A mass emailing (listed OFA-GLB for contact) and stated:

Protect Long Beach from the consequences to our environment and health as increasing amounts of toxic coal and petroleum coke blowing from open railcars pass through our communities into our air and water on their way to the L.B. Port...

Join us this Tuesday, August 19, 5 P.M. along with community and environmental coalition partners as the City Council hears the appeal recently filed by Earth Justice on behalf of the Sierra Club, Communities for a Better Environment, and National Resources Defense Council, asking it to send coal/petcoke export agreements back to the L.B. Harbor Commission for the environmental review.

A week earlier, the advocacy group "California Beyond Coal" sent a mass email urging the City Council to "put families first and stop the fossil fuel trains...filled with dirty, dangerous coal and petcoke [from] coming through California communities...courtesy of the Port of Long Beach."

[CA Beyond Coal text]...Send a message to the Long Beach City Council today to require the Port to conduct an environmental review under the California Environmental Quality Act (CEQA)...The Port's agreement to export fossil fuels will serve Long Beach's temporary economic interests at the extreme expense of overseas communities that are importing the American coal but are without emission controls.

California is at the forefront of climate and clean energy policy. So why is the Port of Long Beach promoting the interests and protecting the wallets of toxic fossil fuel industries? It is up to us to make sure California continues to make forward strides in renewable energy investment rather than allowing fossil fuel companies to regain control of our state.

The Port of Long Beach has transmitted a 16 page memo (plus attachments) -- co-signed by Harbor Dept. Exec. Dir. Jon Slangerup -- urging Councilmembers to reject the appeal and uphold to the Harbor Commission's decision and approve the contracts. To view the Harbor Dept. memo, click here.

The memo states in part:

First and foremost, the GMT payment requirement is simply an economic term of a ground lease. Based upon the current tariff, the Port receives $1.65 per metric ton exporting a minimum of 1.7 million metric tons of coal per year. For 1.7 million metric tons, the wharfage and shiploading fees amount to $2,8.05,000, based upon current tariffs. The GMT payment ensures that the Port will either receive the promised level of tariff income, or a payment that makes up the difference between the promised level of tariff income and the actual level of tariff income. These types of GMT payments are standard in the industry. The Port utilizes this concept in many of its leases and preferential assignments agreements, as does the Port of Los Angeles. Each of the seven other ground leases at the Facility is subject to a GMT. A recent article in PoriTechnology International, Edition 54, entitled "Finding the Right Balance Between Property Based and Minimum Guaranteed Throughput Rents at Ports" explained how adding a GMT component to port leases helps to promote efficient use of port property and an optimal tenant mix, as well as to help maximize the return on investment?

Second, even if throughput falls short.of the benchmark, this is not a "penalty" as Appellants have claimed. Guaranteed minimum rental payments are common provisions in commercial leases, and are simply economic terms. "Penalties," on the other hand, are completely different. The characteristic feature of a penalty is its lack of proportional relation to the damages which may actually flow from failure to perform under a contract. (Ridgley v. Tapa Thrift & Loan Assn (1998) 17 Cal.4th 970, 977.)

Here, there is no lack of proportionality. Instead, the GMT payment is based precisely on the shortfall in the wharfage and shiploader charges (the difference between the charges the Port actually receives and what would have been received if Oxbow met its GMT).

The ability to rely upon minimum payments is a critical part of the Port's financial planning and strategy, and has been an important factor in financial ratings of the Port. (See, e.g., the 2014 Fitch and Standard & Poor's Ratings included in the Additional Reference Documents.)

Third, Appellants' argument rests on the erroneous premise that the amount of coal that Oxbow will export is somehow tied to the GMT payment. The amount of coal that Oxbow will export is based upon supply and demand. Oxbow cannot simply export more coal than is called for by market demand for the sake of meeting a benchmark. Obviously, Oxbow needs customers and destinations to which to send the coal, and it is not logical to assume that it would incur all of the production, transportation, and shipping costs just to avoid paying the Port $1.65 per ton on any shortfall. If Oxbow falls short of its GMT, it makes additional payments to the Port as its landlord.

Such payments are of no environmental consequence.

As Trustees, the Harbor Commissioners have a fiduciary duty to ensure that the trust property is used productively and that the trust obtains a reasonable return on its investments. (Long Beach v. Morse (1947) 31 Cal.2d 254, 257.) "the trustee has a duty to make the trust property productive under the circumstances and In furtherance of the purposes of the trust." (Prob. Code § 16007; see also Rest.2d Trusts, § 181 ["The trustee Is under a duty to the beneficiaries to use reasonable care and skill to make the trust property productive in a manner that is consistent with the fiduciary duties of caution and Impartiality"].)

Finally, the GMT benchmark in this lease - 1.7 million metric tons per year - reflects what Oxbow has projected for its annual throughput in 2014. Based upon throughput levels for the first half of 2014, this projection appears to be accurate. As discussed above, this GMT is far below the original GMT that was applicable when the Coal Shed was first put into operation, and it is well below the maximum historical throughput of the Coal Shed.

It is a level of throughput allowed and achievable under the current agreements utilizing the existing Coal Shed and terminal equipment, and it is entirely consistent with current and historical operations at the Coal Shed.

Appellants also argue that by requiring the Coal Shed to be used primarily for coal, and not counting the petroleum coke toward the GMT, the Coal Shed Lease is somehow fundamentally changing the existing operation. The Coal Shed Lease requires that the Coal Shed be used primarily for coal exports for the first five years, during which no more than 100,000 metric tons of petroleum coke may be stored in the Coal Shed per year. However, the Coal Shed Lease's coal versus petroleum coke mix is entirely consistent with the current operations, as shown in the throughput table above. For the Coal Shed to be used primarily for coal is not a change. The Coal Shed was built as just that - a coal shed. The Negative Declaration and Harbor Development Permit identified it as a "coal shed." The 1992 preferential assignment agreement with Metro originally limited its use to coal storage. It was only in 2001, after the demand for coal declined, that the Port agreed to modify the agreement to also allow the storage of petroleum coke, and at present the Coal Shed is being used for both coal and petroleum coke, with coal as the predominant use.

Moreover, Oxbow already has the use of five other storage sheds at the Facility (the other two storage sheds at the Facility are ground leased to an unrelated third party), and these sheds are primarily devoted to petroleum coke export. These seven sheds have ample capacity to handle 100% of the petroleum coke exported from the Port. In addition, Oxbow is currently meeting its GMT for those other five shed leases. If the Port were to allow petroleum coke to count toward the GMT in the Coal Shed Lease, Oxbow could reallocate some of the petroleum coke from those other facilities to the Coal Shed, thereby reducing its total payments to the Port for the use of the Facility.

The Coal Shed Lease terms ensure that the Port is fairly compensated for the use of its Port-funded assets in accordance with the Port's trust duties.

Appellants have taken certain language from the Coal Shed Lease out of context and attempt to use the language to argue that starting with the sixth year of the Coal Shed Lease, "the Executive Director could potentially require a minimum of 10 million MT of coal to be shipped through Pier G under his sole and absolute discretion." (Attachment 7, p. 4.) That is not what the Coal Shed Lease (Attachment 5) says. Instead, when read in context, it is quite clear that the language, contained in Section 4, means that the Executive Director could approve a request made by Oxbow to increase the amount of petroleum coke above the 100,000 ton annual cap that applies in the first five years.

Moreover, given that the annual throughput capacity of the Coal Shed is over 2.3 million metric tons, Appellants' hypothetical argument is not possible. As noted above, when the CEQA analysis was completed for the 1980 Facility improvements, it was anticipated that up to 5 million metric tons of coal would be exported through Pier G.

The Operating Agreement between the Port and Metro (Attachment 3) allows Metro to continue in its terminal operating role at the Facility. It requires Metro to give up its preferential assignment in the Coal Shed so that the Port may lease the facility directly to Oxbow. It also requires Metro to undertake certain maintenance, repairs and replacements at the Facility, primarily for worker safety. Those activities are discussed further below.

The new agreements also contain environmental covenants that reinforce Port and City requirements and programs, as well as regional, state, federal and international policies for the Facility and vessels, including:
-- Clean Air Action Plan
-- Storm Water Pollution Prevention Program
-- Inspections and testing for hazardous substances, materials or wastes
-- Efficiency improvements at the Facility to reduce emissions
--
-- Standards for new off-road, diesel engine, heavy duty vehicles
-- Annual reporting for off-road and material handling equipment
-- Annual reporting of locomotive hours of operation
-- Green Building Leadership in Energy and Environmental Design (LEED)
-- Vessel Speed Reduction Program
-- Vessel At-Berth Emissions Controls
-- Vessel Low Sulfur Fuel
-- Vessel International Maritime Organization (IMO) Compliance
-- Green Ship Incentive Program In summary, the intent of the new agreements is to ensure a fair return on the Port's tidelands assets and to ensure proper maintenance, repair and replacements at the Facility, which will not have any measurable effect on the capacity of the Facility but which will improve worker safety. The agreements involve an existing facility that will continue to be operated within its existing capacity. The current operator of the Facility and the current user of the Coal Shed will remain the same. The only change is the amount of rent and other compensation paid to the Port, and that the Facility will get needed maintenance, repairs and equipment replacements.

The coal being exported through the Port can't be burned here under U.S. environmental regulations but it is used abroad. In Harbor Commission testimony, industry representatives noted that coal has been exported through the Port for decades and said the Port now strikes a good balance between the environment and business.

At the June Harbor Commission meeting, in response to a podium inquiry by enviro advocate Ann Cantrell -- to which Harbor Commission President Doug Drummond publicly pursued an answer -- PoLB staff acknowledged that SCAQMD's current rule 1158 doesn't prevent transporting coal and petroleum coke to and from the Port by train in open rail cars.

Environmental advocates argued that exporting coal flew in the face of reducing use of fossil fuels, was inconsistent with PoLB's "Green Port" policies and subjected people in other countries to pollution we didn't accept for ourselves.

The Harbor Commission vote (the second of two votes, the first was in late May), recommended by PoLB staff, approved a twenty year agreement with Metropolitan Stevedore Co., which operates the Port's dry bulk terminal at Pier G (where the major commodity is petroleum coke but coal and soda ash are also exported.) Also approved was a 15 year agreement with Oxbow Carbon, which operates a storage shed at the Port under a sublease agreement with Metropolitan.

[From LBREPORT.com's "amnesia file": Through the 1990s, bulk petroleum coke was piled in open air at the Port of LB, sending black dust into downtown and beyond. Port officials made endless excuses for this, at one point trying to attribute the soot to tire debris. Then newly-elected Councilman Alan Lowenthal made an issue of this, insisting on covering the open coke piles. After a sizable political battle, the City of LB ultimately supported [and the Port abandoned its previous resistance to] amending SCAQMD Rule 1158 to require covering bulk petroleum coke and coal, which are now housed inside sheds/barns on Port property.]

In late May 2014, project attorney Morgan Wyenn of the Natural Resources Defense Council's Santa Monica office criticized the Port of LB's coal exporting practices and the two new contracts on NRDC's blog.

[NRDC attorney Wyenn blog text]...These agreements require the Port to export 1.7 million metric tons of coal every year for the next five years. And after five years, the amount of coal required can be increased, without any input from the public.

It is unacceptable for an arm of our government -- the Port is an entity of the City of Long Beach -- to be in the business of pushing climate-change causing fuels on to other countries. This is especially true given that every level of our government, from the White House to the State of California and even the City of Long Beach, are advancing increasingly stronger policies to phase off of coal and otherwise reduce our greenhouse gas emissions. The Port deciding to stay in the business of coal exports flies in the face of our national, state, and local city policies.

Further, this decision flies in the face of one of our state's most important environmental laws, the California Environmental Quality Act (CEQA). CEQA requires agencies like the Port to analyze the environmental impacts of these kinds of decisions, yet the Port has done absolutely zero analysis of the environmental impacts of exporting millions of tons of coal...

...The Port [of Long Beach] proudly calls itself "The Green Port," but if it keeps exporting coal, I think we should ask them to get a different motto.

In its agendizing memo, PoLB staff stated [text shown below is from the Metropolitan agenda item]

...[PoLB agendizing memo re Metropolitan]...Metropolitan Stevedore Company (Metro) has provided stevedoring services in the Port of Long Beach since 1923 and has operated the Port’s dry bulk terminal on Pier G since 1962. The long standing relationship with Metro has been a successful and continuing the relationship would be beneficial to both parties. Metro currently operates on Pier G through the Second Amended and Restated Preferential Assignment Agreement HD-6655 (Restated PAA). The Agreement assigns to Metro 23.28 acres of land and facilities, including the wharf, conveyor system, ship loaders, Pad 7 (a vacant site) , and the Port-owned shed. The conveyor system serves eight sheds within the terminal. All but one shed were privately constructed through separate ground leases. The terminal provides an essential outlet for petroleum refining through exporting petroleum coke (a byproduct of the refining process). Although the predominant commodity handled through the terminal is petroleum coke, soda ash and coal are also exported through the terminal. The Restated PAA was effective as of April 1, 1981, and expires on March 31, 2016. Under the existing agreement, Metro pays the Port, as a pass through, tariff charges collected for the handling of bulk cargo on the terminal, as well as rent for the Port-owned shed, which Metro, in turn, subleases to Oxbow Carbon & Minerals, LLC.

A proposed Operating Agreement has been negotiated that provides for early termination of the existing agreement. In the case of long term agreements such as this, it is customary to negotiate renewals or new terms prior to the expiration date, to allow both parties an opportunity to properly plan for the future. Environmental Planning has reviewed the scope of the new Operating Agreement and has analyzed the impacts of the proposed maintenance and safety improvements deemed to be necessary for the Metro dry bulk terminal. In accordance with CEQA Guidelines, a Categorical Exemption has been determined to be the appropriate level of environmental review for this project. The cited exemptions are: Section 15301, Existing Facilities and Section 15302, Replacement or Reconstruction. The scope and impacts of the project have been reviewed for exceptions to the Class 1 and Class 2 exemptions, as set forth in CEQA Guidelines Section 15300.2. As none of the identified exceptions are applicable to this project, the Categorical Exemption determination has been verified. The analysis for the Categorical Exemption is included in this report as an attachment.

This new agreement, a type not previously implemented in the port, will provide fee and performance oversight of the terminal operation which services the Port’s tenants and customers at the Port’s Pier G dry bulk terminal. The agreement also stipulates needed repairs and upkeep of facilities, which include safety improvements.

Discussion of Current Issues

The salient features of the new Agreement are as follows:

Type of Agreement: Operating Agreement

Premises: There is no leasehold interest. Instead, an Area of Responsibility has been defined in Exhibit A of the Agreement. The Area of Responsibility covers most of the Pier G bulk terminal, with the exception of the existing storage sheds.

Commencement

Date: Upon execution by Executive Director

Term: 20 years

Existing Agreement: This agreement terminates the existing PAA. Because the existing agreement calls for an annual rent payment for the Port-owned shed, the ground rent will be prorated to the effective date. The removal of the Port-owned shed from the Restated PAA does not change the operation of the shed, but simply allows the Port to directly lease the shed and, therefore, achieve a guideline rate of return on the value of the Port-owned asset. The Trona Export Terminals (soda ash, etc.) partial assignment of rights to the north rail yard will be terminated. This does not prohibit soda ash, but simply eliminates the partial assignment of rights for soda ash trains in the north rail yard.

Compensation: Tariff fees are passed through Metro to the Port from tenants or customers that use the Pier G shiploader facilities. There is no guaranteed annual minimum throughput requirement for the Operating Agreement, but each Port lease for the sheds contains annual minimum throughput requirements. In addition, the proposed Metro Agreement contains a provision for renegotiating compensation every five years.

Rights Conveyed: Preferential Right to operate the shiploader facility on Pier G to receive, handle and load bulk commodities...

...Environmental Covenants: Metro agrees to cooperate and assist with facilitating at berth emissions control testing at no cost to Port, install low energy lighting, and replace existing vehicles with zero emissions vehicles within 3 years.

Recommended Action: We [PoLB staff] request that the Board of Harbor Commissioners approve the new Operating Agreement with Metropolitan Stevedore Company, adopt the authorizing ordinance and make CEQA determination.