U.S. District Court Judge Michael Mosman has ordered the Port of Astoria to renew its lease on the Oregon LNG site in Warrenton. Peter Hansen, CEO of the liquefied natural gas development company Oregon LNG, is trumpeting the ruling as a nail in the coffin for the Port, which has been resisting a 30-year lease renewal since early last year.

But Port Commission President Bill Hunsinger said the Port still has 30 days to respond to the ruling.?The issue will be on the board's agenda for its Tuesday meeting.

Oregon?LNG filed a breach of contract lawsuit against the Port of Astoria last year, attempting to force the agency to sign a 30-year renewal of the master lease at the LNG project site on Warrenton's Skipanon Peninsula. The Port leases the land from the state and subleases it to Oregon LNG.

The suit - and the Port's refusal to renew the lease - has generated concern and controversy on the North Coast as two judges have ruled in the company's favor.

On Thursday, Judge Mosman granted Oregon LNG's motion for a preliminary injunction in the case and instructed the Port to "take immediate steps to provide the additional 30-year term specified in the sublease, and to make the land subject to that sublease available to plaintiff LNG for its use."

Also on Thursday, Oregon LNG's attorney sent a letter to the Port's attorney putting the agency on notice that the company plans to file a motion for civil contempt against the Port and its commissioners unless they immediately renew the master lease.

"To be clear," wrote the company's attorney Kelly Corr of the Seattle law firm Corr, Cronin, Michelson Baumgardner & Preece, "we are going to seek substantial daily dollar fines against both the Port and each individual commissioner until they comply."

Oregon LNG CEO Peter Hansen said his company has spent more than $500,000 in attorney fees on the breach of contract suit and will be asking the Port to repay that money in addition to millions of dollars in damages.

"The longer the Port waits, the greater the damages will be," he said. "They've known all along they were wrong. Now they certainly know it. Two judges have told them it's time to stop this charade and get it done."

In 2004, the Port leased 92 acres from Oregon Department of State Lands for $38,400 and subleased it to Oregon LNG for the same amount. The land is slated for a $1 billion liquefied natural gas terminal.

The initial five-year term on the Port's master lease and sublease of the land on the east bank of Warrenton's Skipanon Peninsula ended last year.

Last April, the company, a subsidiary of the New York holding company Leucadia National Corp., renewed its sublease with the Port for a 30-year term. But in August the Port decided not to renew the underlying state land lease for a parallel 30 years. Instead, the agency extended its initial term with the state by two years, keeping two 30-year options in place.

Oregon LNG filed suit against the Port of Astoria claiming damages from a breach of contract if the Port doesn't renew the state lease.

Two judges have found the Port has violated its sublease with the company in failing to renew the underlying state land lease. Judge Mosman's Thursday order instructed the Port to renew the state land lease for a 30-year term. However, the agency can challenge the ruling at the Ninth Circuit Court of Appeals.

Tags