the film forum library tutorial contact

LNG Firm Pumps Up the Legal Pressure on Port by Cassandra Profita The Daily Astorian, September 9, 2009

Oregon LNG goes ahead with lawsuit against Port of Astoria

Oregon LNG is proceeding with its lawsuit against the Port of Astoria - even though the Port Commission voted last month to sign a two-year extension of the state land lease for the liquefied natural gas terminal in Warrenton.

Court records show the LNG development company, a subsidiary of the New York holding company Leucadia National Corp., has added lawyers to its legal team and filed summonses in federal court for all five Port commissioners since the board voted to extend its state land lease Aug. 19.

LNG opponents fear the company is trying to intimidate Port leaders into renewing the lease for 30 years, but the commission took no action on the issue at its meeting Tuesday.

"I always felt that the minute the Port decided to wait to make a decision on the DSL lease that Oregon LNG was pretty much blackmailing them into making a decision in their favor," said Astoria resident Lori Durheim, an LNG opponent.

Oregon LNG filed a civil lawsuit against the Port of Astoria claiming damages from a breach of contract if the Port doesn't renew the state lease. It was uncertain after the Port commission's Aug. 19 vote what Oregon LNG's next move would be.

When asked why Port commissioners have been summoned to court, Port Executive Director Jack Crider said: "I assume they're not satisfied with the two-year extension."

He declined to comment on the Port's response to the lawsuit.

The Port leases 96 acres on the Skipanon Peninsula in Warrenton from Oregon Department of State Lands and subleases the property to Oregon LNG. The Port charges $38,400 annually and passes the money on to the state without making any money as prescribed by two lease agreements signed in 2004. Both leases reach the conclusion of the first five-year term this year.

Oregon LNG renewed its sublease with the Port for a 30-year term in April, but last month the Port decided not to renew the underlying lease of state land for 30 years. Instead, the agency extended its lease with the state for two years and kept two 30-year options in place.

The decision to renew the state lease was a tough one for the Port Commission because of lingering questions over land ownership and potential fraud in the Port's arrangement of the pass-through lease in 2004. The state Attorney General's office is conducting a criminal investigation into business deals made at the Port under former director Peter Gearin, and Port leaders suspect the outcome could affect their position on the LNG lease.

In other business Tuesday, the board voted unanimously to:

• approve a contingent fee agreement with law firm Landye Bennett Blumstein LLP of Portland that will allow the firm to keep a portion of the funds it recovers from insurance companies in the Port's areawide petroleum contamination case.

  The Port has paid more than $300,000 to clean up legacy petroleum pollution from former Port tenants, and many expenses remain in the ongoing clean-up effort. Agency leaders now believe the Port can recover those expenses from its own insurance companies and insurers of the tenants that caused the pollution.

  Thane Tienson of Landye Bennett Blumstein has taken charge of recovering the costs for the Port, and his firm will now be eligible to keep a portion of the funds as payment. Under the agreement signed Tuesday, the Port will not be billed for legal services unless the firm recovers insurance funds and payment will come out of the settlement.

  "They certainly are experts in insurance recovery and contaminated property," said Crider.

• join an intergovernmental agreement to distribute the Port's share of taxes Georgia-Pacific's Wauna Mill paid to the county for failing to meet the tax exemption criteria in the county's enterprise zone. The Port's share of the taxes would be $36,400.

• Apply for a U.S. Department of Transportation Investment Generating Economic Recovery (TIGER) grant of $45 million to build two ships that the Port would lease to Santa Maria Shipping LLC of Santa Rosa, Calif. The TIGER program aims to stimulate economic activity, reduce congestion on U.S. highways and cut carbon emissions by moving freight on more fuel-efficient ships. If the Port receives the grant, each vessel would bring in between $300,000 and $1.5 million in annual lease revenue, according to Port Executive Director Jack Crider. The ships would be capable of carrying 75 to 100 containers on weekly round trips to four ports on the West Coast. Crider said the last-minute application is "a long shot" for this year, but at the very least it will put the Port in a better position to receive the grant in future years.

• Donate $100 to the Astoria girls soccer fund in honor of Astorian Jim Flint, who died of cancer last week and helped the Port reform its management after the departure of former Port director Peter Gearin.