Oakland loses appeal in its bid to block coal from cargo shipping terminal

The city of Oakland lost an appeal in its attempt to bar coal from its shipyard in a divided 9th U.S. Circuit Court of Appeals panel ruling Tuesday.

The panel affirmed U.S. District Judge Vince Chhabria's decision the city violated its contract with a developer that created a bulk cargo shipping terminal on the site of a shuttered U.S. Army base near San Francisco Bay after learning coal would be transported there.

The city imposed restrictions on coal, citing health risks for residents in the area, but 9th Circuit Judge Kenneth K. Lee ruled the agreement "did not limit the types of bulk goods that could be shipped through the terminal."

In a 2-1 opinion, Lee said the circuit court must defer to Chhabria's findings that the city failed to demonstrate the negative health effects of Oakland Bulk and Oversized Terminal LLC transporting coal.

"Because this is a breach of contract dispute -- and not an administrative law proceeding -- we must defer to the district court's factual findings, which were not clearly erroneous," Lee wrote. Oakland Bulk and Oversized Terminal LLC v. City of Oakland et al., 2020 DJDAR 4830 (9th Cir., filed May 26, 2020).

After community outcry, the Oakland City Council passed an ordinance in 2016 stating facilities within city limits could not handle coal and applying it to the terminal.

After losing before Chhabria, the city and two environmental groups, the Sierra Club and San Francisco Baykeeper, appealed.

Senior 9th Circuit Judge Carlos T. Bea agreed with Lee.

U.S. District Judge Lawrence L. Piersol of the District of South Dakota dissented, arguing "a reasonable mind" might agree with the city's conclusion that coal handling and transportation "would pose a substantially dangerous threat to the health and safety to community members."

-- Craig Anderson