Oakland has shaken off the biggest legal threat to its budget in years. A federal judge in Kentucky has thrown out a lawsuit in which a coal terminal developer claimed the city owed it at least $1 billion, and the same day Gov. Gavin Newsom signed a state law that adds a new hurdle for the proposed West Oakland coal terminal.
What the lawsuit claimed
Insight Terminal Solutions, or ITS, held a sublease to develop a 19-acre corner of the former Oakland Army Base, near the foot of the Bay Bridge, as a marine export terminal. The company argued that the city interfered with that lease and blocked its financing, driving it into bankruptcy. ITS filed for bankruptcy in Kentucky in 2019 and in 2024 brought its claims against Oakland in that same bankruptcy court, seeking not less than $1 billion plus interest and other damages.
The case had been going badly for the city. Last year a Kentucky bankruptcy judge found Oakland responsible for ITS's collapse, and KQED reported that the city faced possible damages of between $230 million and $654 million.
Why the judge tossed it
On Sept. 30, U.S. District Judge Benjamin Beaton of the Western District of Kentucky dismissed the case without prejudice and vacated the earlier bankruptcy ruling. He found that a dispute between California parties under California law belonged in a California court, and he wrote that ITS's choice to sue in Kentucky "carries at least a whiff of forum shopping." Hoodline, citing The Oaklandside, reported that he also weighed local interests, including the risk to Oakland's finances.
"The City of Oakland maintained from the start that this case was improper and should be dismissed," the city attorney's office said in a statement quoted by KQED. "The district court agreed, and we're pleased with the result."
Because the dismissal is without prejudice, ITS can still appeal to the Sixth Circuit or refile in California. Opponents of the terminal argue neither path is likely to change the outcome, and ITS's lawyers did not immediately comment on next steps, according to Hoodline.
The terminal fight isn't over
The separate developer behind the project, Oakland Bulk and Oversized Terminal, won its own appeals last year and is still moving ahead with plans to ship more than 13 million tons of coal a year, according to KQED, which also reported that the Trump administration announced a $75 million investment in the project in June.
That is where the new law comes in. Assembly Bill 40, written by Oakland Assemblymember Mia Bonta and signed Sept. 30, requires an environmental impact report before any large bulk coal facility is built in California. KQED reported that Bonta designed it with the West Oakland terminal in mind, which means the project now faces a full environmental review before coal can move through the site.