Oil Terminal Project Highlights Larger Issues
Commissioner Diane Middleton challenges staff on leasing policies
Homeowner activist Janet Gunter made another attempt to get action on a threat she’s been fighting for decades at the Sept. 22 Harbor Commission meeting. “The city and Port of LA have continued to deny that they have any way to remove or relocate the highly explosive 25 million gallon Rancho butane storage facility,” but that wasn’t true, she argued in her comments on a proposed project to combine the operations of the NuStar and Valero oil terminals (Berths 163 and 164) into a single new wharf structure, with new 30-years leases for both companies.
Rancho “serves primarily now as the remote storage location for excess butane gas produced by the Valero refinery located some 8 miles away,” Gunter explained. Thus, “This agenda item offers a unique opportunity to intervene in the interest of public safety, and the protection of the port itself. Valero is seeking the renewal of their lease. Prudent behavior would mandate that Valero’s renewal is contingent upon the agreement to halt storage at Rancho and find space on their own grounds, or elsewhere.”
After public comment, Commissioner Diane Middleton queried Director of Environmental Management Chris Cannon, “Do I correctly understand that item 7 has to do with Berth 163 and ‘64 and that it has no relationship to what Ms. Gunter referred to as the Rancho site?”
Cannon confirmed this impression by referencing his initial presentation, when he had quoted from the State Lands Commission website.
“MOTEMS stands for Marine Oil Terminal Engineering and Maintenance Standards, and they have established minimum engineering, inspection and maintenance criteria for all marine oil terminals in California. They’re to prevent oil spills and protect public health, safety and the environment,” he’d said. “So that’s what this is about.”
In one sense he was right: that was the primary purpose of the project. But the environmental document itself said that 30 year leases for both companies were included in the project — though their details were not spelled out.
“A proposed lease will come later,” port spokesman Arley Baker told Random Lengths News. The environmental analysis “required analysis of the lease duration and operations,” he explained. “The proposed lease will require separate action by the board and the city council.”
The connection Gunter drew was through those leases — specifically Valero’s lease. And though it might have been premature to take action, commissioners certainly could have sent a message in advance. We know that because Middleton herself later did precisely that.
“There are a number of federal, state and other reg
ulations pending, with reference to the eventual cessation — hard as it is for us to imagine now — of fossil fuels,” she noted. “So, whenever anything comes before this board that has to do with long-term leases for anything involving fuels, I’m going to look at it real carefully in terms of how do we get out of it, because ... there will be conflict,” she said. “We understand now that we’re talking about 2030 and 2035, and of course 30 years goes to 2051, but just a heads up to staff. Be prepared. I’m going to ask all those questions.”
It was encouraging to hear Middleresponded. ton raise this important issue. But, then, why not see the issue with Rancho LPG in the same light? Gunter raised a second question as well. “Why does the port resist sending out requests for proposals for these lease renewals? How else does one really understand the actual value of their leases unless they are offered in a competitive market?” She asked. “It is the people of the state that are the losers if these leases are not realizing their true market value,” she said.
Because this raises the question of public trust doctrine, overseen by the State Lands Commission, Random Lengths asked them about these concerns.
“The commission is fully committed to ensuring all of the state’s trustees are honoring their fiduciary duties to the people of California,” Controller Betty Yee, current head of SLC “We have a long history of working with the port in its capacity as a trustee to ensure it is meeting its public trust obligations. We will do our due diligence in this instance, as always, to ensure the proposed action is not at odds with the port’s public trust obligations.”
Former port attorney Pat Nave told Random Lengths that the workings of the global shipping industry made such an approach infeasible. In the 1980s, he explained, Harbor Commission President Fred Heim had proposed an open-bidding system, and it was considered, but ultimately rejected.
However, the specifics of marine oil terminals may be different, especially considering the issues raised by Middleton. The case isn’t closed. It might only be getting more complex.