Oakland poised to settle years-long legal struggle with coal terminal developers, city attorney says

Six years after the city became embroiled in a legal battle with a developer who wanted to build a coal terminal in West Oakland, it’s poised to settle the issue with an agreement that would “preclude transferring or handling coal and other commodities that are harmful to city residents,” City Attorney Barbara Parker announced this week.

According to Parker, the city has agreed to the key terms of a “framework” for settling pending lawsuits with Oakland Bulk and Oversized Terminal, LLC, California Capital Investment Group, Insight Terminal Solutions, LLC and Oakland Global Rail Enterprise, LLC,  a collection of companies that had wanted to build the coal terminal as part of their lease of the West Gateway portion of the former Oakland Army Base.

“Agreement on the settlement framework is a major milestone,” Parker said in a statement to this news organization on Thursday. “The next step is crafting and reaching agreement regarding the detailed, complex, specific language of the settlement agreement and related agreements. And then the agreements must be approved by City Council in open session.”

Mayor Libby Schaaf, in a weekly newsletter, called it “tremendous victory for the health of West Oaklanders.”

Parker did not elaborate further on the details of the agreement, but said in her Wednesday night announcement that the groups will craft terms that will “ensure that no coal or coke will be loaded, unloaded, transferred between any mode of transportation, including without limitation between or among a motor vehicle, ship, or train at the West Gateway” and will resolve the outstanding lawsuits, allowing development of the West Gateway property to proceed.

Skyler Sanders, general counsel for the California Capital and Investment Group, declined on behalf of the companies to comment on the settlement agreement with the city.

If finalized, the agreement would bring to an end a years-long legal battle over the presence of coal in Oakland.

Oakland developer Phil Tagami’s California Capital Investment Group — the parent company of Oakland Bulk and Oversized Terminal, LLC — entered into a development agreement with the city in 2013 that gave the company the rights to develop the property next to the Port of Oakland.

According to Parker’s office, the development agreement allowed for the city to adopt regulations to protect resident’s health and apply them to the development, which is what happened in 2015 after residents and environmental justice advocates found out the developers were planning to build a terminal that would transfer coal from trains to marine vessels for export.

The Oakland City Council in 2016 adopted an ordinance to ban the handling of coal in the city, and Oakland Bulk and Oversized Terminal filed a federal lawsuit trying to invalidate the new law. Both the trial court and the Court of Appeals ultimately sided with the developer, which would have allowed the coal terminal development to move forward.

But the city terminated the lease with the companies in 2018 for a different reason, saying they failed to meet development and construction milestones. The company partnering with California Capital and Investment Group, called Insight Terminal Solutions, had struggled to gather the funds to build the terminal and ultimately fell into bankruptcy.

Tagami’s companies then sued the city in Alameda County Superior Court, blaming the city for the companies’ inability to meet the deadlines because of the city’s coal ban and ensuing federal legal battle. The city filed its own lawsuit against the companies, alleging a breach of contract, leaving two competing lawsuits that have been pending since last year.

The whole issue was scheduled to go to trial on March 5, but a settlement agreement under the terms announced by Parker would dismiss the lawsuits. The City Council will have to approve the terms of the agreement.

The settlement would follow other victories for East Bay residents and environmental activists who have fought to get coal out of local cities. The Richmond City Council in 2020 outlawed the handling and storage of coal and petcoke within that city by January 2023, and after coal companies slapped them with lawsuits, reached a settlement agreement that upholds the city’s coal ban but gives the companies until 2027 to get coal out of the city.

Still, West Oakland residents are fighting to keep other bulk products out of the industrial neighborhood, including at the Port. Port officials are currently considering leasing 18 acres to a company that would put an open-air bulk sand and aggregate marine terminal, raising concerns about the dust from the sand piles and the emissions rom ships and trucks that would move the material. West Oakland residents have higher exposure to diesel particulate matter and higher rates of asthma than most of the state, studies show.