Commentary
Time for the Mayor and the City to stop the Madness and Settle the Coal Dispute
A new developer, JMB Capital, has acquired the project and has offered to sit down with city officials to discuss the potential to not ship coal through the terminal despite having won the court fight over the matter. Unfortunately, officials in the Schaaf administration have not accepted invitations to meet and try to resolve the dispute.
We need the City Council to be the adults and step in to settle the controversy surrounding the Oakland Army Base once and for all.
For nearly a decade, the city has been fighting about the potential shipment of coal at a proposed bulk commodity terminal at the former Oakland Army Base, under a development agreement that it awarded to California Capital Investment Group (CCIG).
A new developer, JMB Capital, has acquired the project and has offered to sit down with city officials to discuss the potential to not ship coal through the terminal despite having won the court fight over the matter. Unfortunately, officials in the Schaaf administration have not accepted invitations to meet and try to resolve the dispute.
The consequences of failing to voluntarily settle the coal issue could be financially devastating for the city. Already, the federal courts have indicated that the city cannot deny the right to ship coal.
The United States Ninth Circuit Court of Appeal upheld a May 15, 2018 ruling by US District Court Judge Vince Chhabria that the city of Oakland failed to prove that the transportation of coal posed a health and safety hazard to residents. Judge Chhabria found that a report presented by the city’s expert consultants, Environmental Science Associates (ESA), was “riddled with inaccuracies, major evidentiary gaps, erroneous assumptions, and faulty analyses.”
Thus, it appears that the city has already lost on the issue of whether it has the right to ban coal. Now the city attorney and city administration hang their hats on a sketchy pending state court case where they argue that the master lessee of the property, CCIG, lost the lease because they failed to commence construction of the terminal within the timeframe specified in the development agreement.
The likelihood of the city prevailing on that argument is very slim. The City caused a delay in the completion of the terminal when they denied CCIG’s permits to resume construction and then claimed that the developer did not act in a timely manner. Now the developer asserts it is ludicrous for the city to claim that it did not act in a timely manner.
I do not understand the city’s refusal to welcome a chance to resolve the issues short of a court decision. If Oakland loses, the terminal will be allowed to ship as much coal as it can handle over the next 66 years. In addition, the city likely will be on the hook for millions of dollars in losses caused by their dilatory maneuvers. More important, the proposed terminal is a major revenue producer for the city and will create hundreds of jobs handling non-coal commodities and products and related financial benefits. As the city dawdles, Oakland residents lose.
By entering into a discussion with JMB Capital it could lead to a no coal agreement that gets the terminal built. But, by refusing to talk it could lead to unlimited coal shipments and significant financial losses. Why, then, doesn’t the city meet and try to come to a no coal agreement?
Some suggest the problem is the Mayor’s ego and a desire for revenge, or her plans for future political positioning. In reality, it doesn’t matter. Under the city charter, the City Council holds the ultimate power to decide whether to settle and resolve the issues on terms most favorable to the city.
As I see it, if the city meets with the developer and reaches a no coal agreement, everyone benefits. But if the city doesn’t even try, and the courts rule against the city, the result will likely be a loss that the city will suffer for the next 66 years.
I urge the City Council to intervene and stop the nonsense. It has the duty and authority to protect the city from major losses and take advantage of a golden opportunity it seems determined to ignore. Please end the madness and direct the City Administrator to negotiate a no coal settlement in good faith and get this case behind us.
Do it now, because if the city leaves it to the courts to decide, and they lose, there will be nothing left to negotiate after a court decision is made. Oakland residents will be stuck with the results of the city’s refusal to meet for decades to come.
