City lacks evidence to block coal shipments, judge finds

City efforts to prevent coal shipments through the Port of Oakland were dealt a major setback on Tuesday when a judge blocked a 2016 law from applying to a project at a former army base.

U.S. District Judge Vince Chhabria found that the city had violated its agreement with Oakland Bulk & Oversized Terminal LLC, a company formed by Oakland developer Phil Tagami to develop the army base, when it tried to restrict coal shipments through the terminal.

According to the judge’s 37-page order, Oakland lacked sufficient evidence to support its conclusion that coal shipments would pose a danger to local health and safety.

The contract with Tagami’s company only allows for the city to enact new regulations for the project in the case that it has found “significant evidence” of a danger to health and safety. The City Council spent months collecting evidence in 2015 and 2016 and heard hours of testimony.

In his order, Chhabria wrote, “In fact, the record is riddled with inaccuracies, major evidentiary gaps, erroneous assumptions, and faulty analyses, to the point that no reliable conclusion about health or safety dangers could be drawn from it.”

The city has been trying to develop the army base, which is near the Port of Oakland and the Bay Bridge, for nearly 20 years. The army vacated it in 1999 and began transferring the land to the city. Since then, the city has heard numerous proposals for the land, including as a car dealership, amusement park and movie studio.

The city first reached an agreement with Tagami to develop the land as a bulk goods terminal in 2012. After that, Tagami contracted Terminal Logistics Solutions, a company headed by former Port of Oakland Executive Director Jerry Bridges, to design and manage the terminal.

Documents submitted to the city in 2015 indicated that TLS was considering shipping coal and coke through the terminal. TLS was reportedly negotiating transporting coal via train from Utah.

TLS is owned by Bowie Resource Partners, a company which primarily owns coal mines in Utah, according to Chhabria. Roughly 5 million metric tons of coal or coke could be shipped through the terminal each year.

With public concerns mounting over the health effects of shipping coal through the port, in September 2015 and May 2016 the City Council held hearings to receive testimony and evidence in the matter.

A consultant hired by the city, Environmental Science Associates, summarized the public record for a report published in June 2016. Based on that report, the city enacted a new ordinance prohibiting the storage and handling of coal at Oakland facilities.

Tagami's company then sued Oakland in December 2016, arguing that the evidence was inadequate for the city to restrict coal shipments. Chhabria held a bench trial in January and ruled on Tuesday in favor of Tagami's company.

The judge found there was significant gaps in understanding for the report, for example that it did not take into account the Bay Area Air Quality Management District's role in regulating the project.

It anticipated pollution at greater levels than existing state regulations allow, omitting that the air district could require trains to use covers to mitigate coal dust, Chhabri found.

According to the order, the city could pursue future regulations that comply with the contract, but the evidence it has now doesn't warrant changing its agreement with Tagami's company.

Oakland could also appeal the order, but hadn’t made any decisions as of Tuesday afternoon, according to Alex Katz, a spokesperson for the Oakland City Attorney’s Office.

“The city takes its responsibility to protect the health and safety of residents very seriously, particularly children whose health will be directly impacted by storage, handling and shipping of coal and coke through our neighborhoods,” Katz said.

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City lacks evidence to block coal shipments judge finds