Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-18-16105/USCOURTS-ca9-18-16105-0/pdf.json

Nature of Suit Code: 950
Nature of Suit: Constitutionality of State Statutes
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

OAKLAND BULK & OVERSIZED 

TERMINAL, LLC,

Plaintiff-Appellee,

v.

CITY OF OAKLAND,

Defendant-Appellant,

and

SIERRA CLUB; SAN FRANCISCO 

BAYKEEPER,

Intervenor-Defendants-Appellants.

Nos. 18-16105

18-16141

D.C. No.

3:16-cv-07014-

VC

OPINION

Appeal from the United States District Court

for the Northern District of California

Vince Chhabria, District Judge, Presiding

Argued and Submitted November 12, 2019 

San Francisco, California

Filed May 26, 2020

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2 OBOT V. CITY OF OAKLAND

Before: Carlos T. Bea and Kenneth K. Lee, Circuit Judges, 

and Lawrence L. Piersol,* District Judge

Opinion by Judge Lee;

Dissent by Judge Piersol

SUMMARY**

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.

** This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.

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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.

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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.

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OBOT V. CITY OF OAKLAND 5

COUNSEL

Stacey M. Leyton (argued), James M. Finberg, and Andrew 

Kushner, Altshuler Berzon LLP, San Francisco, California; 

Barbara J. Parker, City Attorney; Maria S. Bee, Chief 

Assistant City Attorney; Jamilah A. Jefferson, Senior 

Deputy City Attorney; Office of the City Attorney, Oakland, 

California; for Defendant-Appellant.

Colin C. O’Brien (argued), Adrienne Bloch, Heather M. 

Lewis, and Marie E. Logan, Earthjustice, San Francisco, 

California; Jessica Yarnall Loarie and Joanne Spalding, 

Sierra Club, Oakland, California; Daniel P. Selni, Los 

Angeles, California; for Intervenor-Defendants-Appellants.

Robert P. Feldman (argued) and Andrew P. March, Quinn 

Emanuel Urquhart & Sullivan LLP, Redwood Shores, 

California; William B. Adams and Meredith M. Shaw, 

Quinn Emanuel Urquhart & Sullivan LLP, New York, New 

York; for Plaintiff-Appellee.

Tamara S. Galanter and Sara A. Clark, Shute Mihaly & 

Weinberger LLP, San Francisco, California; Carol R. Victor, 

East Bay Regional Park District, Oakland, California; for 

Amicus Curiae East Bay Regional Park District.

Xavier Becerra, Attorney General; Christie Vosburg, 

Supervising Deputy Attorney General; Scott Lichtig and 

Suma Peesapati, Deputy Attorneys General; Office of the 

Attorney General, San Diego, California; for Amicus Curiae 

State of California.

Jonathan C. Evans, Center for Biological Diversity, 

Oakland, California, for Amici Curiae West Oakland 

Environmental Indicators Project, Asian Pacific 

Environmental Network, No Coal in Oakland, West Oakland 

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6 OBOT V. CITY OF OAKLAND

Neighbors, Communities for a Better Environment, and 

Center for Biological Diversity.

James R. Williams, County Counsel; Greta S. Hansen, Chief 

Assistant County Counsel; Susan P. Greenberg, Deputy 

County Counsel; Office of the County Counsel, County of 

Santa Clara, San José, California; for Amicus Curiae 

California State Association of Counties.

Kenneth J. Rumelt, Vermont Law School, Environmental & 

Natural Resources Law Clinic, South Royalton, Vermont, 

for Amici Curiae Arthur Chen, Wendel Brunner, Wendy J. 

Parmet, Julia Walsh, Claire Broome, Thomas McKone, and 

John Swartzberg.

Kenneth B. Bley, Cox Castle & Nicholson LLP, Los 

Angeles, California, for Amicus Curiae California Building 

Industry Association.

Michael B. Kimberly and Matthew A. Waring, Mayer 

Brown LLP, Washington, D.C.; Katie Sweeney, National 

Mining Association, Washington, D.C.; Ellen Steen and 

Travis Cushman, American Farm Bureau Federation, 

Washington, D.C.; Peter C. Tolsdorf and Leland P. Frost, 

Manufacturers’ Center for Legal Action, Washington, D.C.; 

Richard Moskowitz, American Fuel & Petrochemical 

Manufacturers, Washington, D.C.; for Amici Curiae 

National Mining Association, National Association of 

Manufacturers, American Farm Bureau Federation, and 

American Fuel & Petrochemical Manufacturers.

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OBOT V. CITY OF OAKLAND 7

OPINION

LEE, Circuit Judge:

In a bid to revitalize the site of a shuttered U.S. Army 

base near the bay, the City of Oakland agreed to have 

Oakland Bulk & Oversized Terminal, LLC (“OBOT”) 

develop a commercial terminal there. But amid public 

backlash after the announcement that coal would be 

transported through the terminal, Oakland moved to block 

coal there, citing a provision in the agreement that allows it 

to impose new regulations if “substantial evidence” shows 

that the project would be “substantially dangerous” to 

“health and safety.”

At the San Francisco federal courthouse just miles across 

the bay from the site of the proposed terminal, the district 

court held a bench trial on whether Oakland breached its 

contract with OBOT. The court ruled against Oakland, 

finding that its health and safety determination about coal 

was “riddled with inaccuracies, major evidentiary gaps, 

erroneous assumptions, and faulty analyses.”

The City of Oakland and Intervenors Sierra Club and San 

Francisco Baykeeper appeal the district court’s ruling. We 

have jurisdiction under 28 U.S.C. § 1291. A key legal issue 

is whether we defer to the district court’s factual findings or 

the City’s health and safety findings. Because this is a 

breach of contract dispute — and not an administrative law 

proceeding — we must defer to the district court’s factual 

findings, which were not clearly erroneous. We affirm.

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8 OBOT V. CITY OF OAKLAND

BACKGROUND

I. Oakland contractually agrees to have a former Army 

base developed into a commercial terminal.

After the Oakland Army Base closed in 1999, the City of 

Oakland acquired some of its land. The City initiated a 

redevelopment plan in West Oakland to counter the physical 

and economic blight caused by closure of the base. As part 

of this plan, the City in 2012 entered into a Lease Disposition 

and Development Agreement with OBOT’s predecessor-ininterest.1 This agreement envisioned the development of a 

rail-to-ship terminal on the West Gateway portion of the 

closed base, which lies south of the Bay Bridge Toll Plaza 

and west of West Oakland.

In 2013, Oakland and OBOT entered into a Development 

Agreement (the “Agreement”), which gave OBOT the “right 

to develop the Project in accordance with . . . the City 

Approvals and the Existing City Regulations.” Under 

California law, development agreements are intended to 

assure that, “upon approval of the project, the applicant may 

proceed with the project in accordance with existing 

policies, rules and regulations.” Cal. Gov. Code § 65864(b). 

In other words, governmental regulations are frozen in 

recognition that a private party is investing substantial 

resources for the development project. This eliminates the 

“lack of certainty” that can “discourage investment in and 

commitment to comprehensive planning which would make 

maximum efficient utilization of resources.” Id. § 65864(a). 

To that end, California Government Code Section 65866(a) 

provides that “those rules, regulations, and official policies 

1 OBOT and its predecessor-in-interest, Prologis CCIG Oakland 

Global, LLC, are together referred to here as “OBOT.”

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OBOT V. CITY OF OAKLAND 9

in force at the time of execution” continue to apply to the 

project under a development agreement. Id. § 65866(a).

Consistent with this regulatory framework, the 

Agreement froze existing regulations as to OBOT’s 

proposed terminal, except to provide under Section 3.4.2 

that:

City shall have the right to apply City 

Regulations adopted by City after the 

Adoption Date, if such application (a) is 

otherwise permissible pursuant to Laws 

(other than the Development Agreement 

Legislation), and (b) City determines based 

on substantial evidence and after a public 

hearing that a failure to do so would place 

existing or future occupants or users of the 

Project, adjacent neighbors, or any portion 

thereof, or all of them, in a condition 

substantially dangerous to their health or 

safety.

(emphasis added). Importantly, the Agreement did not limit 

the types of bulk goods that could be shipped through the 

terminal. And prior to its execution, Oakland had some 

indication that coal was one of the potential commodities 

that might be handled.

II. Amid backlash at coal being shipped through the 

terminal, Oakland moves to block the proposed plan.

In 2014, OBOT agreed to sublease the terminal to 

Terminals and Logistics Solutions, LLC (“TLS”), a 

subsidiary of a Utah coal company. TLS intended to ship 

commodities, including western bituminous coal from Utah, 

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10 OBOT V. CITY OF OAKLAND

through the terminal. TLS delivered a letter to the City 

outlining its plan for the terminal.

Once word spread that coal would be shipped through 

the terminal, public and political pressure mounted against 

this plan due to concern that coal dust would affect the air 

quality of West Oakland residents and those working at the 

terminal. In September 2015, Oakland held an initial public 

hearing to assess the potential health and safety effects of 

OBOT’s proposed coal operations. In connection with the 

hearing, the city received: (i) an expert report by HDR 

Engineering supporting the project; (ii) expert reports by 

Dr. Phyllis Fox and Sustainable Systems Research, LLC 

opposing the project; and (iii) numerous comments from the 

public.

Following the hearing, Oakland solicited additional 

comments and evidence. It retained Environmental Science 

Associates (“ESA”) to analyze the evidence and evaluate the 

health and safety risks from the proposed coal operations. 

Separately, a councilmember also commissioned Dr. Zoe 

Chafe to prepare a report.

In June 2016, Oakland held a second public hearing. In 

connection with this hearing, Oakland received expert 

reports by ESA, Dr. Chafe, and the Public Health Advisory 

Panel (“PHAP”), all opposed to the project. The ESA report 

— a highly technical 160-page expert report — was publicly 

released one business day before the hearing.

Following the hearing, Oakland enacted Ordinance No. 

13385 (the “Ordinance”), which categorically barred bulk 

material facilities in Oakland from maintaining, loading, 

transferring, storing or handling any coal. The City then 

invoked Section 3.4.2 of the Agreement and adopted 

Resolution No. 86234 (the “Resolution”), which applied the 

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OBOT V. CITY OF OAKLAND 11

Ordinance specifically to OBOT’s terminal. The passage of 

the Ordinance and Resolution thus barred coal at the 

terminal, even though the Agreement itself did not prevent 

it.

III. OBOT sues Oakland for breach of contract, and 

the district court rules against Oakland after a 

bench trial.

OBOT sued Oakland in December 2016, alleging that 

the City breached the Agreement, and that the Ordinance and 

Resolution violated the Commerce Clause and were 

preempted by federal law. Shortly after Oakland filed a 

motion to dismiss, Sierra Club and Baykeeper moved to 

intervene. The district court denied intervention of right, but 

granted permissive intervention limited to “defending 

against the developer’s claims,” which did “not include the 

right to bring counterclaims, the right to bring cross-claims, 

or the right to prevent the case from being dismissed on a 

stipulation between the developer and the City.”

The court denied Oakland’s and Intervenors’ motions to 

dismiss. Following expedited discovery, the court denied 

the parties’ cross-motions for summary judgment on the 

breach of contract claim. The court scheduled a bench trial, 

and took the constitutional and federal preemption claims 

under submission pending resolution of the breach of 

contract claim.

At trial, the court heard testimony from experts and other 

witnesses proffered by both sides. Following post-trial 

briefing, the court issued its findings of fact and conclusions 

of law. The court found that Oakland lacked substantial 

evidence that the proposed coal operations posed a 

substantial health or safety danger. As the court put it, the 

record is “riddled with inaccuracies, major evidentiary gaps, 

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12 OBOT V. CITY OF OAKLAND

erroneous assumptions, and faulty analyses, to the point that 

no reliable conclusion about health or safety dangers could 

be drawn from it.” The court, as a result, determined that 

Oakland breached the Agreement when it passed the 

Resolution, and it declared the Resolution invalid.

STANDARD OF REVIEW:

Deference to the Trial Court or to the City?

Standard of review is pivotal to the outcome of this 

appeal: Should this court review this case as a breach of 

contract dispute in which we must give deference to the trial 

court’s factual findings — or as an administrative law 

proceeding in which the City’s health and safety findings are 

afforded deference?

Appellants contend that the district court erred by 

applying the traditional rules that govern a breach of contract 

case. According to Appellants, the district court should have 

instead adhered to administrative law review principles by 

limiting evidence to the record before the city council when 

it enacted the disputed Resolution and by giving special 

deference to the City’s health and safety determinations. 

Appellants argue that this deferential standard of review is 

mandated both by the terms of the Agreement and as a matter 

of law. We disagree.

Section 3.4.2 of the Agreement provides that Oakland 

may apply a new regulation to OBOT only if the City 

determines, based on “substantial evidence,” that the 

absence of the regulation will result in a condition 

substantially dangerous to health or safety. The district court 

found that “substantial evidence” refers only to the amount 

of evidence required to make a health and safety 

determination (e.g., “substantial evidence” vs. “clear and 

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OBOT V. CITY OF OAKLAND 13

convincing evidence”). In contrast, Appellants assert that 

the parties, in using the phrase “substantial evidence,” 

incorporated a judicial standard of review used in 

administrative law proceedings into Section 3.4.2. This 

interpretation of the Agreement is untenable for several 

reasons.

First, the plain language of Section 3.4.2 does not 

support Appellants’ position. See Cal. Civ. Code § 1638 

(“The language of a contract is to govern its interpretation, 

if the language is clear and explicit, and does not involve an 

absurdity.”). It refers to “substantial evidence,” not 

“substantial evidence review.” Moreover, the provision 

states that “substantial evidence” must guide the City’s

determination to apply new regulations to OBOT. Nowhere 

in Section 3.4.2 does it state that “substantial evidence” is 

the standard of review that governs a court’s determination 

of a claim of breach. And using the term “substantial 

evidence” to describe the quantum of evidence makes sense: 

The parties agree that “substantial evidence” has an 

established meaning under California law as evidence that is 

“reasonable in nature, credible, and of solid value.” Put 

another way, the term “substantial evidence” in the 

Agreement means that the City must rely on evidence that is 

“reasonable in nature, credible, and of solid value” in 

determining whether (in this case) transportation of coal 

through the terminal poses a substantial danger to health or 

safety. It does not speak to the judicial standard of review.

Second, other parts of the Agreement show that, where 

the parties intended to impose parameters on litigation, they 

did so expressly. For example, Section 14.14 provides that 

any challenge to a “termination, modification, or 

amendment” of the Agreement must be by administrative 

mandamus under California Code of Civil Procedure Section 

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14 OBOT V. CITY OF OAKLAND

1094.5(c) — a statutory provision that invokes “substantial 

evidence” judicial review. See Cal. Code Civ. P. § 1094.5(c) 

(“Where it is claimed that the findings are not supported by 

the evidence, in cases in which the court is authorized by law 

to exercise its independent judgment on the evidence, abuse 

of discretion is established if the court determines that the 

findings are not supported by the weight of the evidence. In 

all other cases, abuse of discretion is established if the court 

determines that the findings are not supported by substantial 

evidence in the light of the whole record.”). Section 14.14 

also limits venue for such actions to the Superior Court of 

the County of Alameda. Section 3.4.2, in telling contrast, 

contains no language about the terms of potential litigation. 

See Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 975 

n.2 (9th Cir. 2010) (“[T]he whole of a contract is to be taken

together, so as to give effect to every part, if reasonably 

practicable, each clause helping to interpret the other.”) 

(quoting Cal. Civ. Code § 1641).

And third, contracting parties cannot dictate to a federal 

court the standard of review that governs a case. See

Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 

341 F.3d 987, 1000 (9th Cir. 2003) (“[P]rivate parties lack 

the power to dictate how the federal courts conduct the 

business of resolving disputes.”) (citing K & T Enters., Inc. 

v. Zurich Ins. Co., 97 F.3d 171, 175 (6th Cir. 1996) (“The 

parties, however, cannot determine this court's standard of 

review by agreement. Such a determination remains for this 

court to make for itself.”) (other citations omitted). Thus, 

even if the parties intended to impose a “substantial 

evidence” standard of review under Section 3.4.2 — which 

the language of the Agreement does not support — they 

lacked the authority to do so. See id.

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OBOT V. CITY OF OAKLAND 15

We next consider whether “substantial evidence” 

judicial review applies here as a matter of law. Because we 

are aware of no California Supreme Court case that 

addresses whether administrative law review principles 

apply to a breach of contract action challenging an 

administrative decision, we must predict how that court 

would decide this issue. See Gravquick A/S v. Trimble 

Navigation Int’l Ltd., 323 F.3d 1219, 1222 (9th Cir. 2003) 

(“In the absence of a controlling California Supreme Court 

decision, the panel must predict how the California Supreme 

Court would decide the issue, using intermediate appellate 

court decisions, statutes, and decisions from other 

jurisdictions as interpretive aids.”).

Two California Court of Appeal decisions provide useful 

guidance. In Shaw v. Regents of University of California, 

the defendant university contended that, because the plaintiff 

was challenging an administrative decision by a state 

agency, the trial court erred in performing “a straightforward 

contract analysis” rather than applying the deferential 

mandamus standard of review. 58 Cal. App. 4th 44, 51 

(1997). The Court of Appeal rejected this argument, holding 

that because “mandamus is not an appropriate remedy for

enforcing a contractual obligation against a public entity,” 

the trial court “correctly applied contract principles in 

resolving the parties’ [contract] dispute.” Id. at 52.

Similarly, in 300 DeHaro Street Investors v. Department 

of Housing & Community Development, the Court of Appeal 

reaffirmed that the deferential mandamus framework does 

not apply to a contract action. 161 Cal. App. 4th 1240 

(2008). There, the plaintiff alleged that a state agency’s 

denial of a requested rent adjustment breached a regulatory 

contract with the agency. Id. at 1243–48. Rejecting the 

agency’s arguments, the court held that mandamus rules did 

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16 OBOT V. CITY OF OAKLAND

not apply because “plaintiff does not challenge a mere 

administrative decision, but an administrative decision 

concerning a provision of a contract to which the plaintiff 

and defendant were parties.” Id. at 1254–57.

Our court previously confronted facts similar to those 

here in a case that applied Arizona law. In Pure Wafer Inc. 

v. City of Prescott, the plaintiff entered into a development 

agreement with the City of Prescott for the construction of a 

metal refinishing plant. 845 F.3d 943, 946 (9th Cir. 2017). 

The development agreement protected the plaintiff from 

future changes to certain city regulations, most pertinently 

permitting the discharge of up to 100 mg/L of fluoride. Id. 

at 947. When the city later passed an ordinance limiting 

companies to 16.3 mg/L of fluoride discharge, the plaintiff 

sued for breach of contract. Id. at 949–50. Following a 

judgment in favor of the plaintiff after a bench trial, we 

reviewed the trial court’s findings of fact for clear error. Id. 

at 953–58. Notably, we did not apply administrative law 

standard of review principles and did not give deference to 

the city. Id.

Tellingly, all of the cases cited by Appellants discuss the 

prevailing standard of review in a mandamus (or similar) 

context, which is not at issue here. See, e.g., W. States 

Petroleum Assn. v. Superior Court, 9 Cal. 4th 559, 564 

(1995) (“We granted review to determine whether evidence 

not contained in the administrative record is admissible in a 

traditional mandamus action[.]”). The relevant issue here is 

whether that standard extends by law to the breach of 

contract context. Appellants offer no authority on this point, 

and provide no meaningful counter to the sensible 

delineation articulated in Shaw and 300 DeHaro Street 

Investors between the judicial treatment of mandamus 

actions and contract disputes.

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OBOT V. CITY OF OAKLAND 17

Moreover, showing deference to the government in this 

type of breach of contract dispute would unfairly tilt the 

scales towards the government. See Tonkin Constr. Co. v. 

Cty. of Humboldt, 188 Cal. App. 3d 828, 831–32 (1987) (“A 

contract between a governmental body and a private party is 

to be construed by the same rules which apply to the 

construction of contracts between private persons, and the 

public entity is bound in the same manner as an individual.”) 

(citations omitted).

Indeed, deferring to a government agency’s findings 

would effectively create an escape hatch for the government 

to walk away from contractual obligations if political winds 

shift or if it faces an unexpected public backlash against a 

deal negotiated with a private party. Through self-serving 

regulatory findings insulated by judicial deference, the 

government would stack the odds in its favor in any ensuing 

litigation. The house (of government) would always win, 

and private parties would be left to the whims of a regulatory 

roulette. Cf. United States v. Winstar Corp., 518 U.S. 839, 

895 (1996) (“[A]llowing the Government to avoid 

contractual liability merely by passing any ‘regulatory 

statute’ would flout the general principle that, ‘when the 

[Government] enters into contract relations, its rights and 

duties therein are governed generally by the law applicable 

to contracts between private individuals.’”) (citation 

omitted). Such a rule would undermine California’s public 

policy and statutory mandate that regulations should 

generally remain frozen after approval of a development 

project to avoid uncertainty that can “discourage investment 

in and commitment to comprehensive planning which would 

make maximum efficient utilization of resources.” Cal. 

Gov. Code § 65864(a).

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18 OBOT V. CITY OF OAKLAND

In light of these factors, and in the absence of 

contravening authority, we determine that the California 

Supreme Court would not apply administrative law review 

principles as a matter of law to a contract action challenging 

an administrative decision. The district court thus owed no 

deference to the City’s factual determinations here and did 

not err in considering extra-record evidence beyond what 

was presented at the public hearings.2

Since this action was decided by bench trial, we review 

the district court’s factual findings for clear error and its 

conclusions of law de novo. See Navajo Nation v. U.S. 

Forest Serv., 535 F.3d 1058, 1067 (9th Cir. 2008). “[W]hen 

an appellate court reviews a district court’s factual findings, 

the abuse-of-discretion and clearly erroneous standards are 

indistinguishable.” United States v. Hinkson, 585 F.3d 1247, 

1259 (9th Cir. 2009) (citation omitted). A district court 

abuses its discretion if “application of the correct legal 

2 The dissent suggests that the Agreement barred the district court 

from considering extra-record evidence for any purpose. No such 

blanket restriction exists in the Agreement. Rather, Section 3.4.2 focuses 

the breach of contract inquiry on whether the City relied on evidence that 

was “substantial,” without limiting the tools a reviewing court may use 

to make that assessment.

The district court struck a proper balance by considering extrarecord evidence, “to a limited extent,” for the sole purpose of “shed[ding]

light on the adequacy of the evidence that was actually before the City 

Council.” In other words, it was strictly employed to evaluate the 

credibility of the record evidence, not to supplement the record with new 

information regarding the safety of OBOT’s proposed coal operations. 

That careful balance was appropriate because the 160-page ESA expert 

report — which was the key scientific report relied upon by the City —

was issued one business day before the City voted on the Ordinance, 

depriving OBOT of an adequate opportunity to respond to the ESA 

report’s analysis and conclusions.

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OBOT V. CITY OF OAKLAND 19

standard was (1) ‘illogical,’ (2) ‘implausible,’ or (3) without 

‘support in inferences that may be drawn from the facts in 

the record.’” Id. at 1262 (citation omitted).

DISCUSSION

I. The District Court Did Not Clearly Err in Finding 

That Oakland Breached the Contract.

The sole issue presented by OBOT’s breach of contract 

claim is whether Oakland enacted the Resolution, under 

Section 3.4.2 of the Agreement, based on “substantial 

evidence” of a condition “substantially dangerous” to the 

health or safety of OBOT’s terminal users or adjacent 

neighbors. The parties agree that the district court correctly 

defined “substantial evidence” as evidence that is 

“reasonable in nature, credible, and of solid value.”

The district court found that Oakland lacked “substantial 

evidence” under Section 3.4.2 because the record it relied on 

was “riddled with inaccuracies, major evidentiary gaps, 

erroneous assumptions, and faulty analyses, to the point that 

no reliable conclusion about health or safety dangers could 

be drawn from it.” And because we are reviewing factual 

findings after a trial, we must give those findings substantial 

deference. We cannot reverse merely because we would 

have reached a contrary conclusion based on the evidence. 

See Minidoka Irrigation Dist. v. Dep’t of Interior, 406 F.3d 

567, 572 (9th Cir. 2005). Rather, we can reverse only if the 

district court’s findings are clearly erroneous to the point of 

being illogical, implausible, or without support in inferences 

from the record. See Hinkson, 585 F.3d at 1251. In 

reviewing the trial record in its entirety, we determine that 

the district court’s factual findings were not clearly 

erroneous.

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20 OBOT V. CITY OF OAKLAND

A. State Emissions Standards

The parties focus heavily on whether OBOT’s coal 

operations would exceed California’s “threshold of 

significance” of 10 tons per year of particulate matter 2.5 

(“PM 2.5”) emissions. Cal. Code Regs. tit. 17, § 70200. In 

layman’s terms, the issue is whether the amount of dust from 

the transported coal would surpass state standards. 

Appellants rely on the City’s ESA expert report, which 

concluded that the project would exceed California’s 

standard by generating over 20 tons of PM 2.5 emissions 

annually: 6 tons from rail transport, 11.7 tons from staging, 

and 2.7 tons from terminal operations. The district court, 

however, plausibly found these emissions estimates to be 

unreliable based on five flaws in ESA’s analysis.

1. Covers and Surfactants

The court determined it was a “big mistake” for ESA, 

Oakland’s expert, not to consider OBOT’s proposed control 

measures that would potentially mitigate the dust from the 

transported coal. Specifically, the court pointed to two 

measures that OBOT had committed to using: (i) rail car 

covers that envelop the transported coal; and (ii) chemical 

dust suppressants (“surfactants”) to keep the coal intact 

during rail transport and staging. These steps would mitigate 

the coal dust that would otherwise flow into the air, 

according to OBOT. But ESA refused to consider these two 

mitigation measures in calculating estimated emissions from 

the coal.

Appellants offer two justifications for ESA’s decision 

not to factor these controls into its emissions calculations. 

First, they contend there was no guarantee that OBOT would 

actually employ rail covers or surfactants. OBOT, however, 

had represented to the City in writing that it was prepared to 

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OBOT V. CITY OF OAKLAND 21

enter into a contract with Oakland that mandated the use of 

both covers and surfactants, with the penalty of a default 

being the termination of OBOT’s ground lease. This 

evidence provided the district court with a reasonable basis 

to conclude that the absence of a guarantee did not justify the 

wholesale disregard of these control measures in ESA’s 

analysis.

Second, Appellants argue that no credible scientific 

evidence supports the efficacy of covers or surfactants. The 

district court, however, reasoned that the “lack of existing 

data about the effectiveness of a new technology . . . is not 

enough to assume them away.” The record adequately 

supports this finding, particularly with respect to surfactants. 

In a study cited by ESA, the BNSF Railway Company 

concluded that surfactants generate a coal dust suppression 

rate of 75% to 93%. ESA, however, dismissed the study 

based on certain data reporting deficiencies (e.g., track 

gradient and weather conditions), coal type used, and the 

degradation of chemicals in transit. But as the district court 

noted, given the magnitude of the potential impact of 

surfactants, ESA should have employed a reasonable 

estimate that accounted for its criticisms of the existing data. 

Simply downgrading a possible 75%–93% mitigation effect 

to 0% created a major flaw. The court’s refusal to accept 

ESA’s rejection of the mitigation effect is precisely the kind 

of evidence weighing a trier of fact is supposed to do.

2. Coal Type and Threshold Friction Velocity

The district court also determined that ESA selected the 

wrong coal type in its emissions calculation for the staging 

phase, which resulted in an incorrect “threshold friction 

velocity” being used as an input. In less technical terms, 

some types of coal are “dustier” than others, and Oakland’s 

expert selected the wrong (i.e., dustier) coal in estimating the 

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22 OBOT V. CITY OF OAKLAND

emissions. The potential swing in the resulting emissions 

number — from 11.7 tons to 0.68 tons per year — could 

single-handedly have brought ESA’s total emissions 

calculation within California’s “threshold of significance” of 

10 tons per year.

Sufficient evidence in the record supports the court’s 

conclusion. OBOT’s expert credibly testified that a different 

coal type from the one selected by ESA would have more 

closely resembled the coal that OBOT planned to transport. 

ESA’s selection, in contrast, reflected coal that had “been 

crushed under heavy equipment, bulldozers, et cetera.” Not 

surprisingly, such crushed coal emits much more dust than 

other types of coal. Appellants do not contend that this 

testimony was rebutted in the record, but instead argue that, 

in a battle of experts, the court should have deferred to the 

city’s experts under a “substantial evidence” review akin to 

that used in administrative proceedings. Because 

“substantial evidence” judicial review does not apply here, 

Appellants’ argument fails. We hold that the district court 

did not clearly err in finding that ESA erred in its selection 

of coal type. See United States v. Elliott, 322 F.3d 710, 715 

(9th Cir. 2003) (“Where there are two permissible views of 

the evidence, the factfinder’s choice between them cannot be 

clearly erroneous.”) (citation omitted).

3. Rate of Emission During Rail Transport

The district court further criticized ESA’s calculation of 

rail transport emissions because it assumed constant wind 

and train speeds for the entire trip between Utah and 

Oakland, rather than accounting for local conditions. 

OBOT’s expert opined that factoring in local conditions 

would have reduced ESA’s emissions estimates for rail 

transport from 6 tons to 0.1 tons per year. Appellants’ only 

response to this is that one of its other experts (PHAP) 

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OBOT V. CITY OF OAKLAND 23

accounted for local wind and train speeds in its analysis. But 

this only further undermines the validity of ESA’s emissions 

estimates, as it reinforces that ESA could and should have 

employed those variables. The court therefore did not 

clearly err in this finding.

4. Best Available Control Technology for Terminal 

Operations

The district court identified an apparent calculation error 

in ESA’s emissions estimates for terminal operations. 

ESA’s report acknowledges that this calculation should 

account for the use of best available control technology, 

which would reduce terminal emissions by up to 99% (or 

2.43 tons annually). But ESA’s own spreadsheets appear to 

indicate that, instead of using the reduced figure, ESA 

errantly applied the pre-reduction number.

Appellants do not attempt to explain this discrepancy. 

They contend instead that, notwithstanding the apparent 

inconsistency, the court should have deferred to ESA’s 

calculations, and that even if this error occurred, it was 

relatively small in impact. As discussed above, the court 

owed no such deference to Oakland’s experts. And while 

subtracting 2.43 tons per year would not by itself bring 

ESA’s calculations down to a state-compliant level, it is not 

insignificant and has an incremental effect on ESA’s 

credibility. Based on this record, it was not clear error for 

the court to conclude that ESA’s calculation error for 

terminal operations further undermined the reliability of its 

overall analysis.

5. Air District Authority to Regulate

It is undisputed that ESA’s calculations did not account 

for regulations that the Bay Area Air Quality Management 

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24 OBOT V. CITY OF OAKLAND

District might impose on OBOT. Appellants argue, 

however, that the record offers no evidence to suggest that 

the Air District would apply any meaningful emissionsreducing regulations to the terminal.

It was not unreasonable for the district court to conclude 

that ESA should have at least considered the potential 

impact of Air District regulation. In relative terms, we view 

this as a less significant critique of the ESA report. But in 

conjunction with the four other significant flaws in ESA’s 

analysis, the record provides ample support for the district 

court to have plausibly concluded that ESA failed to present 

credible evidence that OBOT’s proposed coal operations 

would exceed California’s “threshold of significance” for 

PM 2.5 emissions.

B. State and National Air Quality Standards

Appellants contend that the PHAP report shows that 

OBOT’s proposed coal operations would also cause the PM 

2.5 concentration in West Oakland to exceed the state and 

national Ambient Air Quality Standard of 12 micrograms per 

cubic meter (μg/m3

), averaged over three years. PHAP first 

extrapolated from an Air District study that found the current 

PM 2.5 concentration in West Oakland to be 11.5 μg/m3. It 

then applied the findings of a separate study of coal-carrying 

rail cars near the Columbia River Gorge in Washington 

State, and concluded that the transport of coal for OBOT’s 

operations would increase the PM 2.5 concentration in West 

Oakland between 0.25 and 0.625 μg/m3 — bringing the 

resulting total near or above the state and national standard.3

3 Appellants reference in passing the World Health Organization 

standard of 10 μg/m3

. But given that, according to PHAP, West Oakland 

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OBOT V. CITY OF OAKLAND 25

The district court found PHAP’s analysis to be flawed 

because it carried over data and assumptions from a 

dissimilar situation. Specifically, in incorporating the 

Washington State study, PHAP did not sufficiently account 

for local conditions, controls, or the fact that the study 

assessed a “far dustier” type of coal. The court’s overall 

assessment is plausible. Under PHAP’s conclusion that the 

PM 2.5 concentration will increase by 0.25 to 0.625 μg/m3

, 

a majority of that range would keep West Oakland compliant 

with the state and national standard. It was therefore 

reasonable for the court to determine that PHAP’s use of a 

“far dustier” type of coal in its calculation rendered it 

unreliable in showing a likely violation of the standard —

particularly given, as discussed above, the significant 

potential impact of threshold friction velocity (which 

correlates to coal type) on the resulting emissions result.4 

See Husain, 316 F.3d at 839 (where evidence is “a close 

call,” the district court, “as the trier of fact, was in the best 

position to determine which of two plausible explanations 

was correct”).

already exceeds that figure, it is unclear how to assess a substantial 

danger in relation to the WHO standard (not to mention that both 

California and the EPA have implemented a different standard).

4 Appellants also briefly reference reports that indicated OBOT’s 

operations would cause daily exceedances of the national standard. The 

court did not clearly err in rejecting that evidence for failure to 

“meaningfully estimate” the number of exceedances that would result, 

given that the standard allows for seven exceedances per year. As the 

court noted, the expert reports are vague on this point, and do not engage 

in any meaningful analysis.

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26 OBOT V. CITY OF OAKLAND

C. Impact of Incremental Emissions

The district court rejected Appellants’ argument that any

emission of coal particulate matter poses a substantial danger 

to health. The court determined that this view renders 

meaningless the word “substantial,” which the court 

assigned the dictionary definition of “considerable 

importance, size, or worth.” The court further reasoned that, 

because this definition is inherently relative, a contextual 

standard is needed to assess whether the “substantial” 

threshold has been crossed.

Appellants counter, based on jury instructions given at a 

products liability trial, that “substantial” should be defined 

as “real and not insignificant.” Operating under this 

definition, Appellants argue that there is substantial evidence 

of a real danger from any incremental increase of coal 

particulate emissions in West Oakland. They also contend 

that the court improperly required a comparison to other 

sources of emissions in Oakland.

Under California law, “words of a contract are to be 

understood in their ordinary and popular sense, rather than 

according to their strict legal meaning; unless used by the 

parties in a technical sense, or unless a special meaning is 

given to them by usage, in which case the latter must be 

followed.” Cal. Civ. Code § 1644. Unlike “substantial 

evidence,” the phrase “substantially dangerous” has no 

special meaning in the civil context.5 This is underscored by 

5 In the criminal context, “substantial danger” is commonly defined 

as “a serious and well-founded risk.” See, e.g., People v. Superior Court 

(Ghilotti), 27 Cal. 4th 888, 895 (2002). There is no indication that the 

parties intended to adopt the criminal law formulation of that phrase. In 

any event, this definition is more similar to the one articulated by the 

district court than that urged by Appellants.

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OBOT V. CITY OF OAKLAND 27

the fact that Appellants reached to a decades-old products 

liability jury instruction, which has not resurfaced in later 

cases. Since there is no indication of any “technical sense” 

or “special meaning” in which the phrase was used, the 

district court was correct to adopt the ordinary dictionary 

definition.

Appellants misconstrue the district court’s requirement 

of a baseline for comparison. While the court did suggest 

comparisons to neighboring sources of emissions, these 

were simply illustrative examples of how Oakland could 

have identified credible evidence of a substantial danger. 

Much as Appellants tied their other evidence to state and 

national regulatory standards, the court plausibly determined 

that some type of reasonable guidepost was needed to 

understand if a theorized danger was “substantial.”

The portions of the expert reports that Appellants rely on 

are vague. For example, Dr. Chafe’s report opines that 

“[t]here is no safe level of exposure to fine coal dust 

particles,” without offering a means of measuring whether 

the safety threat posed by OBOT’s operations would be 

substantial. ESA similarly — and unhelpfully — states that 

“[i]f baseline concentrations of particulate matter are high, 

then any contribution from coal dust and coal train engines 

is likely to cause health effects.” PHAP offers the more 

specific data point that a one microgram per cubic meter 

increase in PM 2.5 correlates to a 1.6% increase in 

cardiovascular disease mortality, but does not provide any 

meaningful alternative to the EPA benchmark at which a 

finding a substantial danger could reasonably be made. 

Based on this record, the court did not clearly err in finding 

that the evidence Oakland relied on to show that any volume 

of coal emissions is harmful did not credibly establish a 

substantial danger.

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28 OBOT V. CITY OF OAKLAND

D. Risk of Coal Fire

Appellants rely on four sources for their contention that 

substantial evidence showed that the risk of fire from 

OBOT’s coal operations would pose a substantial danger: 

reports from ESA, Dr. Chafe, PHAP, and Dr. Fox. City OB 

at 59–61. The district court, however, found this evidence 

to be “speculation,” contradicted by the record, and lacking 

consideration of the fire department’s oversight. The record 

contains sufficient support for the court’s findings such that 

they are not clearly erroneous.

The district court could have reasonably determined 

ESA’s fire risk analysis to be unreliable based on evidence 

that its report was curated in a results-driven manner. Much 

of the fire risk section was written by ESA’s subcontractor, 

Steve Radis. But the report conspicuously omits Mr. Radis’ 

draft statement that “[m]ajor fires at coal terminals are not 

common or widespread,” and instead notes only that 

“[m]ajor fires have occurred at terminals located in Los 

Angeles, Scotland, and Australia.” The report’s value in 

establishing substantial danger was further diminished by its 

admission that many of the fires that do occur are “related to 

specific coal compositions that are known to have a higher 

tendency for spontaneous combustion, such as Powder River 

Basin coal from Montana and Wyoming” (as opposed to the 

bituminous coal OBOT plans to transport).

Dr. Chafe opines that bituminous coal “is highly 

volatile” and thus “easier to set alight than anthracite with its 

low volatile matter content.” But the National Fire 

Protection Association’s rating of bituminous coal as a low 

fire risk casts doubt on Dr. Chafe’s statements. This is, in 

fact, the very rating relied on by the fire department when 

responding to emergencies. The court’s decision not to 

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OBOT V. CITY OF OAKLAND 29

credit Dr. Chafe’s report as credible evidence of a fire risk 

was therefore plausible. See Elliott, 322 F.3d at 715.

The vagueness of the other two reports’ descriptions of 

fire risk undermines their probative value. PHAP makes 

generalized statements, such as “[i]t is not uncommon for 

coal to self-heat and begin burning,” “spontaneous 

combustion also is possible,” and “[t]here is a non-negligible 

risk of explosion and/or fire.” But the report provides no 

means of estimating the likelihood of such an event, from 

which an assessment of the substantiality of danger could be 

made. Similarly, Dr. Fox states that transporting coal in 

covered rail cars “could facilitate spontaneous combustion.” 

Dr. Fox acknowledges that ventilated tops would reduce the 

risk, but then dismisses this mitigation factor based on the 

unsupported contention that ventilated tops are “too 

expensive.” Viewed in light of the record as a whole — in 

particular, considering contrary evidence of bituminous coal 

as a low fire risk and the completely ignored element of the 

fire department’s oversight of OBOT’s fire safety plan —

the court did not clearly err in determining that these reports 

did not rise to the level of substantial evidence of a 

substantial danger.

E. Other Expert Evidence in the Record

Appellants contend that, in addition to the evidence 

discussed above, the record before Oakland when it passed 

the Resolution contained other, independently substantial 

evidence of a substantial danger. This evidence, however, 

suffers from the same flaws that the district court plausibly 

identified in its findings of fact.

Dr. Chafe Report: Dr. Chafe extensively discusses the 

danger to health arising from coal dust exposure, but does so 

at a generalized level. She does not estimate the emissions 

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30 OBOT V. CITY OF OAKLAND

that would be created by OBOT’s proposed operations, nor 

the resulting impact on air quality for West Oakland or the 

terminal. And while the report contends there is “no safe 

level of exposure to fine coal dust particles,” it provides no 

way to meaningfully assess whether a “substantial” danger 

would be created by OBOT. Similarly, while Dr. Chafe 

opines that bituminous coal is “highly volatile,” she does not 

discuss the likelihood of an explosion or fire other than to 

state it is “non-negligible.”

Dr. Fox Report: Dr. Fox warns that “about 18,200 

tons/yr [of coal dust] could be released within the state.” But 

she dismisses the mitigating impact of surfactants, despite 

acknowledging they can be at least 85% effective, on the 

basis that their use has “not been proposed by” OBOT —

which is contradicted by the record. She also provides no 

calculation for the relevant West Oakland area. And her 

report offers no estimate of the particulate matter (as 

opposed to coal dust) that would be emitted, except to state 

generally that there would be “[i]ncreased emissions of 

diesel particulate matter.”

Sustainable Systems Report: Sustainable Systems 

similarly dismisses surfactants and fails to provide any 

estimate of particulate matter emissions. Instead, like 

Dr. Fox, Sustainable Systems limits its calculations to coal 

dust generally. Notably, Oakland’s expert ESA determined 

that Sustainable Systems used incorrect inputs in its 

calculations, and had to revise Sustainable Systems’ coal 

dust estimates downward.

Dr. Bart Ostro: The substance of Dr. Ostro’s testimony 

to the city council was entirely encompassed within the 

PHAP report, which we discussed above. Dr. Ostro, like 

PHAP, referenced the Washington State study to opine that 

OBOT’s proposed operations would have a harmful impact 

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OBOT V. CITY OF OAKLAND 31

on the air quality of West Oakland. Dr. Ostro made the same 

mistake of failing to account for the different coal type used 

in the Washington State study, and unlike PHAP did not 

even appear to factor in local wind or train speeds. His 

testimony was therefore less reliable than PHAP’s report, 

which the court plausibly found lacked credibility.

Based on this record, we determine that the district court 

did not clearly err in finding that Oakland lacked substantial 

evidence of a substantial danger to health or safety when it 

enacted the Resolution.

F. California Government Code Section 65866

Intervenors separately assert two alternative arguments, 

based on California Government Code Section 65866, that 

no breach occurred. The district court correctly rejected the 

first argument and acted within its discretion in declining to 

reach the latter.

1. Interpretation of Section 3.4.2

Section 3.4.2 provides that “City shall have the right to 

apply City Regulations adopted by City after the Adoption 

Date, if . . .” (emphasis added). Intervenors contend that, 

unless the phrase “City Regulations” in the agreement is 

limited to land use regulations, Section 3.4.2 runs afoul of a 

limitation in Government Code Section 65866 that 

development agreements may freeze only land use 

regulations. Intervenors thus urge that, to harmonize Section 

3.4.2 with California law, “City Regulations” in the 

Agreement should be (re)defined as land use regulations.

Intervenors’ proposed interpretation of Section 3.4.2 is 

inconsistent with the language of the Agreement as a whole. 

The Agreement expressly defines “City Regulations” as the 

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32 OBOT V. CITY OF OAKLAND

“General Plan of City, the Oakland Army Base 

Redevelopment Plan (as amended prior to the Adoption 

Date), Oakland Army Base Reuse Plan (as amended prior to 

the Adoption Date), and all other ordinances, resolutions, 

codes, rules, regulations and policies in effect as of the 

time in question.” (emphasis added). Not in Section 3.4.2, 

the definitions section, or anywhere else in the Agreement 

does the phrase “City Regulations” distinguish between land 

use and non-land use regulations.

While California law states that a “contract must receive 

such an interpretation as will make it lawful,” this mandate 

applies only “if it can be done without violating the intention 

of the parties.” Cal. Civ. Code § 1643. The plain language 

of the Agreement manifests a clear intent by the parties for 

Section 3.4.2 to freeze all existing regulations, not just land 

use regulations. In addition, as the district court aptly noted, 

Oakland expressly invoked Section 3.4.2 in enacting the 

Resolution, putting to rest any possible ambiguity as to 

intent.

2. Validity of Section 3.4.2

The district court declined to consider Intervenors’ 

argument that, to the extent Section 3.4.2 applies to non-land 

use regulations, it is invalid because it conflicts with 

Government Code Section 65866. The court determined this 

argument to be outside the scope of Intervenors’ permissive 

intervention, which was limited to “defending against the 

developer’s claims and will not include the right to bring 

counterclaims [or] cross-claims.”

Under Federal Rule of Civil Procedure 24(b), the district 

court’s authority “to grant or deny an application for 

permissive intervention includes discretion to limit 

intervention to particular issues.” Dep’t of Fair Employment 

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OBOT V. CITY OF OAKLAND 33

& Hous. v. Lucent Techs., Inc., 642 F.3d 728, 741 (9th Cir. 

2011) (citations omitted). We review limitations imposed 

on permissive intervention for abuse of discretion. See id. at 

742.

Intervenors contend they are permitted to argue for the 

invalidity of the Agreement within the terms of their limited 

scope of intervention because this is a defense to OBOT’s 

breach of contract claim. Intervenors’ attempt to void the 

Agreement, however, can be construed as an affirmative 

cross-claim against Oakland for unconstitutionally 

contracting away its police powers. See Hollywood Park 

Land Co., LLC v. Golden State Transp. Fin. Corp., 178 Cal. 

App. 4th 924, 946 (2009). Given the wide latitude that Rule 

24(b) grants in dictating the terms of permissive 

intervention, the district court did not abuse its discretion in 

determining Intervenors’ argument to be outside their 

permitted scope of intervention. See Lucent Techs., 642 F.3d 

at 741 (citing Columbus–Am. Discovery Grp. v. Atl. Mut. 

Ins. Co., 974 F.2d 450, 469 (4th Cir. 1992) (“When granting 

an application for permissive intervention, a federal district 

court is able to impose almost any condition.”)).

II. The District Court Did Not Abuse Its Discretion in 

Denying Intervention of Right.

Intervenors argue that the district court erred in failing to 

grant intervention of right in this action. We disagree.

Federal Rule of Civil Procedure 24(a)(2) entitles 

intervention of right when an applicant: (i) timely moves to 

intervene; (ii) has a significantly protectable interest related 

to the subject of the action; (iii) may have that interest 

impaired by the disposition of the action; and (iv) will not be 

adequately represented by existing parties. Fed. R. Civ. Pro. 

24(a)(2); Prete v. Bradbury, 438 F.3d 949, 954 (9th Cir. 

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34 OBOT V. CITY OF OAKLAND

2006) (citation omitted). We review de novo the district 

court’s denial of intervention of right. United States v. Alisal 

Water Corp., 370 F.3d 915, 918 (9th Cir. 2004).

Adequacy of representation is the sole element at issue 

here. To establish inadequate representation, Intervenors 

needed to make a “very compelling showing” because: (1) a 

governmental entity (Oakland) was already acting on behalf 

of their interests in this action: and (2) Intervenors and 

Oakland share the same ultimate objective of upholding the 

Ordinance and Resolution. See Arakaki v. Cayetano, 

324 F.3d 1078, 1086 (9th Cir. 2003) (a “very compelling 

showing” is required to rebut a “presumption of adequacy” 

when “the government is acting on behalf of a constituency 

it represents” or when the applicant and existing party “have 

the same ultimate objective”).

None of Intervenors’ four arguments satisfy this 

heightened threshold. First, Intervenors contend that their 

narrower interest — a focus on health, safety and 

environmental protections, as opposed to Oakland’s broader 

concerns that include such matters as the City’s finances and 

its contractual relationship with OBOT — rebuts the 

presumption of adequacy. But this alone is insufficient. See

Prete, 438 F.3d at 957–58 (applicant must proffer sufficient 

“evidence” to show that government will take undesirable 

legal position). Intervenors failed to offer persuasive 

evidence, at the time of their motion to intervene, that 

Oakland’s broader interests would lead it to stake out an 

undesirable legal position. The presumption of adequacy 

thus remained intact.

Second, Intervenors argue that Oakland was neither 

positioned nor willing to make all of Intervenors’ arguments. 

Intervenors identify two such arguments. They point 

initially to the fact that Intervenors moved to dismiss 

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OBOT V. CITY OF OAKLAND 35

OBOT’s Commerce Clause claim, while Oakland did not. 

But Oakland later incorporated Intervenors’ Commerce 

Clause arguments at the summary judgment stage, 

conclusively establishing its willingness and ability to take 

that position. Intervenors also reference Oakland’s decision 

not to join their post-trial argument attacking the validity of 

the Agreement. Intervenors, however, failed to identify this

potential argument at the time of their motion, and may not 

do so for the first time after trial. See Janes v. Wal-Mart 

Stores Inc., 279 F.3d 883, 887 (9th Cir. 2002).

Third, Intervenors assert that their prior lawsuit seeking 

to compel Oakland to perform a CEQA environmental 

review of a potential coal terminal rebuts the presumption of 

adequacy. This ground for intervention, however, applies 

when an issue in the earlier litigation is also the reciprocal 

subject of the action in which the applicant seeks to 

intervene. See, e.g., Idaho Farm Bureau Fed’n v. Babbitt, 

58 F.3d 1392, 1398 (9th Cir. 1995) (environmental groups 

granted intervention because the challenged agency rule was 

promulgated only as a result of the groups’ earlier lawsuit 

against the agency). Whether Oakland needs to engage in a 

CEQA review is irrelevant to the issues in this case, and 

therefore has no bearing on adequacy of representation.

Finally, Intervenors state that their expertise in 

environmental issues warrants intervention of right. We 

rejected a similar argument in Prete. 438 F.3d at 958–59 

(specialized knowledge insufficient absent evidentiary 

showing that government could not obtain that knowledge 

through discovery or experts). Because Intervenors cannot 

show that Oakland was unable to acquire the requisite 

specialized knowledge to represent Intervenors’ interests, 

they cannot rebut the presumption of adequacy.

* * * * *

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36 OBOT V. CITY OF OAKLAND

In affirming, we do not opine on the ultimate issue of any 

alleged health or safety impact of OBOT’s proposed plan. 

Nor do we judge the economic or environmental merits of 

the Agreement to develop a commercial terminal that may 

house and transport coal. Rather, we affirm, under a clearly 

erroneous standard of review, the district court’s bench trial 

ruling that Oakland breached the Agreement.

AFFIRMED.

PIERSOL, District Judge, dissenting:

I respectfully dissent.

I. Background

A. The Development Agreement

After Congress closed the Oakland Army Base, the City 

of Oakland initiated redevelopment planning. In 2012, the 

City revised its redevelopment plan for the 34 acres (“the 

Project Site”) with that analysis never considering the 

possibility of coal at the terminal. In fact, in December 2013, 

Phil Tagami, an OBOT principal, assured community 

members that coal was not part of the redevelopment plan. 

In a newsletter, he stated that “It has come to my attention 

that there are community concerns about a purported plan to 

develop a coal plant or coal distribution facility . . . . This is 

simply untrue.” In July 2013, the City and OBOT’s 

predecessor-in-interest signed a “Development Agreement” 

formalizing its right to develop the Project Site into “a shipto-rail terminal designed for the export of non-containerized 

bulk goods and import of oversized or overweight cargo.” 

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OBOT V. CITY OF OAKLAND 37

The Development Agreement did not mention coal or any 

specific commodity.

The Development Agreement was adopted pursuant to 

the Development Agreement Legislation which permits a 

city or county to “enter into a development agreement” with 

any property owner “for the development of the property.” 

Cal. Gov’t Code § 65865. The statute “allows a city or 

county to freeze zoning and other land use regulation 

applicable to specified property to guarantee that a developer 

will not be affected by changes in the standards for 

government approval during the period of development.” 

Santa Margarita Area Residents Together v. San Luis 

Obispo Cty., 84 Cal. App. 4th 221, 226–27 (Cal. Ct. App. 

2000). Under the words of the statute,

Unless otherwise provided by the 

development agreement, rules, regulations, 

and official policies governing permitted uses 

of the land, governing density, and governing 

design, improvement, and construction 

standards and specifications, applicable to 

the development of the property subject to the 

development agreement, shall be those rules, 

regulations, and official policies in force at 

the time of execution of the agreement. A 

development agreement shall not prevent a 

city . . . from applying new rules, regulations 

and policies which do not conflict with those 

rules, regulations, and policies applicable to 

the property as set forth herein. . . .

Cal. Gov’t Code § 65866(a).

The Development Agreement that was executed by 

OBOT’s predecessor-in-interest froze in place local land use 

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38 OBOT V. CITY OF OAKLAND

regulations that existed at the time the Development 

Agreement was signed. An exception to the regulations 

freeze was provided in Section 3.4.2 of the Development 

Agreement which specifies that the City: 

[S]hall have the right to apply City 

Regulations adopted by [the] City after the 

Adoption Date [of the Development 

Agreement], if such application (a) is 

otherwise permissible pursuant to Laws 

(other than the Development Agreement 

Legislation), and (b) [the] City determines 

based on substantial evidence and after a 

public hearing that a failure to do so would 

place existing or future occupants or users of 

the Project, adjacent neighbors, or any 

portion thereof, or all of them, in a condition 

substantially dangerous to their health or 

safety.

Development Agreement 3.4.2.

B. Public Input

After it became clear in April 2015 that the terminal was 

going to be devoted to the storage, handling and loading of 

coal, the City announced a public hearing, the first step in a 

nearly year-long public process to assess the health and 

safety consequences of handling and storing coal at the 

terminal. Before the September 21, 2015, public hearing, 

OBOT submitted to the City a “Basis of Design” describing 

the basic framework for the terminal, and submitted a report 

by HDR Engineering claiming that coal dust pollution from 

coal-filled rail cars and terminal operations would be 

“negligible.” Intervenors submitted expert reports prepared 

by Dr. Phyllis Fox and Sustainable Systems Research, LLC. 

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OBOT V. CITY OF OAKLAND 39

The Fox report identified flaws in the HDR report proffered 

by OBOT and concluded that the terminal would cause 

adverse health and environmental impacts. The Sustainable 

Systems Research report estimated potential air emissions 

from coal-filled rail cars waiting to be unloaded, finding they 

would emit hundreds of tons of coal dust annually.

Nearly 600 people requested to speak at the hearing. 

Many, including prominent health and air pollution experts, 

testified that a coal terminal would endanger nearby 

residents of West Oakland. Dr. Muntu Davis, Public Health 

Director of Alameda County, testified that West Oakland 

already “had lots of sources of pollution” and that the 

residents there had “poor health outcomes” and existing 

“issues with air quality.” Likewise, Dr. Bart Ostro, former 

chief of the air pollution epidemiology section for the 

California EPA and author of over 100 peer-reviewed 

studies on the health effects of air pollution, foresaw 

“significant increases in coal dust” and stated that those 

increases would “affect the public health of the people of 

Oakland.” A local dockworker—formerly a nurse—

explained that she stopped accepting coal trans-loading jobs 

at the Port of Stockton because of the negative impacts of 

coal dust on her health.

At the hearing’s conclusion, the City Council voted 

unanimously to solicit additional public comments, 

requested more evidence from stakeholders, and instructed 

City staff to review and summarize the evidence submitted. 

City staff subsequently sent follow-up questions to 

interested parties and, in October 2015, received responses 

from OBOT, labor organizations, environmental groups 

including Intervenors, the Alameda County Public Health 

Department, the Bay Area Quality Management District, the 

U.S. EPA, and the East Bay Regional Park District.

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40 OBOT V. CITY OF OAKLAND

In early 2016, the City negotiated a contract with the 

consulting firm Environmental Science Associates (“ESA”) 

to analyze the health and safety impacts of storing and 

handling coal in West Oakland. The City Council approved 

the ESA contract on May 3, 2016. ESA issued its report on 

June 23, 2016.

Contemporaneous with the City Council retaining ESA, 

Councilmember Dan Kalb commissioned Dr. Zoë Chafe, 

Ph.D., MPH, to analyze and summarize findings on the 

potential health impacts and safety risks posed by OBOT’s 

proposed terminal. Dr. Chafe issued her report on June 22, 

2016.

The City accepted additional comments in June 2016, 

including a detailed report by the Public Health Advisory 

Panel, a coalition of prominent Bay Area physicians and 

public health experts. Fifteen other physicians, scientists, 

and public health professionals endorsed the Panel report. 

The Director of the Alameda County Public Health 

Department also concurred with the Panel’s conclusions.

C. Health and Safety Impacts on West Oakland 

Residents

On June 24, 2016, City staff published a detailed agenda 

report that analyzed the public comments received during 

months of public review. The report recommended that the 

City Council adopt an ordinance to prohibit storage and 

handling of coal at bulk material facilities and terminals in 

Oakland, and a resolution applying the ordinance to the 

Project Site. The agenda report described and attached the 

ESA report. It also discussed the Chafe report, the Public 

Health Advisory Panel report, and other evidence submitted 

to the City—including OBOT’s Basis of Design.

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OBOT V. CITY OF OAKLAND 41

All three major reports agreed that terminal activities 

would generate fugitive coal dust. The dust would include 

significant amounts of the harmful and sometimes deadly air 

pollutant PM2.5. Further, the Chafe and Public Health 

Advisory Panel reports found that coal dust emissions would 

contain toxic components like mercury and arsenic. All 

three reports discussed the enhanced risks of fire or 

explosion at OBOT’s proposed terminal, given coal’s 

potential to spontaneously combust. Finally, the three 

reports warned that these health and safety risks were even 

more consequential because of the terminal’s proximity to 

West Oakland—where residents were already 

disproportionately burdened with high levels of pollution, 

elevated cancer risks, poor birth outcomes, frequent 

emergency room visits for asthmatic children, and shorter 

lifespans. A study cited by the agenda report found that 

individuals born in West Oakland have a life expectancy that 

is 15 years less than individuals born in the more affluent 

neighborhoods within Oakland Hills.

D. Adoption of Ordinance and Resolution

On June 27, 2016, after a final public hearing, the City 

Council unanimously enacted Ordinance No. 13385 

(“Ordinance”), which states that owners and operators of a 

“Coal or Coke Bulk Material Facility shall not . . . Store or 

Handle any Coal or Coke.” The Council also unanimously 

approved Resolution No. 86234 which applied the 

Ordinance to OBOT. The City Council found, “based on 

substantial evidence in the record,” that failing to apply the 

Ordinance to OBOT would result “in a condition 

substantially dangerous” to the “health and/or safety” of 

nearby community members.

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42 OBOT V. CITY OF OAKLAND

E. OBOT Files Lawsuit

OBOT filed a lawsuit against the City in federal court for 

a claimed breach of contract. It alleged that the City violated 

Sections 3.4.1 and 3.4.2 of the Development Agreement 

when it applied the new Ordinance to the Project Site. 

OBOT alleged that the City breached the Development 

Agreement because the City’s determination was not based 

on “substantial evidence” that the handling and storage of 

coal at bulk material facilities within the City posed a 

substantially dangerous threat to the health or safety of 

community members.

The district court denied the parties’ cross-motions for 

summary judgment and scheduled a bench trial on the breach 

of contract claim to assess whether there was “substantial 

evidence” in the record before the City supporting its 

determination. The district court conducted a three-day 

bench trial beginning on January 16, 2018. At trial, OBOT 

was permitted to present lengthy extra-record testimony 

from three experts. These experts not only offered critiques 

of the City’s methods, evidence, and conclusions, but were 

also allowed to address the relevance and significance of 

new extra-record exhibits. Before, during, and after trial, the 

City objected to the district court admitting and considering 

extra-record evidence introduced by OBOT at trial. The City 

argued that this evidence would enable OBOT to improperly 

contradict the City’s administrative record with information 

that the Council had no opportunity to review. The City 

raised this issue in its pre-trial brief, its pre-trial objection, 

lodged a continuing objection at the outset of trial, and 

renewed the objection after trial.

On May 15, 2018, the district court issued Findings of 

Fact and Conclusions of Law. The court invalidated the 

Resolution as a breach of the Development Agreement, 

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OBOT V. CITY OF OAKLAND 43

concluding that “the record before the City Council [did] not 

contain enough evidence to support the City Council’s 

conclusion that the proposed coal operations would pose a 

substantial danger to people in Oakland.” Although the 

court acknowledged that the City’s decision “may only be 

justified on the basis of evidence that was before the City 

Council at the time the decision was made,” it significantly 

relied on extra-record evidence produced by OBOT in 

rendering its decision. The court’s opinion focused on 

OBOT’s critiques of the ESA report and largely did not 

address other evidence amassed and reviewed by the City.

II. Analysis

Section 3.4.2 of the Development Agreement allowed 

the City to apply new land use regulations1 to the Project site 

if the “City determines based on substantial evidence and 

after a public hearing” that failure to do so would pose a 

substantially dangerous threat to the health and safety of 

residents. The Development Agreement itself limits the 

consideration of what is substantial evidence to what 

evidence came before the City before it adopted the 

Ordinance.

Instead of the trial court’s review of the City’s 

determination being based on the evidence before the City in 

its public proceedings, the trial court allowed OBOT to 

present a variety of experts to contradict and otherwise point 

out flaws in the evidence that was put before the City. In 

addition to holding public hearings, the City considered 

1 The Ordinance at issue in this case concerns the health and safety 

impacts of a particular land use—the storage and handling of coal in bulk 

materials facilities within the City. Virtually all the evidence before the 

City Council and the court dealt with health and safety issues.

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44 OBOT V. CITY OF OAKLAND

evidence submitted by community members and experts on 

this issue. There was every opportunity for OBOT to present 

its own experts in the proceeding as others had done 

throughout the City’s almost year-long review. OBOT 

contends that it did not have a time to respond to the ESA 

report in particular, but OBOT never sought to do so, nor 

requested that it be allotted more time to respond. Instead, 

OBOT sued the City for breach of contract in federal court.

This case is styled as a breach of contract action. Section 

3.4.2 of the Development Agreement (the contract in this 

case) circumscribes what evidence is to be considered by the 

district court in determining whether the City was in breach 

of the Agreement. Per its terms, whether the City breached 

the Development Agreement depends on whether there was 

substantial evidence before the City in its proceedings 

regarding the Ordinance and Resolution.

Circumscribing by contract the evidence to be 

considered by the trial court renders this case analytically 

similar to an appeal challenging an administrative 

determination. There are limited exceptions allowing extrarecord evidence in an administrative appeal. See Fence 

Creek Cattle Co. v. U.S. Forest Service, 602 F.3d 1125, 1131 

(9th Cir. 2010). Those exceptions do not apply in this case 

given the language of the Development Agreement limiting 

the district court’s review to that before the City.

Even if any administrative appeal exceptions to the 

consideration of extra-record evidence were to apply, none 

would be applicable here. In a mandamus action challenging 

air quality regulations, the California Supreme Court upheld 

a trial court’s decision limiting evidence to the 

administrative record. W. States Petroleum Ass’n v. 

Superior Crt., 9 Cal. 4th 559, 579 (Cal. 1995). Much like 

OBOT in this case, the plaintiff in Western States Petroleum 

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OBOT V. CITY OF OAKLAND 45

Association sought to introduce extra-record evidence to 

show that the administrative agency had not considered “all 

relevant factors” in rendering its decision and to question the 

accuracy of the evidence relied upon by the agency. Id.

at 577. The California Supreme Court rejected the plaintiff’s 

arguments, stating that they were “nothing more than a thinly 

veiled attempt to introduce conflicting expert testimony to 

question the wisdom and scientific accuracy of the 

[agency’s] decision.” Id. at 578. The California Supreme 

Court concluded that “extra-record evidence can never be 

admitted merely to contradict the evidence the 

administrative agency relied on in making a quasi-legislative 

decision or to raise a question regarding the wisdom of that 

decision.” Id. at 579.

In the present case, 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. To allow otherwise 

subverts the public proceedings of governmental entities and 

makes their hearings a mere warm-up for when the heavy 

artillery is brought out in a trial.2 In the present case, once 

2 The district court recognized, at least in theory, that even in this 

breach of contract action, the “substantial evidence” standard is 

“deferential” to the City. In its opinion, the district court stated that it 

must confine its review to “whether the record before the City contained 

substantial evidence that the proposed coal operations would pose a 

substantial danger to health and safety” and may not substitute its own 

determination for that of the City’s. Where the district court erred was 

when it admitted extra-record evidence to supplement and contradict the 

evidence that was before the City in rendering its decision.

The majority opinion does away with any deference to the City’s 

determination. Because this action is styled as a breach of contract 

action, the majority concludes that the “district court [ ] owed no 

deference to the City’s factual determinations [ ] and did not err in 

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46 OBOT V. CITY OF OAKLAND

such evidence was allowed to be introduced, the trial court 

became a factfinder on various subjects of conflicting expert 

testimony. The Development Agreement did not provide 

for, nor does it allow the presentation of such evidence. 

Based on the entire record before the City, “a reasonable 

mind might accept as adequate,” see Braewood 

Convalescent Hosp. v. Workers’ Comp. Appeals Bd., 34 Cal. 

3d 159, 164 (Cal. 1983), 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, I would reverse the 

district court’s judgment and remand.

considering extra-record evidence beyond what was presented at the 

public hearings.” Whether an action is styled as a breach of contract 

action, a mandamus action, a declaratory action, or an administrative 

appeal, the majority’s conclusion allows OBOT (or any other party to a 

development agreement) to contest (using evidence that could have been 

submitted to the City, but was not) the applicability of a government 

regulation that was passed after the City conducted public hearings and 

took evidence. Under such precedent, there is little incentive for a party 

to a development agreement to participate, other than nominally, in the 

public proceedings. It may as well, as OBOT largely did, wait and sue 

the City in federal court for a breach of contract and litigate de novo, 

evidence of health and safety effects which should have been offered in 

the public proceedings.

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