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Enviros Object To Lengthy Contracts (Coming To Harbor Comm'n Final Enacting Vote Tonite) Facilitating Coal Exports From Port of LB



(June 9, 2014, 5:10 p.m.) -- LBREPORT.com has learned that two contracts agendized for final LB Harbor Commission enactment votes tonight (June 9) are drawing criticism from some environmental groups over a long time commercial practice at the "Green Port."

LB's Harbor Commission is scheduled to take enacting votes tonight (the second of two votes, the first was in late May) on both items, recommended by PoLB staff, to approve a twenty year agreement with Metropolitan Stevedore Co., which operates the Port's dry bulk terminal at Pier G. Although its major commodity is petroleum coke, coal and soda ash are also exported. Also agendized is a 15 year agreement with Oxbow Carbon, which operates a storage shed at the Port under a sublease agreement with Metropolitan.

In late May, project attorney Morgan Wyenn of the Natural Resources Defense Council's Santa Monica office criticized the Port's coal exporting practice pn 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.

Tonight's agendizing memo by PoLB staff states [text shown is for 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.

LBREPORT.com plans to carry tonight's Harbor Commission meeting LIVE on our front page -- www.LBREPORT.com -- starting at 6:00 p.m.



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