960 F.3d 603
9th Cir.2020Background
- Oakland and OBOT entered a Development Agreement freezing existing City Regulations for a proposed rail-to-ship terminal; Section 3.4.2 permitted the City to apply post‑adoption regulations if, after a public hearing and based on “substantial evidence,” failure to do so would place occupants or neighbors in a condition "substantially dangerous" to health or safety.
- OBOT’s subtenant TLS announced plans to ship coal through the terminal; public backlash followed and the City held hearings that produced multiple expert reports (including ESA, PHAP, and others).
- The City adopted a citywide Ordinance banning coal at bulk facilities and a Resolution applying that Ordinance to OBOT’s site; OBOT sued for breach of contract (and raised constitutional/preemption claims), and Sierra Club/Baykeeper intervened.
- After a three‑day bench trial the district court found the City lacked substantial evidence that coal operations posed a substantially dangerous health/safety threat (criticizing ESA and other reports as flawed) and declared the Resolution invalid for breach of the Agreement.
- The Ninth Circuit affirmed: it held contractual breach review governs (not administrative mandamus), reviewed the district court’s factual findings for clear error, and concluded those findings were not clearly erroneous as to emissions estimates, PM2.5 modeling, fire‑risk evidence, and ESA’s failure to account for mitigation and regulatory controls.
Issues
| Issue | Plaintiff's Argument (OBOT) | Defendant's Argument (City / Intervenors) | Held |
|---|---|---|---|
| Standard of review / deference | Contract action; trial court should assess breach under ordinary contract rules (defer to trial judge) | Section 3.4.2’s use of “substantial evidence” imports administrative substantial‑evidence review limiting review to the administrative record | Held: breach‑of‑contract review applies; courts may consider extra‑record evidence to evaluate whether the City’s record was substantial; district court’s factual findings reviewed for clear error. |
| Whether City had "substantial evidence" of a condition "substantially dangerous" (breach) | City lacked substantial evidence; ESA and other reports were flawed; mitigation (covers, surfactants, BACT, Air District controls) undermined emissions estimates | City relied on ESA, PHAP, Chafe, and others to show PM2.5 and coal dust would meaningfully worsen health risks and fire/explosion risk | Held: district court did not clearly err in finding the City lacked substantial evidence — ESA’s emissions inputs, failure to credit mitigation, PM2.5 extrapolations, and fire‑risk analyses were plausibly unreliable. |
| Scope of “City Regulations” in Section 3.4.2 (land‑use only?) | Intervenors: interpret “City Regulations” as limited to land‑use rules to conform with Cal. Gov. Code § 65866 | City: Section 3.4.2 allows applying post‑adoption regulations broadly when substantial evidence shows substantial danger | Held: plain language defines “City Regulations” broadly; Agreement manifests intent to freeze all existing regulations, not only land‑use; court rejected limiting construction. |
| Intervention of right | Intervenors: their environmental/public‑health interests require intervention of right; City might inadequately represent these narrower interests | City: already representing public‑health interests and has same ultimate objective; presumption of adequacy applies | Held: denial of intervention of right affirmed — intervenors failed to rebut presumption of adequate representation; permissive intervention was appropriately limited. |
Key Cases Cited
- Pure Wafer Inc. v. City of Prescott, 845 F.3d 943 (9th Cir. 2017) (reviewing trial court factual findings for clear error in a development‑agreement dispute)
- Kyocera Corp. v. Prudential‑Bache Trade Servs., Inc., 341 F.3d 987 (9th Cir. 2003) (private parties cannot dictate a federal court’s standard of review by contract)
- Winstar Corp. v. United States, 518 U.S. 839 (1996) (Government cannot avoid contract liability merely by enacting regulatory changes)
- Hinkson, United States v. Hinkson, 585 F.3d 1247 (9th Cir. 2009) (standard for reviewing district court factual findings for clear error)
- Shaw v. Regents of Univ. of Cal., 58 Cal. App. 4th 44 (Cal. Ct. App. 1997) (contract disputes with public entities are governed by ordinary contract principles, not mandamus review)
- 300 DeHaro St. Investors v. Dep’t of Hous. & Cmty. Dev., 161 Cal. App. 4th 1240 (Cal. Ct. App. 2008) (mandamus review does not supplant ordinary contract remedies when enforcing contractual obligations against a public entity)
- W. States Petroleum Ass'n v. Superior Court, 9 Cal. 4th 559 (Cal. 1995) (limits on admitting extra‑record evidence in administrative/mandamus review)