OAKLAND, Calif. (CN) – Oakland’s ban on transporting coal and petroleum coke by rail through the city violates federal law and has gutted developers’ multimillion-dollar investment in a West Oakland shipping port, according to a federal lawsuit filed Wednesday.
Developers of the Oakland Bulk & Oversized Terminal (OBOT) sued the city, calling the ban on coal unconstitutional and preempted by federal statutes that give the federal government authority over interstate commerce and the transportation of hazardous materials by rail.
The Oakland City Council enacted its coal ban earlier this year, after several studies found coal dust blowing off trains into nearby neighborhoods could cause asthma or cancer.
The developers dedicated about 16 pages of their 42-page lawsuit to attacking the legitimacy of two studies used to justify the ban.
Oakland’s ordinance prohibits the storage, handling and transportation of coal and petroleum coke, or petcoke, by rail – a measure the developers say prevents them from reaping the full benefit of their investment in a rail-to-sea terminal on the site of the former Oakland Army Base in West Oakland.
“OBOT has spent millions of dollars and thousands of man-hours removing existing structures at the project site, building the infrastructure required to support the anticipated terminal (including the rail line to the terminal), and implementing environmental safeguards for use both during construction and future operations at the terminal,” the 42-page complaint states. “To date, OBOT and its affiliates have invested well in excess of $10 million on these development efforts.”
Developers from the California Capital Investment Group beat out 13 competitors to win a contract to lease and redevelop land at the former Oakland Army Base, which closed in 1999. They had planned to haul coal by train from nearly 1,000 miles away in Utah, to be shipped to foreign countries through the new terminal.
The investment group signed an agreement with the city in July 2013, which included “no specific restriction or prohibition on coal,” but also reserved the city’s right to enact health and safety regulations based on “substantial evidence” and “otherwise permissible pursuant to laws.”
It’s those two conditions the developers focus on in their lawsuit – attacking the legitimacy of evidence used to support the coal ban and claiming the ordinance is preempted by multiple federal laws.
The developers say Oakland Mayor Libby Schaaf and the City Council already made up their mind to ban coal and petcoke before reviewing the evidence of its health and safety impacts.
They claim the City Council hired a consultant, Environmental Science Associates, to “selectively review the record” and “create findings that would appear to support a finding of ‘health and/or safety impacts.”
“The retention of Environmental Science Associates and the subsequent public hearing to review the Report were a sham – an attempt by the City Council to give the appearance of weighing the evidence concerning coal and petcoke, even though the City Council had already decided to ban the transport of coal and petcoke through the terminal,” the developers say in the complaint.
They argue the consultant failed to look at the health and safety impacts of terminals in Pittsburg and Long Beach that handle coal. They further assert Environmental Science Associates failed to explain why the Bay Area Air Quality Management District’s permit requirements for handling coal and petcoke would be insufficient to protect public health.
The developers go on to attack a review of evidence by another city-hired consultant, UC Berkeley graduate research fellow Zoe Chafe, who stated in her 113-page report that “there is no safe level of exposure” to fine particulate matter.
They say any activity, including shipping commodities other than coal or petcoke, could increase the level of particulate matter in the air.
Furthermore, they assert the ordinance “imposes burdens on interstate commerce” that are impermissible under the Commerce Clause of the U.S. Constitution, and that it violates the Interstate Commerce Commission Termination Act, Hazardous Materials Transportation Act and Shipping Act of 1984.
The developers also say the ban constitutes a breach of their 2013 agreement with the city that gave them the exclusive right to lease and develop the land.
They seek a declaration deeming the ordinance unconstitutional and an injunction barring the city from enforcing its ban on the handling, storing or transporting of coal and petcoke by rail.
The developers are represented by Robert Feldman of Quinn Emanuel Urquhart & Sullivan in Redwood Shores, California.
Erica Derryck, spokeswoman for Schaaf’s office, said she could not comment on pending litigation.
Oakland City Attorney’s Office spokesman Alex Katz did not immediately return phone calls seeking comment Thursday morning.