OAKLAND, Calif. (CN) — Developers suing the city of Oakland are spending another week in trial as they battle with former city leaders who opposed a plan to ship coal through a possible new terminal at California's third largest port.
Speaking to Alameda County Superior Court Judge Noël Wise in Hayward, Mark McClure — Oakland Global Rail Enterprise president and former Port of Oakland commissioner — described a series of events that made him think the city was looking for any way to prevent coal shipments at the terminal.
Oakland Global Rail Enterprise claims that it lost more than $148 million in profits since the city introduced an ordinance to ban coal at its terminals. The developer entered into an agreement with Oakland in 2013 to build an export terminal at the old West Oakland Army Base at the Port of Oakland, and it now claims the city sabotaged the project by creating an anti-coal ordinance.
When news broke in 2015 that the developer was discussing transporting coal from Utah through the terminal, interest groups protested and the city passed an ordinance banning coal handling and storage. Oakland Global partner Phil Tagami sued in 2016, bringing breach of contract and tort claims, and a federal court ruled in 2018 that Oakland officials applying the ordinance to the terminal breached their agreement with the developer.
Now, Tagami’s suit in state court blames construction delays on the city’s coal ban. Oakland, which countersued for breach of contract in 2020, says that the developers hurt the project by missing construction milestones while scheming to close a lucrative coal export deal.
Under questioning from his attorney Barry Lee, McClure said he was surprised by the city’s changes to the zoning and permitting process for the project — having 25 years of experience with the process through other projects.
McClure said the councilmember who oversaw the district in which the port is located toured the site at least 20 times. But then-mayor Libby Schaaf never did, he claimed.
Lee asked McClure about a series of emails in 2015 in which he discussed conversations with Schaaf. McClure said Schaaf told him she was visiting Mike Bloomberg in New York City and would travel to the 2015 United Nations Climate Change Conference.
McClure said he understood this to mean that the mayor was opposing coal going through the port, “even if it meant killing the entire project to do so.”
He said Schaaf expressed qualms about protesters smearing the image of Oakland.
“She wanted a terminal with caveats, and if we didn’t agree to that, there would be no terminal,” McClure said — adding that Schaaf never gave a specific alternative to coal.
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 richer Oakland neighborhoods, and the estimated lifetime cancer risk from port emissions is about seven times that of the region as a whole, according to former California Attorney General Xavier Becerra in the 2018 federal lawsuit.
The city’s land for the proposed terminal was zoned for all maritime uses and harbor operations, with no restrictions, McClure said. Between 2015 to 2016, city staffers posed questions indicating they wanted to find ways to reopen the zoning process and limit coal shipment, he added.
At a March 2016 meeting, a city staffer informed McClure that the permitting process would be a discretionary review process, reviewing each commodity proposed for shipment through the terminal on an individual basis.
“It was completely a surprise to us that this meeting was used to essentially undo 18 months of work,” McClure said.
The city delayed railway development at the site and did not give his company full access to the land, McClure added, preventing completion of infrastructure improvements. He also claimed that the city and Port of Oakland violated set lease terms by trying to keep a railway non-exclusive.
The parties argued about the extent to which the city and Port of Oakland are intertwined, as the city charter keeps the port’s administration separate. Lee says the port is legally connected to the city.
“This is a bigger legal question, potentially,” Judge Wise said. “I need an answer to this.”
The city’s attorneys promised to provide a letter explaining how the port operates separately.
The trial is expected to continue through mid-August.
Follow @nhanson_reports
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
