Why Did The Hermosa Beach City Council Not Read the Mock Jury Trial Transcript Before The Settlement?

A former City Council member’s opinion

Councilman Kit Bobko has repeatedly told the public that the results of the “mock jury’s” trials conducted by the city’s attorneys, Bird & Marella, were the basis for his decision to agree to a settlement with Macpherson Oil. He told us the mock juries came back with bad news, finding hundreds of millions of damages for Macpherson Oil. Bobko fails to point out that the city’s attorneys specifically told the City Council that this was an exercise to prepare for trial. It was in no way to be used as the cornerstone of a settlement.

Mr. Bobko distorts the truth to make himself look better. He says the city was going bankrupt. This is not true. The City Council only explored conversations with bankruptcy attorneys to assist in the settlement negotiations; we never retained a bankruptcy law firm in a meaningful way except to inform the City Council on the rules and parameters of such an action. The City Council never reviewed the detailed mock jury information because our trial attorneys told us it was not a tool for settlement, merely an exercise for their preparation for the trial. Mr. Bobko said the city was “locked in the embrace of death” by Macpherson. That was in his mind; this was not ever discussed in open or closed session of the City Council. Residents should remember that Bobko’s settlement agreement will cost the city millions even if the citizens approve oil drilling.

Michael Keegan, Hermosa Beach

  

Hermosa Beach City Council Must Agendize Their "Oil Neutrality" Closed Session Agreement To Avoid Brown Act Violations

See Howard Longacre's letter to the City Council received and filed on the June 24 meeting.

New Erin Brockovich & Promised Land Movie Be Written In Hermosa Beach

Did Hermosa Beach City Council Members Get Paid Off?

Hermosa Beach City Council oil drilling silence looks just like the movies Erin Brockovich & Promised Land.  Your silence doesn't allow us to have a proper dialog or debate as leaders of our City.  Your silence makes us suspicious and looks like you have been paid off.  If someone wanted to set up a house of prostitution in Hermosa Beach would you be impartial to that?  

Have The Rights of City Council Members To Speak On Their Own Been Muzzled By An Agreement?

Letter From Howard Longacre Letter to City Council May 20, 2013 (Item 4)

(Please excuse my typos below)

4)  Request for clarification as to any other ongoing confidential agreements (other than the March 2, 2013 settlement agreement itself) which have also been made by the City's staff and/or the City Council, and/or with any other entity regarding the oil issue.  

The March 2012 settlement agreement between the parties states that the City will take the necessary actions to have an election for the voters to vote Yes or No on lifting the ban on oil drilling in Hermosa Beach.  However, as long as an election does take place and is facilitated by the Council, is there anything that precludes any individual council members from stating to the press or to the public, inside or outside of a public forum, and on the record, of being for or against lifting the ban on oil drilling? 

Has in any manner the rights of any individual council member to speak on their own, or on their constituents behalf, been muzzled via any agreement by the council in closed session or otherwise?  This question has not been answered clearly in my and others' view and such is not specified in the settlement agreement, nor do I recall a debate on the agenda item in any public meeting where the council specifically voted to maintain a position of unanimous support to muzzle themselves.  Something seems to be missing here and apparently has a lot do with the perception the public has of the Council regarding the entire oil matter? (See article:  Did elected officials in Hermosa Beach violate the Brown Act.)

Complicating the issue is that rumors persist that more than one council member has made it very clear to some residents or business operators that they are either supporting or not supporting lifting the ban on oil drilling in Hermosa Beach.

Unfortunately, that all five council member appear to be stonewalling, on the record, the issue of what agreement they perhaps made behind the scenes indicates to many, if not most, that the Council is being disingenuous and playing politically coy, given that the oil drilling issue is far from new in the city.

Further, it is doubtful that even 1 in 20 of the electorate who actually vote on the oil drilling issue will make up their minds one way or the other, basis reading or understanding anything of the nuts and bolts of the EIR's likely mountain of esoteric data, E&B's application, the flood of mailers and propaganda barrages to be likely put out by E&B and others, or the underlying agreements with Macpherson that have been transferred to E&B or others, nor will they perhaps understand or trust the grandiose claims of revenue one way or the other or the safety or lack of safety claims E&B and others are making.  Thus,

4-a)  Are there any agreements written or verbal other than the settlement agreement as related to the question of lifting the ban on oil drilling, the election, confidential, or otherwise, that the public and press are not distinctly and formally aware, and understanding of?  This could include any issues agreed to by the Council members among themselves, such as that they would not individually take announce a public position on oil drilling until "XYZ" occurs, etc.   If there are any other agreements please disclose and clarify as best possible what purpose they are for, why they are needed, and when they are made.

4-b)  Is each and every council member free at this time to speak his own mind regarding lifting the ban on oil drilling, both inside or outside of a public forum, and/or to the press on the record?  Yes or No?  If No, this due to a specific binding agreement made by the full council among themselves, and if so why such agreement required when the settlement agreement is supposedly the full and complete agreement?

See Hiding Oil Money Point 3  

Who Owns Present & Future Oil & Gas Mineral Rights?

Howard Longacre Letter to City Council May 20, 2013

1)  Request for clarification regard the present and future ownership of the oil and gas mineral rights that were own by the City prior to the original agreement(s) with Macpherson.    

1-a)  Who owns / controls the City's original oil and gas mineral rights at the present time? 

1-b)  Who will  own/control the subject mineral rights if oil drilling IS NOT APPROVED by the voters, and for how long?  

1-c)  Who will own/control the subject mineral rights if oil drilling is approved by the voters and for how long? 

2)  Request for clarification regard the Oil Lease expiration data. 

2-a)  How many years remain on that oil lease? 

2-b)  Is the clock presently ticketing on that oil lease or has it been suspended due to the prior oil litigation, and if so is it still suspended and to when? 

2-c)  If oil drilling is NOT APPROVED by the voters what happens to the oil lease, ie. does it expire immediately, will it ever expire, will the clock continue to tick? 

2-d)  If oil drilling is approved by the voters what happens to the oil lease, ie. when does it expire, will it ever expire and if so when? 

Settlement Agreement Comments

Below is a draft of our settlement agreement comments we are compiling from residents.  We welcome your comments so please email us with your comment structured similar to below.  If you want to read the full 45 page agreement you can download it on the HermosaBCH.org or at Google Docs.

Recitals, Page 1, A
Macpherson also obtained all of the necessary Permits to Construct for the Oil Project from the South Coast Air Quality Management District In November 1995 the residents of the City passed City Measure E an initiative measure that banned oil drilling in the City. 
Comment- South Coast Air Quality Permit ran out or cancelled March 30, 2000. 

Recitals, Page 1, A
In early 1998 and notwithstanding the passage of Measure E the California Coastal Commission authorized issuance of Coastal Development Permit No 29E86 to Macpherson far the Oil Project subject to conditions
Comment - Coastal Developmental Permit No. 29E86 never issued. 

Recitals, Page 2, D
Substantial revenue stream to be generated for City and the Hermosa Beach School District as a result of the payment to City and School District of royalties in association with the production of oil and gas reserves by E&B
Comment - How can School benefit from tidelands trust?

Definitions, Page 3, 2.10
School Lease means the lease between Macpherson and the Hermosa Beach School District
Comment - No lease on School property found. Where is this?

The Closing, Page 4, 3.2
Confidentiality Agreement previously signed on behalf of each of the Parties on February 17 2012
Comment -  Where is a copy of this?

Macpherson's Obligations At Closing: Page 5, 4.1 

1031 exchange as provided in Article X hereof all of Macpherson the School Lease and any other leases releases set forth in paragraph VI
Comments - Like-kind exchange, what's Macpherson doing here?  What other leases are involved in this agreement?

E&B's Obligations At Closing: Page 5, 4.3a 
Said assignment reserves to Macpherson from E B and its successors and assigns an overriding royalty of 1.5% of one hundred 100% of gross hydrocarbon production but otherwise
Comment - Macpherson keeps part of this going here.

E&B's Obligations At Closing: Page 6, 4.3c 

constitutes the E&B Loan of $17,500,000

Comment - Note this loan and how it's to be repaid by the city.

E&B's Obligations At Closing: Page 6, 4.4b 
Upon issuance of the drilling permit or in the event the City cannot issue the drilling permit as the sole result of action or inaction undertaken by and under the control of E&B (including without limitation) the failure of the California Coast Commission to issue a coast development permit. immediately

thereafter forgive $14,000,000 of the E&B Loan

Comment - Failure to meet conditions and most of loan is forgiven?  Where does the fact we are giving E&B a $15M property factor into the cost?  Total costs is more like $18.5M and more cheaper to vote no. 

City's Obligations Following Closing: Page 7, 4.6a 

Place on the ballot at a special municipal election in a manner that comports with all applicable law within six 6 months of a request to do so by E&B
Comment - Within 6 months call election!!!! "....notwithstanding inconsistent change in City's Municipal Code." ????

City's Obligations Following Closing: Page 7, 4.6b 

Vacate and make the City maintenance yard available for the construction of the Project as when and in the manner and subject to the conditions provided for in the Lease and repay Three Million Five Hundred Thousand Dollars of the E&B Loan through a deduction of royalties equal to 1.5% of gross proceeds. 
Comment - Vacate and make the City maintenance yard available? And where in the world is the city going to put it. Steve Burrell could never find another location for it, here or in Redondo Beach. Let's get real. this is an important issue.  This property is worth $15M and we are paying them $3M on top?  Total deal looks like $18.5M to vote yes.  

City's Obligations Following Closing: Page 8, 4.6d 

Grant as reasonably required by E&B all necessary rights of way 
easements franchises and other rights as necessary for subsurface pipelines < and other facilities and appurtenances in order for E&B to drill for produce market transport and sell all oil and gas produced from the subject lease 
Comment - Whoa Ho! Check out this demand. Dig up the streets or the greenbelt? And where will it terminate in Redondo Beach or AES?

City's Obligations Following Closing: Page 9, 5.4 

The parties recognize that Macpherson is materially changing its legal position and rights and property holdings in reliance upon the final and binding effect of this Agreement and any rescission of this Agreement would be a wholly inadequate remedy for Macpherson because rescission cannot possibly return to Macpherson the legal position and rights it held prior to the consummation of this Agreement
Comment - We need an attorney to explain this paragraph. It's legalese is convoluted.

Mutual Releases: Page 9, 6.1 

Effective upon the successful completion of the Closing in accordance with the conditions described in paragraph 3
Comment - What are these conditions in 3.3 

Mutual Releases: Page 10, 6.1 

the City hereby fully and finally waives releases and  permanently discharges Macpherson and its respective partners officers employees agents representatives and attorneys the Releases from any claims arising under the Lease any continuation extension amendment restatement or replacement of the Lease
Comment - Whoa Ho! What's this? What about compensation due the city for the past  Environmental reports, attorneys fees due the city, etc?

Mutual Releases: Page 10, 6.4 

Except as may be provided in this Agreement each of the Parties waives any and all claims for the recovery of any costs expenses or fees including attorney fees associated with the matters and claims released in this Agreement
Comment - Attorneys fees from earlier court cases? Have they been paid?

Defense of Litigation:  Page 11, VII
In the event that one or more lawsuits are filed challenging this Agreement and/or the actions implementing or contemplated by this Agreement the Parties to the extent named as parties defendant in the lawsuit will cooperate in good faith in the defense of the litigation and shall initially bear their respective attorneys fees and costs With the exception of a lawsuit challenging the approval of this Agreement itself should the Ballot Measure described in paragraph 46a pass E&B shall indemnify the City for all attorneys fees and costs incurred by City in the defense of litigation encompassed by this paragraph and also for any attorney fees and costs awarded to a plaintiff against City if any in such litigation
Comment - Does this mean the city can collect attorney fees if sued for this agreement?

Representations & Warranties:  Page 11, 8.1c
They acknowledge that the Stinnett Well has been plugged and abandoned and agree that Csity inability to convey the Stinnett Well to E B shall not constitute a breach of this Agreement or the Lease. 
Comment - Dave Lucero, what was the result of your looking into this well on the City's Yard?

Representations &Warranties:  Page 12, 8.2c

The force majeure provisions in paragraph 30 of the Lease apply and have applied during the pendency of the Action and the CUP remains valid. 

Comment - CUP is for a "Conditional" Use Permit. The  Use Permit itself was never issued, or was it? Wasn't the Fire Code in doubt?  In the CUP it states, "All CUP required studies and reports must be submitted to the City and approved before permit issuance."

Representations &Warranties By All Parties  Page 12, 8.3a
The Parties have received all corporate and other approvals necessary to enter into this Agreement on their behalf and that the persons signing this Agreement on their behalf are fully authorized to commit and bind the Parties to each and all of the commitments terms and conditions hereof and to release the claims described herein and that all documents and instruments relating thereto are or upon execution and delivery will be valid and binding obligations enforceable
Comment - Not so! The California Coastal Commission issued "approval with a long list of conditions" but never issued a "Permit" for Macpherson to drill in Hermosa Beach. So how does this affect this Settlement Agreement? Is Macpherson claiming to have abided by all the requirements of 15 b. of Lease No. 2 (it has with the City), i.e. "The Lessee shall also apply for and obtain all necessary permits from the City of Hermosa Beach...The Lessee shall also be responsible, at its sole expense, for alI necessary permits and approvals to be obtained from the California Coastal Commission...."
Representations &Warranties By All Parties  Page 12, 8.3d
The Parties have prior to the execution of this Agreement obtained the advice of independent legal counsel of their own selection regarding the substance of this Agreement and the claims released herein
Comment - Was the advice "independent"?
Representations &Warranties By All Parties  Page 13, 9.2
This Agreement and the Confidentiality Agreement discussed in Paragraphs 32 and 3 are an integrated contract and sets forth the entire agreement between the Parties hereto with respect to the subject matter contained herein 

Comment - If the Confidentiality Agreement is part of this, please, let's have a look at it.

Representations &Warranties By All Parties  Page 13, 9.5
This Agreement shall be binding upon and inure to the benefit of each of the Parties and their respective representatives partners officers employees agents heirs devisees successors and assigns
Comment - How about to the benefit of the people of Hermosa Beach?

(stay tuned more to come)

Ask Mayor Howard Fishman Lunch on Tuesday

Networking Lunch at Fritto Misto in Hermosa Beach on Tuesday, March 13 at 11:30 AM.  Lets get some more information out to the public while we eat some tasty garlic bread and bruschetta.  We attended the lunch and was struck be a number of erroneous statements the Mayor made about revenues, timing of the vote and some important legal details.  It is clear that he did not understand the agreement he signed and think this is why large agreements like this should not be negotiated and signed in a backroom without public comment.  Our Hermosa Beach City Council is obviously being told what to say by the oil company and a paid PR agency.  Are they really working for us?  Why are they under a confidentiality agreement?