the project from moving forward, which created delays that caused him to miss key construction milestones.

“The terminal would be unique and the preferred terminal on the West Coast to transfer coal from Utah to Japan,” Barry Lee, the attorney representing the developers, said in court on Friday. He claimed that the city “did everything it could to interfere” with the project.

Attorneys representing the city of Oakland said that Tagami missed key deadlines and failed to uphold his end of the lease. “They have utterly failed to meet their burdens” of the contract, attorney Danielle Leonard said.

Oakland could pay millions of dollars in damages

In total, Tagami is asking for $159 million in damages or, alternatively, the chance to move forward with the project by receiving an extension to complete construction milestones.

According to a pretrial brief (PDF), OBOT is seeking an extension of at least two years and five months to meet its construction requirements.

James Wolff, CEO of Enchant Energy, who was previously involved with the project, said in witness testimony this week that he believes “there were billions of tons of coal to export through this facility” and that the coal prospects “encouraged us to move forward and we secured customers.”

The city countered that the developers’ projected profits are speculative and unreliable.

“This court has no discretion to award any damages at all,” Leonard said on Friday during closing arguments for the trial.

“California law is clear that lost profits from a future third-party business relationship are typically consequential, not actual damages,” the city wrote in pretrial filings (PDF). “It is not enough to say, for example, that this was a development contract and the City has interfered with that development, therefore, OBOT should get its estimated lost future profits.”

The judge ultimately found that the city breached its contract with Tagami, who argued officials blocked him from executing his plans.

Her decision over whether Oakland — and, by extension, taxpayers — will have to pay Tagami back millions or let the project move forward is expected in the coming weeks.

West Oakland pushes back

Environmental groups continue to oppose the coal terminal project for its potential to increase pollution in West Oakland.

A 2016 report by Environmental Science Associates found that coal flowing through the ship-to-rail terminal would largely impact lower-income communities near the port, including in West Oakland, western San Leandro and Emeryville.

Coal dust from the millions of tons of fossil fuels that could pass through the terminal could worsen air pollution, increasing the risk of respiratory and heart disease for those living near the export terminal.

The neighborhoods surrounding the heavily industrialized port are already choked by some of the state’s dirtiest air, largely from a near-constant stream of semi-trucks moving goods in and out. Coal transported through the terminal to later burn overseas would add to greenhouse gas emissions globally.

“This increase in [greenhouse gas] emissions would contribute incrementally to global climate change along with sea-level rise that would be experienced locally in Oakland,” the report reads.

Steve Masover has been working since about 2016 with the community group No Coal in Oakland, coordinating opposition to the project and raising awareness of how it could cause environmental harm.

“As an East Bay resident, there can’t be a coal terminal in Oakland,” Masover said. “The outcome of this case notwithstanding, there are many options available for how we might see that it never comes to pass that coal is shipped through Oakland.”

The city could appeal the judge’s decision if the project is allowed to move forward.