OAKLAND, Calif. (CN) — A short-line railroad developer and the city of Oakland continue to clash in a trial to determine whether the city broke a contract to build a new port terminal by banning coal transports by rail.
Former California Capital & Investment Group project manager Megan Morodomi — now Port of Oakland’s construction administrator — took the stand Thursday before Alameda County Superior Court Judge Noël Wise in Hayward. She represented the key architectural and records keeper for Oakland Global Rail Enterprise, which entered into a 2013 agreement with Oakland to build an export terminal at Port of Oakland’s old West Oakland Army Base.
Company heads Phil Tagami and Mark McClure maintain Oakland’s leaders delayed railway development at the site and did not surrender full access to the land, preventing completion of infrastructure improvements. Oakland Global Rail Enterprise claims it lost more than $148 million in profits due to the city's ordinance banning coal at its terminals.
Tagami’s suit in state court blames construction delays on the coal ban. Oakland, which countersued for breach of contract in 2020, says the developers hurt the project by missing construction milestones while scheming to close a lucrative coal export deal.
The case revolves around Oakland’s longtime opposition to coal due to concern about emissions. The city, particularly the formerly segregated neighborhood of West Oakland adjacent to the port, has been studied for decades for pollution caused by the movement of harmful materials such as soda ash at the harbor. West Oakland residents die 12.4 years sooner than residents in wealthier Oakland neighborhoods, and the estimated lifetime cancer risk from port emissions is about seven times that of the region as a whole, according the California attorney general in a 2018 federal lawsuit.
McClure testified this week that former mayor Libby Schaaf opposed coal shipment and expressed qualms about protesters tarnishing Oakland's image.
As McClure and Tagami watched in court Thursday, Morodomi told Oakland’s legal counsel Daralyn Durie that in 2015 she knew the company was discussing coal as a primary commodity at the terminal. She acknowledged Tagami directed his team to not say so specifically, in a design draft document sent to the city that year.
Morodomi remembered how a March 2016 meeting with city staffers — which the plaintiffs identify as a major source of frustration — surprised the company when the city suggested a discretionary review of commodities and reopening the environmental review process. She recalled how Tagami’s abrupt departure ended the meeting.
By May 2016, Morodomi said, she knew coal was still being contemplated for shipment through the planned terminal. That month former mayor Schaaf bluntly told Tagami and McClure that she would oppose it.
However, Morodomi testified she saw no formal commitment to coal before the city approved a resolution to ban coal shipments citywide in June that year. The city’s coal ban ordinance went into effect the following month.
Despite these setbacks, Morodomi said the company planned to construct the new terminal between 2017 and 2019, to go operational within two years while the lease from the city was rent-free.
However, Durie pointed out that by August 2018 neither the developer nor its subcontractors had applied for permits to start construction of the terminal. By September 2018, the city declared a default due to non-payment of the lease, which ended in November 2018.
Under the plaintiffs’ attorney Barry Lee’s questioning, Morodomi said she emailed the city in October 2018 to identify dangerous conditions at Burma Road near the port, which needed improvements in order to add a railway system.
Although the road was closed for construction between 2017 and 2018, Morodomi said photos demonstrated that the road was open in October 2018 as vehicles and pedestrians went around “closed” signs to use it. Morodomi said the city had never alerted the developer that the road was open so that they could access the project site.
Lee asked her why she emailed Tagami and McClure saying, “This is a chicken and egg situation.” Morodomi described a circuitous process of attempting to apply for permits to start construction at the terminal.
“In attempting to get the city permits, I was instructed to get the BCDC permit, and in attempting to get the BCDC permit, I was instructed to get the city permit,” she said, referring to San Francisco Bay Conservation and Development Commission.
She said that in spring 2019, after the company paid permit fees to access Burma Road she tried to pull permit cards. But city staff told her the permits were locked pending the city attorney’s further instructions.
“The person who helped me had never seen anything like it before,” Morodomi said.
The trial resumes Monday, with Morodomi and McClure expected to face more cross-examination.
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