WOMF for Astoria

Peter Hansen, CEO for Oregon LNG writes:



Last week a letter from the Attorney Generals office was released alleging misconduct by the former executive director of the Port of Astoria five years ago. I am writing to point out some facts about the letter, which was written by Sean J. Riddell, chief counsel at the Attorney Generals office.



According to earlier statements from the Attorney Generals office, neither Oregon LNG nor I were ever targets of this investigation. Further, last week's letter makes no accusations or charges of any kind against Oregon LNG or against me.



The letter has absolutely no bearing on the sublease agreement between the Port of Astoria and Oregon LNG. In fact, the letter, which says the investigation "interviewed 31 people, issued 11 Attorney General subpoenas, [and] reviewed hundreds of pages of documents" never once mentions the sublease.

Additionally, the sublease was neither approved nor signed by the former Port Executive Director. It was approved unanimously by the votes of the five Port Commissioners and signed by the Commission President in 2004. Four of the five Commissioners have publicly and recently stated that the process was proper and above-board. Attorneys for all parties-including the Oregon Department of State Lands and the Port of Astoria-were fully satisfied with the process.

The investigation and it's conclusion have no bearing on Oregon LNG or on our sublease with the Port of Astoria. Our sublease with the Port of Astoria is a valid, legally binding contract and we continue to expect the Port to honor the contractual commitments it has made.
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There has been a great deal of speculation in the press and on the web about the possible impact of the Peter Gearin investigation. Some writers say this could allow the Port to make the case that the sublease itself is invalid. That might be true if the sublease had been approved and signed by Gearin but it was not. Gearin, acting as the Director made the recommendation to the Port Commissioners to accept the terms of the lease with DSL and the terms of the sublease with Calpine. That sublease passed to Oregon LNG. If an investigation were to reveal that the Port Commission members or the Port Commission President in 2004 had personally benefited from signing the agreement it might be an entirely different matter. There hasn't been any investigation regarding this point and there is no reason to believe it is necessary to do so.

The sublease was written in such a way as to give Oregon LNG unilateral authority to pick up two 30 year options immediately following the end of the first five year term. They did so and well within the stipulated deadline to exercise the option. This sublease is said to mirror the Port's lease with the Division of State Lands.

The current Port Commission has decided to dig in it's heels regarding the lease with DSL attempting to forestall the first 30 year option by entering into an agreement with the state to extend the first five year option.

Oregon LNG is suing the Port for breach of contract and the Port has filed a counter suit.

Port Commissioner Floyd Holcom has serious doubts that the Port should have to pay anything to DSL. He believes that, based on his historical research, the Port owns the submerged and submersible lands on the Skipanon and therefore should be able to forge it's own direct lease with Oregon LNG, if they choose to do so, which could result in a big payday for the Port of Astoria. Right now the money Oregon LNG pays for the sublease passes directly to the State to pay the Port's lease with DSL. If it is found that Holcom is right about the actual ownership then that would likely invalidate the current DSL lease and possibly the sublease it is based upon depending on how the sublease was written.

This ownership issue is key to this controversy.

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