A federal appeals court has agreed that the city of Oakland, California, breached its contract with Oakland Bulk and Oversized Terminal (OBOT) when it banned coal and petroleum coke handling and storage in the city.

A three-judge panel of the 9th US Circuit Court of Appeals issued a 2-1 opinion yesterday upholding the US District Court for the Northern District of California’s 2018 decision to block Oakland’s ban.

Oakland had entered an agreement in 2013 for OBOT to develop the terminal, which is proposed to export 5mn metric tonnes of coal and petroleum coke per year plus another 2.5mn t of other commodities.

But in 2016, two years after terminal developers announced OBOT would ship coal and petroleum coke, the city passed an ordinance banning handling and storing the fuels. Oakland cited health and safety concerns as underpinning its decision.

The federal district court determined Oakland’s claims were “riddled with inaccuracies, major evidentiary gaps, erroneous assumptions, and faulty

analyses.” The appeals court also affirmed the contract with OBOT did not limit the types of bulk goods that could be shipped through the terminal.

Oakland argued that the district court made a mistake in applying traditional standards for breach of contract cases to the OBOT case. But the appeals court disagreed and said the lower court’s determination was not “clearly erroneous.”

Judge Lawrence Piersol dissented, saying the district court allowed OBOT to present health and safety evidence that had not before been given to the city and therefor should not have been part of the court’s consideration on whether Oakland breached its contract.

Piersol and the other two judges on the appeals panel, Carlos Bea and Kenneth Lee, also disagreed on whether Oakland knew OBOT might handle coal.

Piersol pointed to a statement OBOT principal Phil Tagami made to community members in December 2013 in which he said reported plans for the terminal to handle coal were “simply untrue.”

But Lee, who authored the majority opinion, said Oakland “had some indication” before signing the agreement that OBOT might handle coal.

Oakland declined to comment on the appeals court ruling.

OBOT attorney David Smith said the company is awaiting the response of Oakland’s attorney general before proceeding.

OBOT has laid ground infrastructure for the terminal and brought materials on site. But it still does not have all the permits it needs to complete the project.

There is another outstanding lawsuit filed by OBOT in 2018 against the city for blocking progress on the terminal.

The second lawsuit leveled by OBOT against Oakland claims the city violated its lease with the developer when it withheld the necessary government approvals needed for the project to move forward.

City officials argue that OBOT violated the lease when it missed a construction deadline.

View article here.