Coal Case Judge Gets First Batch of Post-Trial Pleadings

Photo:  Oakland youth-led march against coal, 31 Jan 2018.  Credit: Rhonesha Victor.


In the first flurry of post-trial papers filed in federal court late last week, the two sides highlighted their dramatically different views of the case that will decide whether Oakland’s ban on coal storage and handling can be lawfully imposed on a proposed coal export terminal at the site of the former Oakland Army Base.

On Friday, February 9, the parties filed an initial round of documents urging federal judge Vince Chhabria to decide the case of Oakland Bulk and Oversized Terminal, LLC v. City of Oakland in their favor.  Oakland Bulk and Oversized Terminal, LLC (OBOT), the plaintiff in the lawsuit, is a front corporation managed by developer Phil Tagami’s California Capital and Investment.

Based on NCIO’s review of the papers filed last Friday, the high-stakes legal battle between Tagami and the City of Oakland could turn on whether Judge Chhabria rules that the City’s ban met or failed to meet the standards set forth in the Development Agreement between the parties, or agrees with a new legal theory advanced by the Sierra Club and San Francisco Baykeeper that relies on a different basis for the ban, or concurs with a sweeping demand by the developer to exclude all evidence submitted to the City by parties who did not testify during the trial.

The developer claims the court cannot consider the blue-ribbon Public Health Advisory Panel’s report, a comment letter by Dr. Muntu Davis, Alameda County’s chief public health official, a letter from lora jo foo of No Coal in Oakland as well as myriad other documents that were in the City’s record and systematically posted on the City’s website during the lengthy public hearing process before the City adopted a ban on coal handling and storage.


OBOT has a 66-year lease on the West Gateway, 35 acres of City-owned land near the Bay Bridge toll plaza.  Under the terms of the lease, OBOT was required to begin construction by August 2016 but has failed to do so, claiming that the City’s veto of coal has impaired its ability to finance the project.

In December 2016, OBOT filed suit against the City, challenging the City’s July 2016 adoption of a ban on storage and handling of coal. The ban disrupted Tagami’s plan to sublet the West Gateway to a subsidiary of coal company Bowie Resource Partners for use as a coal export terminal.

OBOT’s lawsuit, financed by Bowie, is relying on three theories.  According to OBOT, the City’s ban on coal violates the Commerce Clause of the U.S. Constitution by excessively interfering with interstate commerce, is preempted by three federal statutes, and breaches the City’s 2013 contract with the developer.

The three-day trial in January focused solely on OBOT’s breach of contract claim after the Court decided to defer resolution of competing motions for summary judgment on OBOT’s constitutional and preemption claims until after trial.  If the judge sustains OBOT’s breach of contract claim, the other arguments become moot; if the judge rejects the breach of contract claim, he will then rule on OBOT’s constitutional and preemption claims.

OBOT’s breach of contract claim hinges on the legal effect of the parties’ 2013 Development Agreement.  Under the Development Agreement, the City agreed to lock in place existing City regulations, giving the developer a “vested right” to build a marine terminal. The Development Agreement contained an exception for new health and safety regulations enacted after a public hearing and based on “substantial evidence” that failure to impose the new regulations on the West Gateway would place existing or future occupants, users, or neighbors of the project in substantial danger.

Most of the trial was consumed by a battle of experts testifying about air quality, fire and explosion hazards, and risks to health of West Oakland residents as the City sought to show that its adoption of the ban on coal met the Development Agreement’s “substantial evidence” test and OBOT sought to show the opposite.

Last Friday, both sides submitted proposed findings of fact summarizing the evidence presented at trial and in documents filed with the court. Predictably, the findings of fact proposed by the City and OBOT present dramatically different views of the evidence:  the City points to a vast array of expert opinion supporting the City’s ban while OBOT portrays the City’s ban as a politically motivated attack with no basis in substantial evidence of health and safety risks to Oakland residents.

Intervenors’ posttrial motion based on Development Agreement Statute

Possibly the most important development last Friday is the filing of a posttrial motion for judgment by Sierra Club and San Francisco Baykeeper, intervenors on the side of the City in the lawsuit. The City filed a brief in support of the intervenors’ motion.

Picking up on a question posed by Judge Chhabria at the outset of the January 10 hearing on dueling motions for summary judgment, the intervenors contend that California’s Development Agreement Statute allows the City to apply the ordinance banning coal to OBOT because it is a health and safety regulation, not a land use regulation, and the Ordinance does not conflict with zoning regulations that were locked in place by the 2013 Development Agreement.

“Arguing that a health and safety regulation like the Ordinance conflicts with OBOT’s general land use authorization is akin to arguing that a prohibition on the sale of non-pasteurized dairy conflicts with the rights of a grocery store or restaurant developer with a development agreement that predates the prohibition,” say the intervenors in their brief.

If the Court agrees with this analogy and the intervenors’ interpretation of the Development Agreement Statute, the trial would be largely irrelevant as the City would only need to show that it had a “rational basis” for banning coal storage and handling in Oakland rather than meet the specific “substantial evidence” test set forth in the Development Agreement.  Legislation reviewed under a “rational basis” standard is almost always upheld by the courts as it merely screens against arbitrary enactments.

OBOT’s post-trial brief

For its part, OBOT insists that the City’s ban had to meet the “substantial evidence” test and failed to do so.  OBOT aims to gut the City’s defenses by attacking as insubstantial the expert evidence accumulated by the City to support its adoption of the coal ban and by raising numerous objections to the City’s exhibits and the testimony of its witnesses.

In its post-trial brief, OBOT argued the following points:

  • The City did not have substantial evidence that a complete ban was needed to prevent substantially dangerous conditions, and ignored the possibility that mitigation measures proposed by OBOT and regulation by the EPA, OSHA, and the Bay Area Quality Air Management District might adequately protect public health and safety.
  • The City’s air quality analysis contained numerous factual and analytic errors.
  • The City did not adequately assess health risks because it did not conduct air quality modeling, had no fire safety risk assessment evidence, and had no trace metals risk assessment.
  • The City did not have evidence that the danger to West Oakland residents was “substantial” because the City provided no comparative evidence.
  • The City did not demonstrate that the evidence it accumulated prior to the City Council decision to ban coal was reviewed by City Council members, rather than merely available to them.

The City and intervenors will rebut these arguments in their post-trial brief due February 23.

OBOT’s objections to the City’s evidence

OBOT’s objections to evidence are premised on a theory that the court should pay little deference to the City’s investigative and deliberative process.  Among the documents OBOT seeks to exclude are the City’s entire public record of 40,000 pages of documents accumulated during the public hearing process as its legislative record.

OBOT singles out for particular mention the submissions from the Public Health Advisory Panel report, Dr. Muntu Davis, and lora jo foo of No Coal in Oakland.

It is easy to see why OBOT wants these particular documents excluded from consideration.  The Public Health Advisory Panel (PHAP) report was prepared by a distinguished volunteer panel of public health experts and provided independent corroboration of the Environmental Science Associates and Dr. Zoe Chafe reports paid for by the City.  The letter from Alameda County Health Officer Muntu Davis supported the ban on coal with an expert opinion issued by the County’s highest public health official.  The letter from lora jo foo reported on interviews with rail cover manufacturers that revealed that none of them had tested or sold any covers for dealing with coal, which OBOT has offered as a mitigation of health and safety risks.

OBOT challenges the documents’ admissibility because members of the Public Health Advisory Panel, Dr. Muntu Davis, and lora jo foo did not testify at the trial and because there was no proof that anyone from the City actually read their submissions. OBOT is eager to exclude the Public Health Advisory Panel Report because the judge had commented that he found it more convincing than the report prepared by Environmental Science Associates (ESA), the City’s contractor. Also, unlike the ESA report, which the City received only three days before the City Council’s vote on the coal ban, copies of the Public Health Advisory Panel report were hand delivered to the offices of the Mayor, the City Administrator, and each of the eight members of the City thirteen days before the City’s vote. This undermines OBOT’s narrative that the City Council had no time to absorb the evidence regarding the likely health and safety impacts of the coal terminal.

The City’s objections to OBOT’s evidence

The City and intervenors object to numerous exhibits offered by OBOT.  Unlike the exhibits OBOT objects to, the documents to which the City objects are primarily documents that were not part of the legislative record.  While OBOT seeks to persuade Judge Chhabria that the City’s legislative record is meaningless and that the only documents that should be considered by the court are those whose authors testified during the trial, the City argues almost the opposite, that, with a few exceptions, documents that were not collected in the City’s record should not be considered and the federal court should not treat the City’s proceedings as a practice run.

The overwhelming weight of the evidence presented in the City’s public hearing process supported the City’s ban of coal so the strategy hatched by OBOT’s lawyers is to call into question the City’s right to present the evidence that supported the City’s decision.  Typically, elective bodies are given substantial deference when they make legislative and administrative judgments and the kinds of objections raised by OBOT are routinely rejected.  Judge Chhabria has already warned OBOT that he considers their arguments about bias against coal irrelevant so long as the City Council based its decision to ban coal on substantial evidence that operation of the coal terminal would bring about a substantial danger to public health and safety.

If he holds to this logic, Judge Chhabria is likely to reject OBOT’s argument that only documents actually read by the City Council members should be considered.  Generally, in proceedings with vast records, city councils and other government agencies are entitled to defend their actions in court by pointing to any documents in the public record without having to show that members of the decision-making body personally read any particular document.  Government would grind to a halt if every act of state and local governments could be challenged on grounds of who read what document.

The Court has scheduled a final hearing in the case for March 28 at 10 a.m.