TITLE
Recommendation to authorize City Manager to execute a settlement agreement and all other necessary documents to settle potential litigation with the Long Beach Oil Development Company, American Energy, Conoco Phillips, ExxonMobii and Chevron in connection with remediation of the Operating Industries, Inc. Superfund Site.
DISCUSSION
The City of Long Beach ("City") acts as Unit Operator for various oil production units located in the City (collectively, the "Units"). In 1964, in connection with its operation of the Units, City executed a contract ("Field Operator Contract") with a consortium of oil companies (collectively, the "Field Contractors") to act as the field contractor for the Units. The Field Operator Contract expired by its own terms in 1989.
Over the term of the Field Operator Contract and as part of their day-to-day operation of those portions of the Units located in the Tidelands only, the Field Contractors deposited certain hazardous oil wastes generated by the Unit operations at a disposal site in Monterey Park, California, operated by Operating Industries, Inc. (the "Site"). In 1988 the Environmental Protection Agency ("EPA") designated the Site as a "superfund site". The EPA further named the Field Contractors as potentially responsible parties obligated to pay for a share of remediation costs of the overall Site, and in turn the Field Contractors alleged that the City, as Unit Operator and primary beneficiary of the revenues generated by the Units, should reimburse the Field Contractors for a portion of such remediation costs.
The City claimed that it was not obligated to make any such reimbursements pursuant to the Field Operator Contract, and the City and the Field Contractors thereafter jointly agreed to toll the statute of limitations time period within which the Field Contractors were required to bring a lawsuit, in order to allow the parties to negotiate a settlement.
The parties which currently own the rights to seek reimbur...
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