HomeMy WebLinkAboutRES-95-5714 (OIL & GAS LEASE/DENYING LESSEE'S OTHER CLAIMS)1
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RICHARDS.
WATSON &
GERSHON
ATTORNEYS AT LAW
RESOLUTION NO. 95-5714
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HERMOSA BEACH, CALIFORNIA, DECLARING A PERIOD OF
ENFORCED DELAY IN THE PERFORMANCE OF THE
LESSEE'S DUTIES UNDER OIL AND GAS LEASE NO. 2,
AND DENYING THE LESSEE'S CLAIMS OF ADDITIONAL
ENFORCED DELAYS
I THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA DOES
HEREBY FIND AND RESOLVE AS FOLLOWS:
Section 1: The City and Windward Associates/GLG Energy, L.P.
("lessee") are parties to that certain agreement entitled "Oil and
Gas Lease No. 2 (Royalty)," as amended, dated January 14, 1992,
("the lease"). The lease affords the lessee the right to use a
City -owned maintenance yard ("the property") for oil and gas
exploration purposes ("the project") in exchange for the payment
of royalties by the lessee to the City.
Section 2: The lease establishes a primary term of two years,
within which the lessee must obtain all necessary Federal, State,
County and City permits and commence drilling operations. The
lease further provides that such primary term shall be extended
for periods of enforced delay, as defined in the lease, if notice
of the commencement of such delay is sent by the party claiming
delay to the other party within thirty (30) days of the
commencement of the cause.
Section 3: On October 11, 1994, the City Council granted the
lessee's request for an extension of the primary term based upon
enforced delays. The primary term was extended for 362 days,
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RICHARDS,
WATSON &
GERSHON
ATTORNEYS AT LAW
beginning on October 12, 1994.
Section 4: By letter dated October 24, 1994, Mr. Donald R.
Macpherson on behalf of the lessee purported to provide
notification to the City of enforced delays, and requested
extensions of the primary term of the lease. Specifically, Mr.
Macpherson claimed enforced delays in the consideration by the
California Coastal Commission of a permit application submitted by
the lessee. That letter alleged that the City's failure to gain
title to an existing oil well on the property has delayed the
lessee's submission to the Coastal Commission of a plan for the
collection of on-site formation water. Further, Mr. Macpherson
alleged in the letter that the City's failure to undertake an
environmental assessment of the property has caused a delay in
consideration of the project by the Coastal Commission.
Section 5: Mr. Macpherson's allegations in the October 24,
1994 letter were based upon a letter to Mr. Macpherson from
Allison J. Detmer of the Coastal Commission staff, dated September
11 1994, which listed 34 separate items of additional information
required by the Coastal Commission before the lessee's permit
application could be filed as complete.
Section 6: By letter dated November 11, 1994, Mr. Donald R.
Macpherson on behalf of the lessee again purported to provide
notification to the City of enforced delays, and requested
extensions of the primary term of the lease. Specifically, Mr.
Macpherson claimed a period of enforced delay was caused by an
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RICHARDS,
WATSON &
43ERSHON
ATTORNEYS AT LAW
order of Judge Diane Wayne of the Los Angeles Superior Court on
October 27, 1994, granting -,a writ of mandate and ordering that the
City's approval of the project be set aside because the project
violates the City's Municipal Code.
Section 7: The City Council considered Mr. Macpherson's
requests at its meeting of December 13, 1994, and hereby finds as
follows with regard to the October 24, 1994 requests:
a. The Coastal Commission staff has notified the lessee
that the lessee's application is incomplete since it
lacks 34 separate pieces of information. As of
December 13, 1994, the lessee had failed to provide
Any of the requested information to the Coastal
Commission. The City's alleged failure to provide
certain documents to the lessee has not, on its own,
delayed performance since the lessee still must
provide 32 other items of information to the Coastal
Commission.
b. Any delays in the Coastal Commission approval process
as of the writing of the October 24, 1994 letter are
within the control of the lessee and do not
constitute cause for an extension of the primary term
pursuant to Section 30 of the lease.
C. Section 30 of the lease requires that the party
claiming an extension based upon an enforced delay
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RICHARDS,
WATSON &
GERSHON
ATTORNEYS AT LAW
send notice to the other party "within thirty (30)
days of the commencement of the cause." The Coastal
Commission's letter to Mr. Macpherson notifying the
lessee that consideration of the project would be
delayed because of incomplete information was dated
September 1, 1994. Mr. Macpherson's "notice" letter
to the City was dated October 24, 1994, 53 days after
commencement of the alleged cause of the delay,
namely the request for additional information made by
the Coastal Commission's staff. Even if such delay
warranted an extension, Mr. Macpherson's October 24,
1994 letter was untimely.
Section 8: With regard to Mr. Macpherson's November 11, 1994
request, the City Council hereby finds as follows:
a. The court's determination of October 27, 1994 that the
City's approval of the project should be set aside
constitutes an enforced delay beyond the control of the
lessee.
b. Notice of the enforced delay was timely provided by
the lessee to the City on November 11, 1994.
NOW, THEREFORE, BE IT RESOLVED THAT:
1. The City Council hereby denies the lessee's request dated
October 24, 1994, seeking extensions of the primary term of Oil
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RICHARDS,
WATSON &
GERSHON
ATTORNEYS AT LAW
and Gas Lease No. 2, as amended, based upon alleged enforced
delays in consideration of the project by the California Coastal
Commission.
2. The City Council hereby grants the lessee's request dated
November 11, 1994, seeking extensions of the primary term of Oil
and Gas Lease No. 2, as amended, based upon alleged enforced
delays caused by the court's ruling on October 27, 1994. Effective
October 27, 1994, the lessee has been temporarily relieved of its
obligations to perform under the lease until such time as this
period of enforced delay is terminated, either by the court's
ruling being reversed or modified on appeal so as to allow the
original project to proceed, or by the City Council approving a
new or revised project, whichever occurs earlier.
3. At such time as this period of enforced delay is
terminated as described in paragraph 2 above, 347 days will remain
on the primary term of the lease.
PASSED, APPROVED and ADOPTED this 24th day of
I January , 1995.
.ATTEST:
. , ).
CITS� CLE
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N%WPPP�
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CITY OF HERMOSA BEACH
L Naoma Valdes, Deputy City Clerk of the City Council of the
City of Hermosa Beach, California, do hereby certify that the foregoing
Resolution No. 95-5714 was duly and regularly passed, approved and adopted
by the City Council of the City of Hermosa Beach at a Regular Meeting of
said Council at the regular place thereof on January 24, 1995.
`,,, The vote was as follows:
AYES:
Bowler, Oakes, Reviczky, Mayor Benz
NOES:
None
ABSTAIN:
None
ABSENT:
Edgerton
DATED: January 25, 1995
Deputy City Clerk