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City Is Hit With $400 Million in Claims Over Rejected Port Project

A terminal operator and an energy firm say a councilwoman rejected their proposals while taking contributions from a competitor.

June 11, 2004|Patrick McGreevy | Times Staff Writer

New allegations of political intrigue at the Port of Los Angeles surfaced Thursday when an energy company and a terminal operator filed $400 million in legal claims against the city, charging that officials improperly blocked a terminal expansion.

Oxbow Carbon & Mineral Inc. and Los Angeles Export Terminal Inc. allege that the city Harbor Department, a minority owner of the export terminal, failed to consider reasonable proposals for the 117-acre site.

The claims also charge that harbor-area Councilwoman Janice Hahn led efforts to close the export terminal and block alternative proposals at the same time she received $8,000 in political contributions from executives and advisors of a firm that operates a competing terminal.

Hahn "has publicly vowed to destroy our business," Oxbow spokesman Brad Goldstein said. "We believe her motives and her alliances are suspect. She is not acting in the best interest of the taxpayers."

In addition, the claims question whether former Councilman Rudy Svorinich Jr. violated city ethics laws by lobbying the city for the competing terminal after voting a dozen times as a councilman on Los Angeles Export Terminal matters.

Hahn declined to comment through an aide, who said the councilwoman has been advised by the city attorney's office not to say anything about potential litigation.

An attorney for Hahn's campaign said she also received contributions from LAXT and its representatives.

During debate last year on an Oxbow proposal to buy out the city's minority interest in the terminal, Hahn said that it had been a bad investment for the city from the beginning and that she shared the desire of San Pedro residents to replace the coal and petroleum coke operation with a cleaner cargo container facility.

Svorinich did not return calls for comment.

The legal claims, a precursor to a lawsuit, note that the dispute comes as federal and local grand juries are investigating contracting practices at the Harbor Department.

The city of Los Angeles has a 13% interest in the Los Angeles Export Terminal, which was created in 1993 by the Harbor Department and 36 U.S. and Japanese coal, energy and shipping companies to establish a coal export operation.

They sought permission to use part of the property to import crude oil, liquid natural gas and other energy products, but the claims allege the city has refused to consider the proposals.

Mitsubishi Corp. proposed to invest millions in building a liquid natural gas facility, but the claim says the Harbor Department declared there would be no such project "under any circumstances."

"The city's arbitrary and capricious refusal to even consider the Mitsubishi proposal thus resulted in substantial financial loss to LAXT and its shareholders," the claims allege.

Without permission for additional operations, Oxbow is working on plans to export petroleum coke through Long Beach, said Roy Morrow Bell, an attorney for Oxbow and LAXT.

The claims seek to have the city pay the private investors the $150 million they invested, $200 million in lost profit and more than $50 million in general damages.

The claims also charge that Metropolitan Stevedore Co., which operates a competing coal and coke export terminal in Long Beach, hired Svorinich as a lobbyist and offered a $48,000 bonus if he could kill the LAXT project.

Svorinich's involvement was "notwithstanding a Los Angeles city ordinance that precludes a former council member from lobbying the city on issues in which he was 'personally and substantially' involved," the claims allege.

Representatives of the city attorney's office and Harbor Department declined to comment Thursday, saying they had not yet had a chance to review the claims.

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