The City of Oakland signed a development deal for a coal-shipping terminal in 2013, and then backed out over environmental protests. Now that’s coming back to haunt them, as legal rulings against their flip-flop could cost the city hundreds of millions.

The Port of Oakland is the ninth-busiest port in the United States of America, and an important economic lifeline for the City of Oakland. But being in the politically far-left Bay Area, the Port of Oakland is often a proxy backdrop for political battles, like the AB-5 trucker blockade in 2022, or the shipping of military supplies to Israel brouhaha over the last couple of years.

One political battle that appeared to have come and gone is now coming back to haunt the City of Oakland in a big way. The New York Times has an analysis today of a coal-shipping deal that the city had agreed to in 2013 and then backed out of in 2016. But that begat numerous lawsuits, most of which the city has been losing, and the massive legal payouts the city is facing could force Oakland into bankruptcy.

The mess all started in 2013, when the City of Oakland entered a deal with local developer Phil Tagami to build a $250 million shipping terminal on port-adjacent waterfront property that the city owns, which previously was home to the Oakland Army Base. Tagami quickly signed agreements to ship as much as 12 million tons of coal per year out of that port to lucrative Asian markets. This would have made the Port of Oakland the largest coal exporting facility not just in California, but on the entire West Coast.

Cue up the environmentalist drama. A No Coal in Oakland movement quickly sprung up, successfully lobbied the Oakland City Council to back off the deal, and with some help from then-Governor Jerry Brown, got the contract canceled. Activists cited particulate concerns over the coal itself (which would not be burned here), and decried how the deal was supporting the fossil fuel industry and worsening climate change.

The problem was that the City of Oakland had already entered and approved the deal before backing out of it.

“I believe in climate change,” the developer himself Tagami said in a New York Times interview. “This is a fraction of the seaborne coal market. You’re saying this makes the difference in the world? Oakland needs to balance its budget and fill its potholes.”

Tagami of course sued, and he’s been on a winning streak in court. A 2018 court order invalidated the city's concerns that the coal would have adverse effects on Oakland residents, and a state judge ruled in 2023 that the city was indeed obliged to hold up its end of the deal with Tagami. Then in September of this year, the California Supreme Court declined to hear any more of Oakland’s appeals, so that coal-shipping facility is getting built anyway.  

But that’s not the end of the story. One Kentucky coal company claims they went bankrupt because of the loss of coal-shipping revenue that this port would have represented for them. A Kentucky bankruptcy judge sided with them, saying the City of Oakland’s “improper and unjustified conduct significantly disrupted and burdened” that coal company. The judge has indicated in a ruling that this could cost the City of Oakland anywhere between $230 million and $654 million. Those damages have not yet been determined, but the sum is obviously likely to be in the hundreds of millions of dollars.

And we will remind you that the City of Oakland is facing a $130 million deficit, so that is money that they do not have.

UC College of Law professor David Levine points out that as a municipality, Oakland does have options, like spreading the payments over ten years, issuing bonds, or raising taxes. And their insurance would cover this to some degree. But as Levine ominously said to the Times, “The specter of bankruptcy for Oakland is not off the table.”

And after all of that, the 19-acre new terminal is going to start shipping coal anyway, likely beginning in 2027.

Related: Port of Oakland Lithium Battery Fire Sent Plumes of Black Smoke Over the Bay Sunday [SFist]

Image: OAKLAND, CALIFORNIA - AUGUST 01: In an aerial view, a container ship arrives at the Port of Oakland on August 01, 2025 in Oakland, California. U.S. President Donald Trump announced that his August 1 deadline for trade deals will not be extended and sweeping tariffs will be imposed on certain countries beginning today. (Photo by Justin Sullivan/Getty Images)