Oakland had some indication that coal was one of the potential commodities that might be handled” prior to contracting with developer, Court finds.
OAKLAND, Ca – The City of Oakland (“City”) breached its contract with Oakland Bulk and Oversized Terminal (“OBOT”), a City-selected developer at the former Oakland Army Base, according to the United States Court of Appeal for the Ninth Circuit. In attempting to block the possible future shipment of coal from a planned ship-to-rail bulk commodity terminal (“Terminal”), the City violated the vested rights the City itself conveyed to OBOT in 2013. The Ninth Circuit’s ruling upheld the earlier ruling of the Federal District Court that found the City’s efforts to be “riddled with inaccuracies, major evidentiary gaps, erroneous assumptions, and faulty analyses.”
The City granted Oakland Bulk and Oversized Terminal (“OBOT”) vested rights to develop the Terminal at the West Gateway of the former Oakland Army Base in a 2013 development agreement (“Agreement”). Although continuously certifying OBOT’s full compliance with the Agreement, the City moved to block progress on the Terminal in 2015 when the Sierra Club launched a campaign to block any coal shipments from the facility. “Importantly, the Agreement did not limit the types of bulk goods that could be shipped through the terminal,” observed the Court of Appeal. “And prior to its execution, Oakland had some indication that coal was one of the potential commodities that might be handled,” the Court found. Several City-authored documents from May 2013 confirm this fact, defining a “bulk marine terminal” as one that handled “lumber, coal, and sulfur . . . .”
“The District Court issued a thorough, thoughtful, and comprehensive ruling invalidating the City’s action,” said Phil Tagami, CEO of OBOT. “We remained confident that the Ninth Circuit would uphold that ruling, which they now have.” During the pendency of the federal lawsuit and appeal, OBOT filed a new lawsuit potentially seeking millions of dollars in damages against the City for its breaches of the master lease for the property on which the Terminal is to be built.
OBOT has repeatedly notified the City that its efforts to ban coal and other ongoing obstructive actions have prevented OBOT from proceeding with development of the Terminal as scheduled. Greg McConnell, spokesman for OBOT’s sub-tenant, Insight Terminal Solutions (ITS), and President and CEO of the Oakland Jobs and Housing Coalition, said the costs to Oakland residents from the dispute have been significant. “It’s not only the City’s potential legal liability for damages to the developer. Jobs for Oakland residents, rent payments to the City, and a cut of the revenue from operations have all been lost because of the City’s efforts to block the Terminal at all costs.” “The city needed good paying jobs in 2009 and now needs them now more than ever” said Tagami.
Lead counsel for OBOT, Robert Feldman of Quinn Emanuel Urquhart & Sullivan, said, “”Now, after all this time and continued rejection by the federal courts, I would hope there is a responsible City official with whom OBOT can sit down and resolve its differences.”
Note: Insight Terminal Solutions, OBOT tenant, is client of Zennie62Media. Post based on press release from OBOT.
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