HomeMy WebLinkAboutC2005-202 - 4/12/2005 - ApprovedSETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement") is made by and between the
City of Corpus C~isti, a Texas home-rule city, ("City") and Equistar Chemicals, LP
("Cotnt~any")
Recitals
Company owns or operates pipelines that have occupied property subject to public rights-
of-way within City's boundaries for many years.
On November 16, 2004, City adopted Ordinance No. 026023 (the "Ordinance"), which
provided an annual charge for pipelines located in such rights-of-way.
City and Company disagree as to City's authority to impose charges as provided in the
Ordinance.
On November 17, 2004, City filed a declaratory judgment action in the District Court in
Nueces County, Texas, styled City qf Corpus Christi v. Air Liquide, et al., Cause No. 04-06556-
A (the '~Lawsuif').
City and Company have had a mutually-beneficial relationship for many years and want
to resolve certain issues between them without the time and expense of litigation.
Agreement
In consideration for the mutual obligations herein provided, City and Company agree as
~bllows:
1. Term. This Agreement extends for a term commencing January 1, 2005, and
expiring at midnight on December 31, 2014, unless sooner terminated in accordance with its
[crlns.
2. Payments
(a) Amounts. Company shall pay the sum of $68,000 to City annually on or
before each March 31, beginning in 2006 and ending in 2014, or 30 days after invoice by City,
whichever is later, in addition to license fees payable under the license referred to in
paragraph (b)(iii) of this Section.
(b) Conditions. The obligation of Company to make the annual payments
described in this Section 4 shall be subject to the conditions precedent that:
(i) Dismissal: City shall have dismissed the Lawsuit against all
defendants named therein;
Equistar Chemicals
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(ii) Ordinance: City Council shall have adopted an ordinance in the
form and to the effect appended hereto as Exhibit A, amending and restating the
provisions of the Code of Ordinances of City enacted or amended by the Ordinance; and
(iii) License: City shall have issued a license to Company in
accordance w~th the ordinance to be enacted pursuant to paragraph (b)(ii) of this Section,
if Company shall have applied for such license in accordance with such ordinance by
July 1, 2005.
In addition, the obligation of Company to make such annual payments shall terminate, unless
otherwise agreed by Company in writing, if:
(iv) Ordinance Amendment: City amends the ordinance described in
paragraph (b)(ii) of this Section without the written consent of Company; or
(v) License Termination: City terminates the license described in
paragraph (b)(iii) of this Section without the written consent of Company.
Il' legislation is enacted (or an unappealable appellate decision is rendered) that either
(A) resolves the parties' dispute as to whether City has the legal right to raise net revenues via a
pipeline ordinance or (B) resolves the parties' dispute as to the nature or scope of what is the
lawful charge that home rule cities may impose for the use of city streets by pipelines, or
(C) otherwise limits the annual charges that may be assessed for the license described in this
Section to an amount that is less than the annual amount payable under such license plus the
annual amount payable under this Agreement, then the annual payments described in this
Section, together with the payments payable under the license described in this Section, shall be
renegotiated in good faith by City and Company to be fully consistent with any such new
legislation or binding decision and, absent agreement, Company's obligation to make annual
payments hereunder shall terminate on the second anniversary of the enactment of such
legislation or rendering of such decision, as applicable; provided, however, that unless City and
Company otherwise agree, Company shall in any event make all annual payments due under this
Nection 2 on or before March 31, 2009, unless may condition described in paragraphs b(i),
(b)(iO, or (b)(iiO of this Section has not been satisfied or Company's obligation to make such
payments has been tem~inated pursuant to paragraph (b)(iv) or (b)(v) of this Section.
(c) Use. City shall expend such annual payments by Company only for
economic development programs currently funded by City, other economic development
programs, and emergency planning and response activities, including, but not limited to, training,
equipment, record collection, and coordination of responding entities; provided, however, if
revenue attributable to a particular City-owned property, such as airport property, is legally
limited to certain uses, use of that revenue shall be so limited. The City Manager of City shall,
30 days prior to submission of his annual budget recommendation to City Council, advise
Company in writing of his recommended use of the annual payment, and he shall, at Company's
request, meet with Company and consider any alternative proposal for use of such annual
payment it might make.
(d) Late Payments. Late payments will accrue interest from the due date to
the dale payment is received by City at the rate of three percent (3%) over the per annum rate of
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interest announced as the "Prime Rate" for commercial loans as published in the Wall Street
dournal or equivalent, as selected by City's Director, Engineering Services, or his designee (or
other City officer designated by City's City Manager), as of January 1 of each year, or the
maximum lawful rate permitted by apphcable law, whichever is less.
(e) Economic Development. City recogrfizes Company's contribution to the
economic health of the Corpus Christi area. In entering this Agreement, the City Council finds
that Company makes significant contributions to employment and business activity in the Corpus
Cttristi area, and that this Agreement will promote local economic development, and declares
that this Agreement and the license referred to in Section 2(b)(ii0 hereof are part of City's
program of economic development pursuant to Section 380.001 of the Texas Local Government
Code.
3. Release of Claims City hereby releases any claims it may have against
Company for payments related to past occupancy of public rights-of-way within City boundaries
or City-owned property by Company's pipelines; provided, however, this release shall become
null and void if Company fails to make in full any of the annual payments due and payable
pursuant to Section 2 hereof prior to telTnination of the Company's obligation to make such
payments, and in such event all of City's valid claims, if any, shall be automatically reinstated,
and Company's annual payments hereunder shall be applied to satisfy any such claims pro tanto.
4. Dismissal of Lawsuit. Promptly after final approval and execution of this
Agreement by both parties, City will cause the Lawsuit against Company to be dismissed as
moot. Promptly after final approval and execution by Air Liquide Large Industries U.S. LP,
Citgo Refining & Chemical Company, Enterprise GTM Holdings, L.P., Flint Hills Resources,
L P., and Valero Refining - Texas, L.P., of substantially similar agreements (except that annual
payments by GulfTerra Energy Partners, L.P. shall be in the sum of $110,000), City shall cause
the Lawsuit to be dismissed against all defendants named in the Lawsuit.
5. Legislation. City shall not oppose, directly or indirectly, enactment of the Senate
Natural Resources Committee substitute for Senate Bill 480, introduced by Senator Hinojosa in
the pending regular session of the Texas Legislature, or any companion bill introduced in the
House of Representativcs of the Texas Legislature, and shall take all action reasonably requested
by Company to support passage of such legislation.
6. Assignment. This Agreement shall be personal to Company. However,
Company may assign this Agreement to other entities, provided that, prior to the assignment, it
first obtains the City Council's written consent to the assignment. City may not unreasonably
withhold consent to Company's request to assign this Agreement. In the event of any
assignment of this Agreement to a third party, all of the benefits and obligations created by this
Agreement will inure to the benefit of and become binding upon the assignee, and Company
shall be released from any further obligation hereunder. Notwithstanding any of the foregoing,
Company may assign its interest in this Agreement to any affiliate of Company without the prior
written consent of City, but such assigrmaent may not relieve Company of any of its obligations
or liabilities under this Agreement, whether accrued or unaccrued.
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7. ]Notices. All notices required or permitted by the terms of this Agreement are
deemed sufficient if given by personal delivery, or facsimile, or by prepaid, certified mail and
addressed to each party as follows:
Notice to City:
City Manager
City of Corpus Christi
P.O. Box 9277
Corpus Christi, Texas 78469-9277
Telephone: (361) 880-3220
Facsimile: (361) 880-3839
For overnight delivery:
1201 Leopard Street
Corpus Christi, Texas 78401
or to any other address designated in writing by City to Company.
Notice to Company:
Equistar Chemicals, LP
1221 McKinney, Suite 700
Houston, Texas 77010
Attn: Pipeline Counsel
Telephone: (713) 309-7809
Facsimile: (713) 309-7618
For overnight delivery:
1221 McKirmey, Suite 700
Houston, Texas 77010
or to any other address designated in writing by Company to City.
8. Applicable Law. This Agreement must be construed under and in accordance
with the laws of the State of Texas, and all obligations of the parties created under this
Agreement are performable within the incorporated limits of City of Corpus Christi, Texas.
9. Venue. Venue lbr any cause of action brought under this Agreement shall be the
federal or State courts o1' competent jurisdiction in Nueces County, Texas, unless Texas law
requires a matter to be submitted to a particular regulatory body or court outside Nueces County.
10. Attorney Fees. In the event either party brings any action under this Agreement
alleging that the other party to this Agreement has defaulted on or breached obligations created
by this Agreement, thc party who prevails is entitled to recover its reasonable attorneys' fees
from the losing party.
11. Waiver. Failure of e~ther party to require the performance of any term in this
Agreement or the waiver by either party of any breach of this Agreement does not prevent
subsequent enforcement of such term and is not deemed a waiver of any subsequent breach. The
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recitation of specific remedies in this Agreement does not waive the right of either party to other
remedies available at law or equity to enforce this Agreement.
12. Relationship of Parties. This Agreement may not be construed to create
between City and Company a relationship of partnership, joint venture, principal and agent, or
any similar relationship, nor may it be construed to be for the benefit of any third party other
than City and Company.
13. Captions. The captions contained in this Agreement are for convenience only
and in no way limit or enlarge the terms and conditions of the Agreement.
14. Severability. If for any reason any section, subdivision, clause, phrase, word or
provision of this Agreement shall be held invalid or unconstitutional by final judginent of a court
of competent jurisdiction after all appeals, if any, it shall not affect any other section,
subdivision, clause, phrase, word or provision of this Agreement, for it is the definite intent of
the parties that every scction, subdivision, clause, phrase or word or provision hereof be given
lull, force and effect for its purpose.
15. Entire Agreement. This Agreement constitutes the entire Agreement between
CiD and Company as to the issues between City and Company raised in the Lawsuit and any
prior use of public rights-of-way within the City and City-owned property by Company for its
pipelines.
1N WITNESS WHEREOF, the parties have caused this Agreement to be duly authorized,
executed, and delivered as of the last date of execution specified below.
CITY OF CORPUS CHRISTI, TEXAS
By: ~anJ
ager
EQUISTAR CHEMICALS, LP,
a Delaware limited partnership
Je . ~_I0mmer
Je~r~iaent, mipel~.~,
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ATTEST:
Armando Chapa
City Secretary
Approved as to form:
'IF r ,mn~} s 1 ~t aBnr~ Yd, ~ ' Att3
For City Attorney