What was behind Ensenada takeover attempt at Sempra LNG plant? - SDUT

[Hans Laetz, Newsgroup Editor]

Catching up: this is from the 2/18 San Diego Uniion-Tribune:

It was like a scene from an action movie. Dozens of police officers,
some in SWAT gear, swarm a major energy installation, cutting through
locks and confronting the operators. Hours later, the Mexican military
arrives, and the municipal officers make a quick retreat.

The showdown a week ago came as Ensenada’s new mayor, Enrique Pelayo
Torres, attempted to close the Costa Azul natural gas import terminal
owned by San Diego-based Sempra Energy, saying its permits were not
properly issued and that it posed a danger to his city’s residents.

But just days later, the mayor softened his stance, saying he was open
to negotiations and wanted Sempra to pay taxes and supply natural gas
to his seaside city.

Was it political theater by a cowboy functionary in over his head?
Part of an extortion attempt? An expression of the rising political
rivalries across Mexico?

The actions have been the subject of widespread speculation, but this
much is certain: There’s a group of people who don’t want Sempra in
Mexico, but the company has plenty of support among top officials.

Approved in 2003 by governments controlled by President Felipe
Calderon’s National Action Party, the PAN, the billion-dollar facility
has long been the target of critics in Mexico and the U.S.

They say that its permits were improperly issued, that its presence
violates environmental laws and property rights, and that its location
poses a danger to Ensenada’s residents.

Their complaints went nowhere, but now a shift in Baja California’s
political makeup has provided new opportunities for Sempra’s
detractors to challenge its presence on a scenic stretch of coastline
some 50 miles from the international border.

The incident has laid bare the intensifying political rivalries in
Baja California and across Mexico at a critical time. PAN and Mexico’s
once-ruling Institutional Revolutionary Party, the PRI, are preparing
for presidential elections in 2012, and in 2013 they are expected to
face off in the Baja California’s governor race.

The man at the center of the controversy, Mayor Pelayo, is the 60-year-
old owner of a Chinese restaurant. Pelayo, who was a federal
legislator in the mid-1980s, rode into office last year in a PRI sweep
of municipal and congressional elections across Baja California, a
state that since 1989 had been dominated by the more conservative and
pro-business PAN.

Little-known outside Ensenada, Pelayo gained widespread attention on
Feb. 11, less than three months into his three-year term, when he sent
his officers to the Costa Azul facility, accusing Sempra of “flagrant
violations of the law,” including of safety, zoning and environmental
regulations.

Pelayo outlined his concerns Friday night to a group of journalists
visiting from the U.S. The Costa Azul plant “is there; it’s not going
to disappear. What we want is to see some benefits for the people of
Ensenada.” He insisted his attempt to close the plant was conducted
legally and followed calls that he take action by members of both the
federal and state legislatures.

The action has raised alarm in the business community and among
government promoters who fear the action will discourage badly needed
private investment.

“I think people will watch it very closely,” said James Clark,
director of the Mexico Business Center of the San Diego Regional
Chamber of Commerce. The potential for damage to direct foreign
investment, he said, is “devastating.”

Ricardo Thompson, who heads an Ensenada business group, Coparmex, said
Pelayo may be in over his head.

“The mayor is being used by interests that he may not even be aware
of,” he said. “They have prompted him to take action.”

Whatever the reason, Pelayo’s move drew swift rebukes from top federal
officials in Mexico City, who said he acted without authority and put
at risk a facility that is critical to the country.

Pelayo has retorted that the criticism is “an orchestrated barrage of
insults, slander.”

The terminal imports natural gas from overseas and puts it in
pipelines leading to power plants, businesses and homes on both sides
of the border. It was completed in 2008, and about half the gas it
imports is consumed in Mexico. Because natural gas is worth more in
Asia, it now operates at about half its capacity of a billion cubic
feet a day.

The plant employs about 100 people, most from Ensenada, Sempra said.
Construction created 3,100 jobs.

Baja California and national politicians have been adamant that
Sempra, the parent company of San Diego Gas & Electric, has obtained
all the permits it needs and complies fully with Mexican law. Sempra
said the criticism stems from people who are trying to use the
political process to extort money from it.

“We will defend our position against any and all attacks,” said Darcel
Hulse, chief executive of Sempra LNG, the subsidiary that operates the
plant.

Sempra said the incident had its origins in a long-running land
dispute, still unresolved, with a Mexican named Ramon Eugenio Sanchez
Ritchie, who has sued in Mexico and the United States claiming that
Sempra took his land, which it needs for a buffer zone around the
plant.

Sempra says it bought the land from the rightful owners and has clear
title, and, in any case, the land is located in a buffer zone isn’t
necessary for it to operate the plant.

Sanchez’s dispute has been a battle cry for some of Sempra’s fiercest
detractors.

The critics found a foothold in Baja California this year, when a PRI
state legislator took up their cause. In a written statement referring
to a history of outside threats to Baja California’s territory, Nancy
Sanchez, whose district is across the state in Mexicali, was harshly
critical of Sempra and called on Ensenada’s administration “to analyze
the permits granted by previous administrations,” to the Costa Azul
facility, and determine responsibility “of those, abusing their
authority, who violated the law, put at risk the population and
trampled on the rights of citizens.”

Around the same time, Sanchez Ritchie went to the Ensenada municipal
government with his claims, asking a land-use official to step in.

That’s when Pelayo made the controversial move that earned him
national notoriety.

Late on a Friday afternoon a week ago, Ensenada municipal police
rolled up to the plant from the north — the opposite direction from
which you’d expect them to come.

When plant officials refused to let them in, with cries that “this is
not the Wild West,” officers used bolt cutters to slice through locks
in two gates and then arrived at a guardhouse where heavy steel
turnstiles stopped them.

An official used aerosol adhesive to post “Closed” signs sealing the
plant.

The police posed a serious safety risk, said Sempra’s Hulse.

“Had the actions gone beyond that, to the ordering of removal of
operators from the facility, it would have been a real dangerous
safety risk,” he said. “A plant like that cannot be left without
trained operators.”

Inside, workers continued the process of letting liquid natural gas
stored in twin 17-story tanks slowly warm up, revert to a gaseous
state, and put into a pipeline.

When federal police and the army showed up a couple of hours later,
Pelayo said he ordered his officers to leave, “in the hopes of
avoiding a confrontation.”

The military stayed on to guard the plant. Tuesday, Pelayo said he was
open to negotiating with Sempra, hoping the company would pay his city
taxes and build a pipeline. Thursday, he said he had asked the company
to pay for an aqueduct to Mexicali a few months ago.

Sempra’s Teora said Pelayo had asked a government affairs director for
the company about an aqueduct.

“We never gave him any indications that we would ever consider such a
request,” she said.

“Stupid he isn’t, but maybe a little crazy,” said Cesar Mancillas, a
former Ensenada mayor who is now a federal legislator in Mexico City
representing the PAN. “He wants the approval of his party. Maybe he
thinks that by striking against the PAN, he can aspire to another
position.”

If that was his goal, it might have backfired.

Beatriz Paredes, the PRI’s national leader, questioned his decision
this week when she visited the state and met with the five PRI mayors.

“I asked the mayor of Ensenada whether he had the authority to take
the action that he did,” Paredes said in an interview Thursday. “I
told him that dialogue was essential, and that any action that was
undertaken that in relation to productive activities needed to have a
legal basis.”

Even some of Sempra critics say they have been taken aback by Pelayo’s
move.

Pelayo “is saying there were some irregularities when the land-use
permit was authorized, and I agree,” said Horacio de la Cueva, a
scientist at the Ensenada-based research institution, CICESE. “There
are courts where you can appeal. I don’t think that shutting down
Sempra is the way of doing it.”

Michael Shames, who has crossed swords with Sempra more than once as
head of UCAN, the Utility Consumers’ Action Network, said Pelayo
appeared to be grandstanding, because there are more legitimate ways
to voice concerns about the plant.

“The concept of sending the police off to shut down the plant and then
having a faceoff with the federal army?” he asked. “That was political
theater. That’s when you know this is a soap opera that’s being
performed live.”