Over the last few months, a law firm with close ties to the coal industry has been investigating three members of the Oakland City Council — Lynette Gibson McElhaney, Dan Kalb, and Rebecca Kaplan — who have expressed opposition to a proposal to ship millions of tons of coal through a new maritime facility at the former Oakland Army Base. Records and interviews show that the law firm has pursued its investigation quietly through a series of public records requests submitted to the City of Oakland. The requests were made by Kristin Nichols of Holland & Hart, a Denver-based law firm that counts among its clients some of the largest coal mining companies in the world, and financial corporations that fund the expansion of coal mining.
In at least five different records requests — three submitted on June 15, one on September 9, and another on September 18 — Nichols asked the three city councilmembers and their staffers to hand over an extensive list of records, including "voice mails, emails, text messages, and any other writings," between themselves and various groups and labor unions that are leading the opposition to coal shipments through Oakland. Among the groups identified in the law firm's investigation into the councilmembers' communications are the Sierra Club, West Oakland Environmental Indicators Project, the International Longshore and Warehouse Union, and the Asian Pacific Environmental Network. Nichols is also seeking the councilmembers' appointment calendars and other documents regarding the old Oakland Army Base redevelopment project that relate to the controversy over whether or not to ban coal shipments in the city.
Gibson McElhaney, Kalb and Kaplan have been critical of a plan by Oakland developer Phil Tagami and businessman Jerry Bridges, a former Port of Oakland executive director-turned maritime shipping executive, to accept a $53 million investment from four Utah counties in the Oakland Bulk Oversized Terminal. Tagami is building the terminal near the Bay Bridge on the old Army Base site, and Bridges' firm, Terminal Logistics Solutions (TLS), will operate it. The money from Utah would secure capacity for coal exports far into the future, with the Kentucky-headquartered Bowie Resource Partners coal company, which owns three massive coal mines in central Utah, earning potentially billions of dollars on the deal (see "Banking on Coal in Oakland," 8/19).
So who are Holland & Hart's attorneys working for? Who is paying for the investigation into the Oakland city councilmembers? And why? I reviewed numerous public records and asked the major players behind the coal export scheme, but no one is willing to say who hired Holland & Hart.
In August, I called officials with Bowie Resource Partners to ask them if they had hired Holland & Hart to look into Oakland councilmembers. James Wolf, Bowie's chief financial officer, declined to answer any questions about his company's efforts to bring Utah coal to Oakland. "Let me tell you, I don't want to be rude. ... You need to talk to TLS," said Wolf, in a hostile tone of voice, before hanging up the phone. Since them, Bowie representatives have not returned my emails and phone calls.
Bridges and other TLS representatives have also not responded to multiple phone calls and emails. But it's unclear why TLS would hire the Colorado law firm, because TLS does not appear to have a connection to it. Tagami, who is the master developer of the Oakland Army Base, also did not respond to emails and a telephone message left with his secretary concerning Holland & Hart. At the September 21 Oakland City Council hearing on the controversial coal issue, Bridges and TLS and Tagami and his company, California Capital Investment Group, were represented by lawyers from the firms Stice Block and Venable — not Holland & Hart.
In August, I called Nichols of Holland & Hart at her office in Greenwood Village, a suburb south of Denver, and I asked her who she was working for. She declined to say. But in a subsequent email, Nichols wrote that "Bowie Resources has not hired Holland & Hart to submit record requests to the City of Oakland nor to prepare a lawsuit against the City of Oakland."
In my last email to Nichols, I also referenced whether she was working for Morgan Stanley bank. The reason is that information on the law firm's website, and in public records maintained by the US Securities and Exchange Commission, raised questions as to whether Morgan Stanley was behind the investigation. According to Holland & Hart's website, Nichols is a junior associate in the firm's mining practices group. The head of the firm's mining group is attorney Robert Bassett, a partner in Holland & Hart. Bassett is essentially Nichols' boss, and Basset's webpage lists some of his clients, and the work he has accomplished for them. This includes recent assistance he provided to Morgan Stanley bank "in a $470 million financing for the purchase of three operating coal mines in Utah."
The law firm's website doesn't list the names of the mines, nor the name of the company that bought them with borrowed money from Morgan Stanley. But other documents link Morgan Stanley to Bowie Resources and to three of its Utah coal mines — Sufco, Skyline and Dugout Canyon — which are located in the same counties that have proposed to invest $53 million in the Oakland terminal. In 2013, the Arch Coal company sold these three mines to Bowie Resource Partners for $435 million in cash. A press release issued by Bowie Resource Partners at the time of the deal stated that Morgan Stanley bank made part of the loan to Bowie to purchase the mines, and that "Morgan Stanley & Co. LLC is acting as the financial advisor to Bowie." Bassett of Holland & Hart was part of that deal.
I called and emailed Bassett last week to ask him who he's working for, and why his colleague Nichols has been seeking so many records from the Oakland city council. "I don't believe anyone at our firm is in a position to comment on the Oakland port issue," he replied on Monday. I sent a follow up email the same day asking him to confirm or deny that he's working for Morgan Stanley. "We cannot comment on this matter," he wrote in a one-line response.
Then I asked Morgan Stanley representatives if the bank had hired Holland & Hart to investigate Oakland councilmembers, and if the bank was actively involved in plans led by Bowie Resource Partners to ship coal through Oakland. Mary Claire, a spokesperson for Morgan Stanley, wrote back in an email, "[W]e will decline to comment." In several follow-up emails, I pressed the bank for an answer, but Morgan Stanley representatives repeatedly declined to comment.
Records show that Deustche Bank also partnered with Morgan Stanley in loaning Bowie money in 2013 to buy the Utah mines in question. And Bassett of Holland & Hart has worked for Deutsche Bank in previous years, according to the law firm's website. Deutsche Bank representatives declined to comment.
The three councilmembers who are the subject of Holland & Hart's investigation said they don't know who the law firm is working for. "I'm not sure what they expect to get, but when we get public records requests, we comply with them," said Kalb. "I would just hope anyone who wants to take a position on this would have the honesty to say who they are," added Kaplan.
But all this secrecy about who's pushing the coal export plan in Oakland, and who is hiring attorneys to investigate city officials who have spoken out against it, has frustrated opponents who say coal will cause harm to people's health and the environment. "There is a global landscape of powerful economic interests, including desperate western coal companies, international financiers, and big national banks, who are trying to make toxic economic decisions for Oakland," said Margaret Rossoff, a member of the No Coal in Oakland Coalition.
Ben Collins, a senior research and policy campaigner at the Rainforest Action Network, has been tracing the connections between banks and coal companies since 2011. He said the coal industry relies on loans from banks such as Morgan Stanley and Deutsche Bank to finance the acquisition of new mines, expand mining operations, and find markets for their fuel, and that these banks have earned billions on deals involving coal.
If Holland & Hart's attorneys are working on behalf of Morgan Stanley, or another bank, it wouldn't be surprising. Morgan Stanley and Deutsche Bank are gambling hundreds of millions on whether or not Bowie Resource Partners can gain access to Oakland's waterfront. The 2013 loans that both banks extended to Bowie is just the beginning. In June, Bowie filed paperwork with the SEC to prepare the way for a potential public offering of its shares. Morgan Stanley is one of the investment banks that hopes to help take Bowie public. Others include Citibank, UBS, Credit Suisse, and Stifel. A Bowie IPO would be worth much more to these banks if the company can demonstrate to investors it has secured access to Asian markets via Oakland.
As to why these financial giants would have bet so much money on bringing coal through Oakland, at a time when communities across the West Coast are rebelling against the industry, Collins said, "I would speculate they see it as high risk, high reward."