Governor’s friend sues to lift coal-shipping ban in Oakland

Phil Tagami at the site of a development at the Oakland Army Base in Oakland, California, on Wednesday, Sept. 23, 2015. Phil Tagami at the site of a development at the Oakland Army Base in Oakland, California, on Wednesday, Sept. 23, 2015. Photo: Connor Radnovich, The Chronicle Buy photo Photo: Connor Radnovich, The Chronicle Image 1 of / 1 Caption Close Governor’s friend sues to lift coal-shipping ban in Oakland 1 / 1 Back to Gallery

The would-be shipper of coal from the Port of Oakland, a company controlled by a longtime friend of Gov. Jerry Brown, has sued Oakland for outlawing coal handling and storage within its borders, saying the ban interferes with interstate commerce and with federal authority over the transportation of hazardous substances.

The City Council unanimously passed the ordinance in July with the support of environmental groups, who said coal trains emit hazardous dust particles, and burning coal releases carbon dioxide that worsens global warming. In August, Gov. Jerry Brown signed legislation by Sen. Loni Hancock, D-Berkeley, prohibiting the state Transportation Commission from funding future coal-handling ports, though it would not affect Oakland.

The suit was filed in federal court Wednesday by a company called Oakland Bulk and Oversized Terminal, which had signed a contract with the city in 2013 to build a $250 million shipping terminal as part of a 130-acre development at the site of the former Oakland Army Base. The coal would be shipped by rail from Utah and could amount to 10 million tons a year, more than three times as much coal as California ports now send overseas.

“Restricting any commodity on political grounds puts a cloud of uncertainty over the entire project,” said Phil Tagami, chief executive of California Capital and Investment Group, which controls the shipping company. “What will be the next commodity to which the council objects?”

Tagami has been a friend of Brown’s for 20 years and owns the seven-story building near Oakland City Hall where Brown and his wife, Anne Gust Brown, were married in 2005. As mayor of Oakland, Brown appointed Tagami to the Oakland Port Commission in 2000, and as governor he has named Tagami to the California Lottery Commission and the state medical board.

Brown has also been a leader in California’s efforts to combat global warming by reducing carbon pollution. In signing the ban on state funding of future coal ports, he praised Oakland’s action and said the state’s goal should be to “eliminate the shipment of coal” through its ports.

The lawsuit contends opponents’ fears of coal-dust pollution are exaggerated.

The ports of Long Beach, which exports coal, and Pittsburg, which ships the coal product petcoke, have kept emissions in check by using insulated coverings on their shipping terminals, lawyers for Tagami’s company said. They said pollution-control technology would keep emissions from the Oakland port “negligible.”

By prohibiting the local export of coal, one of the most commonly transported commodities in the United States, Oakland is imposing unconstitutional “burdens on interstate commerce,” the lawyers argued. They also said the ban violates exclusive federal authority over rail transportation and the designation of hazardous substances.

The Sierra Club, which backed the Oakland ordinance, denounced the lawsuit.

“Private developer Phil Tagami wants to overturn the will of the people so that he can make a profit on coal, which poses a health, safety and climate risk to Oakland,” said Jessica Yarnall Loarie, a lawyer for the environmental group. “We plan to stand shoulder-to-shoulder with the city to make sure that this terminal never ships coal.”

Oakland Mayor Libby Schaaf declined to comment on the lawsuit. But in a May 2015 letter to Tagami, quoted in the suit, Schaaf told the developer he should “respect the owner and public’s decree that we will not have coal shipped through our city.”

Bob Egelko is a San Francisco Chronicle staff writer. Email: begelko@sfchronicle.com Twitter: @egelko