Oakland Bulk & Oversized Terminal, LLC v. City of Oakland, No. 18-16105 (9th Cir. 2020)
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After the City agreed to have OBOT develop a commercial terminal at an Army base near the bay. The City moved to block coal from being transported through the terminal amid a public backlash. The district court concluded that the City breached its contract with OBOT.
Because this is a breach of contract dispute, the Ninth Circuit must defer to the district court's factual findings, rather than administrative law review principles. The panel held that the district court did not clearly err in finding that the City breached the contract, because the City lacked substantial evidence of a substantial danger to health or safety when it enacted its resolution barring coal. Furthermore, the district court did not abuse its discretion in denying intervention of right. Therefore, the panel affirmed the district court's judgment.
Court Description: Breach of Contract The panel affirmed the district court’s judgment following a bench trial holding that the City of Oakland breached an agreement to have Oakland Bulk & Oversized Terminal develop a commercial rail-to-ship terminal on the site of a shuttered U.S. Army base near the bay. After an announcement that coal would be transported through the terminal, the City held public hearings, passed an ordinance and adopted a resolution that barred coal at the facility, citing a provision in the parties’ agreement that allowed it to impose new regulations if “substantial evidence” showed that a project would be “substantially dangerous” to “health and safety.” The district court held a bench trial and found that the City’s health and safety determination about coal was “riddled with inaccuracies, major evidentiary gaps, erroneous assumptions, and faulty analyses.” The district court determined that the City * The Honorable Lawrence L. Piersol, United States District Judge for the District of South Dakota, sitting by designation. OBOT V. CITY OF OAKLAND 3 breached the agreement with Oakland Bulk & Oversized Terminal (OBOT) when it passed the resolution barring coal, and it declared the resolution invalid. In determining the appropriate standard of review on appeal, the panel held that it would review the case as a breach of contract dispute rather than an administrative law proceeding, and therefore it would give deference to the trial court’s factual findings. The panel rejected the City’s contention that the district court erred by applying the traditional rules that govern a breach of contract case rather than adhering to administrative law review principles. The panel therefore held that the district court owed no deference to the City’s factual determinations and did not err in considering extra-record evidence beyond what was presented at the public hearings. The panel held that the district court did not clearly err in finding that the City lacked substantial evidence of a substantial danger to health or safety when it enacted its resolution barring coal. Specifically, the panel held that the district court did not err in finding that: (1) the City’s estimates of dust emission from the transported coal were unreliable; (2) the report showing that OBOT’s proposed coal operation would cause particulate matter to exceed state standards was flawed; (3) the evidence the City relied on to show that any volume of coal emission was harmful did not credibly establish a substantial danger; and (4) the City’s evidence pertaining to the risk of coal fire was speculative, contradicted by the record and lacking consideration of the fire department’s oversight. The panel found that the other expert evidence in the record suffered from the same flaws that the district court plausibly identified in its findings of fact. 4 OBOT V. CITY OF OAKLAND The panel considered two alternative arguments brought by Intervenors Sierra Club and San Francisco Baykeeper. The panel held that the Intervenor’s proposed interpretation of Section 3.4.2 of the agreement, as limiting only the City’s regulation of land use, was inconsistent with the language of the agreement as a whole. The panel held that the plain language of the agreement manifested a clear intent of the parties to freeze all existing regulations, not just land use regulations. The panel further found that the district court acted within its discretion in declining to consider Intervenors’ additional attempt to void the agreement. Finally, the panel held that the district court did not abuse its discretion in denying intervention of right. Dissenting, District Judge Piersol stated that it was error for the trial court to admit and consider evidence pertaining to the health and safety effects of coal handling and storage upon nearby residents that was not submitted to the City. Judge Piersol stated that based on the entire record before the City, a reasonable mind might accept as adequate the City’s conclusion that coal handling and storage at the terminal would pose a substantially dangerous threat to the health and safety to community members. Accordingly, Judge Piersol would reverse the district court’s judgment and remand. OBOT V. CITY OF OAKLAND 5
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