Over a decade ago, investor Phil Tagami proposed an export terminal in Oakland, California, likely not foreseeing the ensuing legal and controversial upheaval. Despite early rumors suggesting the terminal would facilitate coal exports, which worried local residents, Tagami dismissed these concerns as “misinformed” in a newsletter. However, the project quickly became embroiled in turmoil.
In 2013, Tagami and his partners signed a development agreement with Oakland to redevelop a former army base on the west side of the city. Tagami insisted the terminal was intended to handle various bulk materials and recapture traffic lost to other West Coast ports. However, two years later, the Salt Lake Tribune revealed that the developers had secretly planned to use the terminal to export Utah coal to international markets. This revelation ignited significant backlash in the progressive city, leading to ongoing litigation and financial losses for both developers and the city.
In a new development, the U.S. Department of Energy has offered up to $75 million to support the terminal’s construction, as part of the Trump administration’s efforts to bolster the coal industry. A recent announcement from the Energy Department also included over $400 million for coal-fired power plants, despite the decline of coal’s role in U.S. electricity generation. Over the past year, the administration has relaxed coal regulations, kept retirement-bound plants running, and transferred coal contamination oversight to states.
The administration maintains that American coal remains valuable for international markets.
“For too long, limited West Coast export capacity has constrained America’s ability to move coal and other energy resources to global markets,” explained Energy Secretary Chris Wright in a press release detailing the funding. He emphasized that investing in the terminal would advance “American energy dominance.”
Critics argue that federal funding is merely an attempt to sustain a dying industry.
Ben Eichenberg, an attorney with San Francisco Baykeeper, an environmental group in the Bay Area, noted that the terminal’s construction has stalled due to funding issues. “The Trump administration stepping in and saying they’re going to supply that money gives it a new lifeline,” he said. “This terminal project was drowning, and they’ve just been thrown the life preserver.”
The Energy Department’s intervention is unlikely to conclude the terminal’s protracted saga. After learning of the developers’ coal transport intentions, Oakland officials held public hearings and eventually enacted an ordinance banning coal storage citywide, prompting the initial lawsuits against the city.
The development agreement with Oakland promised regulatory stability for the terminal backers, preventing post-commencement rule changes about the terminal’s use. Developers sued Oakland, claiming the city violated this agreement by passing the anti-coal-storage ordinance, affecting their project plans.
However, the agreement allowed new regulations if the city deemed existing ones insufficient to protect Oakland residents from “substantial danger.” Public hearings collected evidence of coal dust threats, but developers contended the evidence was inadequate. The judge concurred, finding the evidence riddled with inaccuracies and assumptions, preventing a reliable conclusion on health or safety risks.
Importantly, the judge did not state that coal transport through Oakland poses no threat or that the city lacked the right to ban coal. A higher court upheld this decision.
“The fight was not about whether coal is safe or dangerous, but it was about the terms of the development agreement,” stated Colin O’Brien, an attorney with Earthjustice, which represented the San Francisco Baykeeper and the Sierra Club in the proceedings.
Following court losses, the city pursued a different approach. The developers’ lease with Oakland required certain construction milestones, which they missed due to prolonged litigation. This led Oakland officials to cancel the lease, sparking further legal battles. Developers sued in state court in 2018, arguing the city’s actions hindered construction deadlines. Courts sided with developers, both initially and on appeal.
Meanwhile, Insight Terminal Solutions, designated to operate the terminal, filed for bankruptcy in Kentucky and sought damages against the city. During bankruptcy proceedings, the company blamed its financial troubles on Oakland’s legal challenges, claiming over $650 million in damages. A bankruptcy judge supported this claim, but a federal district court vacated the ruling on appeal, relieving the financially strained city.
Despite federal support, the terminal still faces significant hurdles. It requires various permits, including air quality permits from the Bay Area Air Quality District, and local advocates have initiated a campaign for stringent regulations. (Tagami and a representative from California Capital & Investment Group, the project’s lead developer, did not respond to requests for comment.)
Environmental groups remain vigilant during the permitting process.
“We’re going to do everything in our power to protect the community in San Francisco Bay from the pollution that this coal terminal represents,” Eichenberg asserted. “We’ll be evaluating all of those permits and any additional action that we can take to protect the community and fulfill our mission.”
Editor’s note: Earthjustice is an advertiser with Grist. Advertisers have no role in Grist’s editorial decisions.
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