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Ord. 0955 02-28-00ORDINANCE NO. 955 AN ORDINANCE GRANTING A PERMIT AND CONSENT TO PG&E GAS TRANSMISSION, TEXAS CORPORATION, PG&E GAS TRANSMISSION TECO, INC., AND PG&E ENERGY TRADING -GAS CORPORATION, THEIR WHOLLY OWNED SUBSIDIARY CORPORATIONS AND WHOLLY OWNED SUBSIDIARY GENERAL AND LIMITED PARTNERSHIPS, AND THEIR SUCCESSORS, LESSEES OR ASSIGNS, TO MAINTAIN, USE AND OPERATE CERTAIN NATURAL GAS AND/OR NATURAL GAS LIQUIDS TRANSMISSION PIPELINES ALONG, ACROSS, AND UNDER PUBLIC PROPERTY AND RIGHTS OF WAY IN THE CITY PEARLAND , TEXAS * BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CITY PEARLAND , TEXAS: Section 1. Permit and consent granted; consideration. That the City of CITY PEARLAND , Texas ("the City"), for and in consideration of the payment of the Agreed Settlement Sum, which includes a one-time, lump sum payment equal to (a) an annual payment of two thousand dollars ($2,000.00), for each year of the Term hereof, reduced to present value using a 6% per year discount rate, and (b) an annual payment of fifteen cents ($.15) for each linear foot of pipe constituting part of "the PG&E Pipeline System" (as defined herein) that is presently located within City Rights of Way (as defined herein, but excluding for purposes of this payment calculation only any in -City portion of the designated state highway system), to be calculated for each year of the Term (as defined herein) and reduced to present value using a 6% per year discount rate, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and subject to the terms and conditions of the Full and Final Release and Settlement Agreement executed and approved by the City contemporaneously herewith and the terms, conditions and definitions set forth herein, hereby grants to Grantee (as defined herein) a permit and consent for the Term (as defined herein) to operate, use and maintain the PG&E Pipeline System and to exercise the rights and privileges granted by this Ordinance. Section 2. Definitions. (a) For purposes of this Ordinance, "the PG&E Pipeline System" shall mean the intrastate, interurban natural gas and natural gas liquids transmission pipelines and all their appurtenant facilities, including, but not limited to, mains, spurs, laterals, meters, valves, corrosion protection systems, city gates, and all other similar facilities of Grantee, located in, under or along City Rights of Way. The PG&E Pipeline System includes all pipelines and facilities owned, leased, operated and/or controlled, in whole or in part (such as through a joint venture or partnership, for example), by Grantee. The PG&E Pipeline System has been disclosed to the City and/or its counsel by maps, written descriptions or by other identification. The PG&E Pipeline System is not a "local gas distribution system" or "LDC" (as defined herein). The consent, permit, rights and privileges granted by this Ordinance encompass the PG&E Pipeline System and the operations, lines of business, and business activities of Grantee in the City; such grants however do not allow the PG&E Pipeline System or any portion thereof hereafter to be operated, used or maintained as an LDC. (b) In this Ordinance, "City Rights of Way" shall mean any public easement, street, road, avenue, highway, freeway, toll road, bridge, alley, boulevard, sidewalk, park, parkway, lane, drive, circle, canal, sanitary or storm sewer runoff, drainage ditch, dump, landfill or other public property, thoroughfare, way, or place currently owned or controlled by, and/or located within or which may in the future be constructed within or annexed into the corporate limits of, the City, including all in -City portions of any federal or state highway, farm to market road, or other right of way designated as part of the Texas state highway system by the Texas Department of Transportation, Texas Transportation Commission, State Highway Commission, and/or any predecessor or successor thereof. (c) In this Ordinance, "Grantee" shall mean and shall be understood to be PG&E Gas Transmission, Texas Corporation, PG&E Gas Transmission Teco, Inc., and PG&E Energy Trading -Gas Corporation, their wholly owned subsidiary corporations and wholly owned subsidiary general and limited partnerships, and their successors, lessees or assigns. (d) In this Ordinance, "Agreed Settlement Sum" shall mean and be understood to be Grantee's one time, lump sum payment of money and all other things of value given to and accepted by the City as consideration for the Full and Final Release and Settlement Agreement executed and approved by the City contemporaneously FINAL ORDINANCE 01/27/00 herewith and the rights, permit, and consent granted by this Ordinance for the Term. (e) In this Ordinance, "Local Distribution Company" or "LDC" shall mean a person, corporation, general or limited partnership, or other entity that owns one or more lines of pipe within a city service area and holds itself out to both residential and commercial customers generally within such city service area to provide public utility service through such line or lines of pipe for a fee. Section 3. Maintenance, Operation, Repair, Relocation, Expansion or Removal of PG&E Pipeline System. The consent and permit granted herein includes, without limitation; all rights and privileges to own, maintain, operate, improve, enlarge, extend, repair, remove, and relocate any part of the PG&E Pipeline System as may be deemed necessary by Grantee. In the event that Grantee finds it necessary to excavate in any City Rights of Way, Grantee shall notify the City and shall comply with all then existing City and/or other governmental requirements, if any, concerning such excavation and work performed, subject to the provisions of this Ordinance and to the extent that such requirements are applicable to other pipelines and facilities similarly situated. Grantee shall comply with ordinances of general application. Section 4. New Construction. (a) General. Subject to the provisions of Section 2(a) above (and as limited by Section 4(b) below), should Grantee, during the Term of this Ordinance, desire to construct or install new pipelines or add new facilities in City Rights Of Way, Grantee shall notify the City and comply with existing City and/or other governmental requirements, if any, concerning such construction to the extent applicable to other pipelines and facilities similarly situated, except that no additional payment, other than what is expressly set forth herein, shall be made during the Term and thereafter such new pipelines or facilities shall be made subject to the provisions of Sections 6 and 9. In the event any new pipeline construction or expansion of an existing pipeline causes a cumulative increase of more than 300 linear feet of pipe along or under City Rights of Way, then in such event Grantee shall make an additional lump sum payment to the City equal to 15 cents per linear foot of such new pipeline within City Rights of Way (excluding for purposes of this payment calculation only any in -City portion of the designated state highway system), multiplied by the number of years remaining on the Term, reduced to present value using a 6% discount rate. After completion of construction and compliance with existing City and/or other governmental requirements, if any, the new pipeline and/or new facilities shall become a part of the PG&E Pipeline System as defined herein and covered by this Ordinance. For the purpose of calculating any lump sum payment obligation, the terms "new pipeline" and "new facilities" do not include any upgrades, replacements, changes in diameter, size or configuration, of any part of the existing PG&E Pipeline System. Further, any relocation of the existing PG&E Pipeline System due to any change in location, expansion or widening of the paved road surface portion of any City Rights of Way shall not be considered to be a "new pipeline" or "new facility" for the purpose of calculating any lump sum payment obligation. Nothing in this Ordinance shall effect the rights, if any, of the City to receive any monies from the Texas Department of Transportation that may, in the future, be collected by or through the Texas Department of Transportation from any user of the Texas state highway system. (b) Limitations on Future Expansion. Although this Ordinance grants consent to expand the PG&E Pipeline System, by the construction or installation of new pipelines or new facilities, such consent shall be limited by this Section as follows: (i) During the Term, if and only in the event any construction involving new pipelines or new facilities is proposed in any City Rights of Way open to the public but not located along or under a road or other City Right of Way subject to vehicular traffic — such as an airport, public park, municipal building site, or landfill site — the Grantee entity(ies) that owns and/or operates the in -City portion of the PG&E Pipeline System ("Pipeline Owner") will file an application for consent to construct new pipelines or new facilities. In addition, in no event shall the City seek or impose any terms, conditions or consideration in granting the application that are greater or more onerous than those being imposed or received by the City upon or from any other person or entities that are similarly situated to or compete with Pipeline Owner. The City agrees to act on such application in a timely fashion, not to exceed 60 days; and/or (ii) During the Term, if and only in the event that the Pipeline Owner desires to construct or install new pipelines or add new facilities in a manner that would cause the PG&E Pipeline System to cross under or along any additional FINAL ORDINANCE 01/27/00 City Rights of Way, for the purpose of delivering gas directly (it being agreed that direct deliveries of gas shall not include a sale for resale nor a delivery of gas to the LDC or any other third party transporter) to any retail gas consumer not served by the Pipeline Owner as of the effective date of this Ordinance and located inside the City, the Pipeline Owner agrees to provide notice to the City. To the extent required by this Section 4(b)(ii), Pipeline Owner will file an application for consent to construct new pipelines or new facilities, such consent not to be unreasonably withheld by the City. In addition, in no event shall the City seek or impose any terms, conditions or consideration in granting the application that are greater or more onerous than those being imposed or received by the City upon or from any other person or entity that is similarly situated to or compete with Pipeline Owner. The City agrees to act on such application in a timely fashion, not to exceed 60 days. Notwithstanding anything to the contrary, this Section 4(b)(ii) shall not apply to the construction or installation of new pipelines or addition of new facilities to deliver gas to existing or new electric power generating plants. Section 5. Substances. Subject to the terms and conditions of this Ordinance: (a) the following substances may be transported and/or delivered for purposes of sale, sale for resale, transportation or purchase in any part of the PG&E Pipeline System by Grantee: natural gas or natural gas liquids, in gaseous or liquid state or the equivalent thereof, whether natural or synthetic ("Substances"); and (b) Grantee may transport and deliver its own Substances, and transport and/or deliver for hire Substances owned by affiliates, governmental entities and/or third parties. Section 6. Nature And Sufficiency of Consideration. (a) Findings. The monies paid to the City and the agreements set forth in Section 4 are sufficient consideration for all purposes (b) Exclusive Charge. The consideration described in Sections 1 and 4 shall be the exclusive compensation, tax (except as provided in Subsection (c) below), fee, rental, assessment or other charge, however characterized, payable or due to the City by Grantee pertaining to the presence, use, ownership, and/or operation of the PG&E Pipeline System, and the natural gas or natural gas liquid sales, purchases, transportation and other business activities related thereto, during the Term of this Ordinance. Grantee's agreement to pay such consideration shall be full consideration during the Term for the City's consent and permit for the rights and privileges granted by this Ordinance and shall be in lieu of all other franchise, license, regulatory, use, sales, gross receipts, or occupation taxes, fees, assessments, exactions, rentals or charges which may levied or attempted to be levied by the City. (c) Certain Taxes Not Exempt. Nothing herein shall constitute an exemption to Grantee from (i) ad valorem taxes levied by the City on real or personal property owned by the Grantee within the City, or (ii) any new tax (including any new increment to an existing tax) first authorized, mandated or imposed by the state or federal government after the effective date of this Ordinance if such new tax or new increment is equally applied to all persons and entities within the City that are similarly situated to or compete with Grantee. Section 7. Term. The consent and permit granted by this Ordinance shall continue and remain in full force and effect for a period of twenty-five (25) years from and after its effective date pursuant to Section 15 ("the Term"). Section 8. Expiration of Term; Renewal. If Grantee desires a renewal of this consent and permit, it shall notify the City at least two (2) years prior to the expiration date of the Term. The City shall not be compelled to renew but shall not unreasonably withhold or refuse renewal of this consent and permit. The City shall not require more onerous terms or conditions nor require greater consideration from Grantee for renewal than those then in effect for other persons and entities that are similarly situated to or compete with Grantee and are using or occupying City Rights of Way. If the City, acting in good faith and with a reasonable basis decides not to renew this consent and permit, the City shall give Grantee formal written notice of such decision not later than 18 months before the expiration of the Term. After receipt of such notice, Grantee shall have until the end of the Term to find a buyer or buyers to acquire all or any divisible parts of the PG&E Pipeline System. For any part of the PG&E Pipeline System Grantee is unable to sell or convey after expiration of the Term, Grantee shall have a reasonable time after the expiration of such Term to remove from City Rights of Way those parts, and shall restore affected City Rights of Way to the condition existing before such removal. FINAL ORDINANCE 01/27/00 Section 9. Existing Obligations Affecting The PG&E Pipeline System. (a) As of the effective date of this Ordinance, there may be existing contracts, ordinances, easements, leases, agreements or permits imposing obligations and/or City requirements pertaining to the PG&E Pipeline System or Grantee ("Existing Pipeline Facility Obligations"). It is the intent of City and Grantee that any such payment obligation shall be subsumed into Section 6(b) hereof and that this Ordinance shall control and supercede any such Existing Pipeline Facility Obligations to the extent they conflict or vary in any manner from this Ordinance. (b) Grantee and City further agree and declare that: (i) the consideration paid under this Ordinance satisfies in full any fee, charge or payment obligation that otherwise would be due under Existing Pipeline Facility Obligations after the effective date of this Ordinance; (ii) the term, if any, for any such Existing Pipeline Facility Obligations is hereby extended to coincide with the Term of this Ordinance; and (iii) Grantee and City shall execute such further documents as necessary to conform Existing Pipeline Facility Obligations to this Ordinance. Section 10. Notice. (a) Written Notice. All notices required or sent in accordance with this Ordinance shall be in writing. (b) Addresses. All notices shall be addressed to the other party at the address below or at such other address as the receiving party may subsequently designate by notice to the sending party (i) Notice to the City shall be sent to: [Address of Director of Public Works, Mayor, or other appropriate official] (ii) Notice to Grantee shall be sent to: PG&E Gas Transmission, Texas Corporation and PG&E Gas Transmission Teco, Inc. 1100 Louisiana, Suite 1000 Houston, Texas 77002 Attn: General Counsel Section 11. Satisfaction of Consent and Permit Requirements City acknowledges and agrees that Grantee has satisfied and fully paid all of Grantee's obligations, duties, responsibilities, fees and charges, and liability, if any, including but not limited to any derivative liability, with regard to all past and present statutory and regulatory consent requirements pertaining to use or occupation of any City Rights of Way under any state or municipal law or regulation applicable to Grantee, including, by way of example and not limitation, Texas Revised Civil Statutes art. 1175, Texas Local Government Code § 282.003, Texas Transportation Code § 311.071, Texas Utilities Code §§ 181.006, 181.023 and 181.026, the City Charter and Code of Ordinances, if any, and/or any City ordinance, resolution, permit or consent requirement, if any, pertaining or applicable to the PG&E Pipeline System or Grantee. Section 12. Severability. It is hereby declared to be the intention of the parties that the phrases, clauses, sentences, paragraphs, and Sections of this Ordinance are severable, and, if any phrase, clause, sentence, paragraph, or Section of this Ordinance shall be declared void, ineffective, or unconstitutional by the valid judgment or final decree of a court of competent jurisdiction or a final order, rule or regulation of a governmental regulatory authority, such voidness, ineffectiveness, or unconstitutionality shall not affect any of the remaining phrases, clauses, sentences, paragraphs, and sections of this Ordinance since the same would have been enacted by the City without the incorporation herein of any such void, ineffective, or unconstitutional phrase, clause, sentence, paragraph, or section. Section 13. Transfer or Assignment. Grantee is expressly given the right, power and privilege to sell, convey, transfer, lease, or assign, to any person or entity, Grantee's rights under this consent and permit, and to sell, convey, transfer, lease, or assign all or any portion of the PG&E Pipeline System. Grantee agrees to give written notice to the City, within a reasonable time afterward, of any such conveyance, sale, transfer, lease, or assignment, but failure to provide such notice shall not constitute a forfeiture of any of Grantee's rights under the terms and conditions of the Ordinance. The consent, permit, rights and privileges granted by this Ordinance encompass the PG&E Pipeline System and the operations, lines of business, and business activities of Grantee in the City; but such grants do not allow the PG&E Pipeline System or any portion thereof hereafter to be operated, used or maintained as an LDC (as such term is defined above). Therefore, absent separate and express City consent and agreement, no such conveyance, sale, transfer, lease, or assignment by Grantee, as authorized herein, shall constitute or convey to any buyer, transferee, FINAL ORDINANCE 01/27/00 lessee, or assignee the right, power or privilege to operate as an LDC within the City. Section 14. Indemnity. Except as expressly provided for below, this Ordinance does not address or concern, and shall not be construed to have any application to, any future occurrence involving leakage, rupture, fire or explosion involving any in -City portion of the PG&E Pipeline System which causes or is alleged to cause any personal injury or property damage. If and only in the event the City is sued as a result of any such occurrence during the Term, and subject to the language and conditions hereof, the Pipeline Owner agrees to indemnify and hold harmless the City from any adjudged liability and damages caused by any negligent or wrongful act or omission of Pipeline Owner relating to the construction, maintenance, operation, or repair of the PG&E Pipeline System; provided, however, the City shall promptly notify Pipeline Owner in writing of such claim or lawsuit. In the event that City desires to settle any such claim or suit relating to any matter for which indemnification is or will be sought by City hereunder, prior to final judgment by the court, then this indemnity shall be without legal effect, unless the City obtains Pipeline Owner's written consent to such settlement. Pipeline Owner shall have the right but not the obligation, to assume the defense of any claim made against the City relating to any matter for which indemnification is or will be sought hereunder. Pipeline Owner agrees to bear the costs of defense in circumstances in which Pipeline Owner assumes the defense. Section 15. Effective Date and Controlling Effect of this Ordinance. This Ordinance shall become effective upon the last in time of its adoption by the City in the form accepted by the Grantee and the payment in full to the City of the Agreed Settlement Sum. Upon such effective date, this Ordinance shall constitute a contract between the City and Grantee and shall govern the rights and relationships between the City and Grantee for the duration of the Term, and it shall supersede and take precedence over inconsistent ordinances, resolutions, or regulations hereafter or heretofore passed by the City. READ, CONSIDERED, PASSED and APPROVED at a Regular Meeting of the City Council, on the turn day of=February , 2000 , held in accordance with the Open Meetings Act, Texas Gov't Code §551.001 et seq., at which a quorum was present. APPROVED by the Mayor of the City of CITY PEARLAND , Texas, on this the 28 day of February , 2000. ATTEST: CITY OF CITY PEARLAND By: n/071 Mayor APPROVED AS TO'FORM: City Attorney STATE OF TEXAS COUNTY OF Brazoria I, the undersigned City Secretary of the City of CITY PEARLAND , Texas, hereby certify that the above and foregoing is a full, true and correct copy of an ordinance adopted by the governing body of the City at the meeting held on the 28th day of February , 2000, as the same appears in the official minutes of the City Council meeting. WITNESS MY HAND AND SEAL of he City of CITY PEARLAJ, Texas, this 3rd day of March , 2000. Secre of CI PEARLAN '', Te as FULL AND FINAL RELEASE AND SETTLEMENT AGREEMENT This Full and Final Release and Settlement Agreement is made and entered into as of the day of , 2000, by and between the Cities of San Benito, Primera, and Port Isabel, individually and as Class Plaintiffs for the Settling Class Cities (as hereinafter defined); and (i) PG&E Gas Transmission, Texas Corporation f/k/a Valero Energy Corporation; (ii) PG&E Texas Natural Gas Company flk/a Valero Natural Gas Company; (iii) PG&E Texas Pipeline Company f/k/a Valero Transmission Company; (iv) PG&E Texas Pipeline, L.P. f/k/a Valero Transmission, L.P.; (v) VT Company flk/a Lo Vaca Gathering Company; (vi) PG&E Texas Field Services Company f/k/a Valero Field Services Company; (vii) PG&E Texas Gas Storage Company f/k/a Valero Gas Storage Company; (viii) PG&E Hydrocarbons Company f/kla Valero Hydrocarbons Company; (ix) PG&E Hydrocarbons, L.P. f/k/a Valero Hydrocarbons, L.P.; (x) PG&E Texas Hub Services Company f/k/a Valero Storage and Transfer Company; (xi) PG&E Texas Management Company flk/a Valero Management Company; (xii) PG&E Texas Gas Partners, L.P. f/k/a Valero Natural Gas Partners, L.P.; (xiii) PG&E Texas Management Partnership, L.P. f/k/a Valero Management Partnership, L.P.; (xiv) PG&E -Tex, L.P. flk/a Valerotex, L.P.; (xv) PG&E Texas Energy Company; (xvi) PG&E Reata Energy, L.P. f/k/a Reata Industrial Gas, L.P.; (xvii) PG&E Energy Trading Holdings Corporation f/k/a Valero Gas Marketing Company f/k/a Reata Industrial Gas Company; (xviii) PG&E NGL Marketing, L.P. f/k/a Valero Marketing, L.P.; (xix) PG&E Texas LDC, L.P. f/k/a VLDC, L.P.; (xx) PG&E Rivercity Energy, L.P. f/k/a Rivercity Gas, L.P.; (xxi) PG&E Texas VGM, L.P. f/k/a Valero Gas Marketing, L.P.; (xxii) PG&E Texas Industrial Energy, L.P. f/k/a Valero Industrial Gas, L.P.; (xxiii) PG&E West Texas Pipeline Company f/kla Valero-Teco West Texas Pipeline Company; (xxiv) PG&E Gas Transmission Teco, Inc. f/k/a PG&E Gas Transmission, Texas Corporation and Teco Pipeline Company; (xxv) Teco Gas Gathering Company; (xxvi) Teco Industrial Gas Company; (xxvii) Teco Gas Marketing Company; (xxviii) Teco Gas Processing Company; (xxix) Teco Gas Services Company, and (xxx) PG&E Energy Trading - Gas Corporation f/k/a PG&E Energy Trading Corporation, and the directors, officers, general and limited partners, joint ventures, employees, and representatives of said entities (collectively referred to hereinafter as "PG&E/TECO" or "the Settling Defendants"). WHEREAS, the Cities of San Benito, Primera and Port Isabel initiated litigation as individual litigants on or about December 27, 1996, and were named as Class Representatives for a class of Texas cities certified by Court order on November 5, 1997, as amended and corrected by Court order of November 12, 1997, such litigation styled Cause No. 96-12-7404-A; City of San Benito, et al. v. PG&E Gas Transmission, Texas Corporation, et al.; In the 107th Judicial District Court, Cameron County, Texas ("litigation"); and WHEREAS, PG&E/TECO has vigorously defended the litigation and deny and continues to deny the allegations, claims and damages asserted by the Class Plaintiffs; and WHEREAS, the Class Plaintiffs and PG&E/TECO wish to fully and finally settle the litigation and all claims and damages as herein provided; and WHEREAS, without admission of liability by or to any party, the Class Plaintiffs and PG&E/TECO desire to avoid the vexation and uncertainties of litigation and fully and finally Final Release & Settlement Agreement January 27, 2000 (5:55pm) - 2 - resolve the litigation, ancillary litigation, avoid further litigation, settle all claims and buy peace; NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual promises and agreements herein contained, including the foregoing recitals which form an integral part of this Release and Settlement Agreement, and in consideration of the Agreed Settlement Sum and the Ordinance Granting a Permit And Consent enacted by each of the Settling Class Cities, and other good and valuable consideration, and in order to buy their respective peace, the receipt and independent adequacy of all elements of such consideration being acknowledged by the parties hereto, the parties hereby contract, covenant and agree as follows: 1. DEFINITIONS. The following terms are defined as follows when used within this Agreement: a. "RELEASE AND SETTLEMENT AGREEMENT" shall mean this Full and Final Release and Settlement Agreement and all referenced Exhibits hereto. b. "CLASS CITIES" shall mean those cities that were given notice of this class action after it was certified, have not opted out or have rescinded their original opt out, and have not been severed, dismissed, nonsuited, or otherwise removed from the class by court order. c. "SETTLING CLASS CITIES" shall mean those Class Cities that have been given notice of the settlement, have agreed to the terms, conditions and consideration supporting the settlement, have agreed to accept the benefits hereof, and have agreed to be bound by the Agreement. d. "SETTLING DEFENDANTS" or "PG&E/TECO" shall mean all the parties named as Defendants in the litigation, and the directors, officers, general and limited partners, joint ventures, employees, and representatives of said entities. Final Release & Settlement Agreement 3 January 27, 2000 (5:55pm) e. PIPELINE(S) shall mean the intrastate, interurban PG&E/TECO natural gas and natural gas liquids transmission pipelines and all their appurtenant facilities, including, but not limited to, mains, spurs, laterals, meters, valves, corrosion protection systems, city gates, and other related facilities of PG&E/TECO owned, leased, operated and/or controlled, in whole or in part (such as through a joint venture or partnership, for example), by PG&E/TECO. The location of the Pipelines within the respective city limits of the Settling Class Cities have been disclosed to the Settling Class Cities directly and/or through Class Counsel, to the extent known, by maps, written descriptions or other identification as may be required by the City. 2. AGREED SETTLEMENT SUM. PG&E/TECO agrees to pay by check, payable to "the Law Offices of Ramon Garcia, P.C., Class Counsel," the total sum of twelve million two hundred thousand dollars ($12,200,000.00), which is the full and complete amount that the Settling Defendants will pay pursuant to the Release and Settlement Agreement as the Agreed Settlement Sum. The check will be delivered to the Settling Class Cities through Class Counsel on or before five business days after final approval by the Court of this Release and Settlement Agreement. 3. CONSENT AND PERMIT ORDINANCE . The Settling Class Cities agree to consent, permit, authorize, and approve the past, current and continued presence, use, maintenance, expansion, and operation of PG&E/TECO's Pipelines, as granted and expressed by the ordinance which each Settling Class City has or will enact and adopt, for a term of twenty-five years, in the same or substantially similar form to Exhibit "A" attached hereto. 4. COURT COSTS. All costs of court in the litigation and ancillary litigation shall be paid by the party incurring such costs. 5. DISMISSAL WITH PREJUDICE OF CLAIMS. The Settling Class Cities shall dismiss with prejudice all claims in this litigation and all claims against the Settling Defendants in the ancillary lawsuits, as identified in Exhibit "B" attached hereto and incorporated by reference herein, following the approval by the Court of the Release and Settlement Agreement and receipt of the Agreed Settlement Sum in full as provided in Section 2 above. 6. RELEASE a. Scope. It is the Settling Class Cities' intent to release all causes of action of whatsoever nature, or any other legal theory arising out of the circumstances described above, against PG&E/TECO, and to release PG&E/TECO from any and all liability and damages of any kind, known or unknown, whether based on statute, ordinance, contractor tort. The release Final Release & Settlement Agreement -4 January 27, 2000 (5:55pm) given herein is intended by the Settling Class Cities hereto to constitute a complete, comprehensive and final release and shall be construed accordingly in its broadest sense as to PG&E/TECO; however, the Settling Class Cities do not by this Release and Settlement Agreement release any claims that any Settling Class City may possess or assert regarding franchise fee payments against any of the following entities: the local distribution company now known as Southern Union Gas Company, a division of Southern Union Company; Southern Union Company; the former Rio Grande Valley Gas Company, a Delaware corporation, now known as Southern Union Company; Mercado Gas Services, Inc.; and Entex, a division of NORAM Energy Corp.; or any of said entities' successors or assigns. Further, the Settling class Cities do not by this agreement release any claims, if any, asserted by any such Settling Class City, either as a class representative or class member, against any person or entity other than the Settling Defendants named herein, in the case styled City of Pearland on Behalf of Itself and All Other Similarly Situated Cities v. Entex, Inc. et al., Cause No. 3131-JG-97, In the 239th District Court in and for Brazoria County, Texas; or in the case styled City of Pharr et al. v. Rio Grande Valley Gas Company et al., Cause No. C-4558-95-G-2, In the 370th District Court in and for Hidalgo County, Texas. b. No Admission of Liability: Claims are Disputed and Uncertain. The Releasing Parties further agree and acknowledge that there is considerable doubt, disagreement, dispute and controversy, with regard to the validity and/or viability of the Settling Class Cities' claims against the Settling Defendants and that the Settling Defendants have not and do not hereby make any admission as to the legal or equitable liability of the Settling Defendants for any liability amount of damages or justification for legal relief. The Releasing Parties further acknowledge and agree that there is doubt, disagreement, uncertainty and confusion as to the amount of said liability, if any. The purpose of this Release and Settlement Agreement is to end the dispute about the value of the claims made, or which could have been asserted, by the Settling Class against the Settling Defendants, once and for all. c. Release of PG&E/TECO. The Class Plaintiffs, for themselves and on behalf of the Settling Class Cities, and their agents, attorneys, representatives, employees, elected and appointed officials, and all other related persons or entities ("Releasing Parties"), hereby forever release, discharge, and acquit the Settling Defendants, their successors, and assigns, of and from any and all past, present, or future claims, demands, obligations, causes of action, contentions or legal theories, known or unknown, and any and all past, present, or future damage, including, without limitation, loss of income, Final Release & Settlement Agreement January 27, 2000 (5:55pm) -5- contractual rights or interests, statutory damages, pre- or post -judgment interest, costs of court, punitive damages, attorneys' fees, and any other damage or expense, accrued or unaccrued, whether now known or unknown, fixed or contingent, real or spurious, and whether any of the foregoing arise out of common law, contract, tort, equity, regulation, state or federal constitution, statute, city ordinance or any other applicable law, which the Releasing Parties now have or may hereafter accrue or acquire, which are the subject of the litigation and ancillary litigation, and/or which might have been asserted in any court, forum, tribunal, commission or agency whatsoever, in connection with, arising out of, or in any way related to the Pipelines, any acts, facts, transactions, occurrences, representations or omissions asserted or which could have been asserted in the litigation and ancillary litigation or arising for any reason out of any natural gas activities or any relationship with, or duty owed by the Settling Defendants to the Releasing Parties. It is not the intention of the Settling class Cities to release any claims, if any, asserted by any such Settling Class City, either as a class representative or class member, against any person or entity other than the Settling Defendants named herein, in the case styled City of Pearland on Behalf of Itself and All Other Similarly Situated Cities v. Entex, Inc. et al., Cause No. 3131-JG-97, In the 239th District Court in and for Brazoria County, Texas; or in the case styled City of Pharr et al. v. Rio Grande Valley Gas Company et al., Cause No. C-4558-95-G-2, In the 370`h District Court in and for Hidalgo County, Texas. It is the intention of the Releasing Parties to release all claims and potential claims against the Settling Defendants, including, only by way of example and not limitation: (1) trespassing/purpresture upon city property; (2) failure to obtain lawful consent for Pipelines within the city; (3) failure to pay monies or underpaying monies due under street rental ordinances or other city ordinances impacting Pipeline operations and Pipeline business activities; (4) tortiously interfering with any Settling Class City's contract or franchise with its local gas distribution company; (5) allegedly aiding and abetting third parties to violate any franchise agreements or city ordinances; (6) breach of any expired or existing franchise agreement between any Settling Class City and any of the Settling Defendants; and (7) all other related causes of action.. 7. WARRANTY OF FULL AUTHORITY AND NO ASSIGNMENT: The Releasing Parties represent and warrant that they own and control 100% of the claims released herein and have full authority to execute this Release and Settlement Agreement. The Releasing Parties and Class Counsel represent, covenant, and warrant that none of the claims released herein have previously been conveyed, assigned, pledged, sold or transferred, in whole or in part, to any third party, and that they have full authority to release any and all claims. Final Release & Settlement Agreement January 27, 2000 (5:55pm) - 6 - 8. AGREEMENT TO INDEMNIFY AND HOLD HARMLESS. The Releasing Parties agree to indemnify and hold harmless Settling Defendants from any third party or derivative liability claims against Settling Defendants asserted by any defendant in any present or future litigation initiated by or on behalf of any one or more of the Settling Class Cities that arises or is derived from the matters released herein. The Releasing Parties do not by this Agreement release any claims that any Releasing Party may possess or assert regarding franchise fee payments against Southern Union Company; Southern Union Gas Company, a division of Southern Union Company; the former Rio Grande Valley Gas Company, now known as Southern Union Company; Mercado Gas Services, Inc. and/or Entex, a division of NORAM Energy Corp. It is further understood and agreed that no Settling Class City is required to indemnify or hold harmless any Settling Defendant for or on behalf of any other Settling Class City. 9. CONTRACTUAL TERMS. The terms of this Agreement are contractual and not mere recitals. 10. GOVERNING LAW. This Agreement shall be governed and construed in accordance with the laws of the State of Texas. 11. ACKNOWLEDGMENT OF FULL UNDERSTANDING, OF REPRESENTATION BY AND CONSULTATION WITH COUNSEL, AND DISCLAIMER OF RELIANCE. a. Sophisticated: Parties Dealing at Arm's Length. The Settling Class Cities, as Releasing Parties, agree and acknowledge that in negotiating and entering into this Release and Settlement Agreement. Releasing Parties and their counsel have at all times been dealing with each other at arm's length, and all are knowledgeable and sophisticated parties. b. Warranties of Understanding, Full Disclosure. and Representation by and Opportunity for Consultation with Counsel. The Releasing Parties hereto represent and warrant: (i) that they have read this Release and Settlement Agreement and fully understand it; (ii) that they have been represented in this litigation by Court appointed Class Counsel, and had the opportunity to consult with their independent City Attorney and/or with other counsel of their own choice; (iii) that they have agreed to be fully bound according to the terms of this Release and Settlement Agreement. The Releasing Parties acknowledge that they have had the opportunity to consult with Class Counsel and/or their City Attorney or other independent legal counsel regarding the entire contents of this Release and Settlement Agreement, as well as the legal consequences of this Final Release & Settlement Agreement January 27, 2000 (5:55pm) - 7 - Release and Settlement Agreement. In approving the execution of this Release and Settlement Agreement by Class Counsel, each of the Settling Class Cities is relying on its own judgment and each has been represented by competent and able Class Counsel and has further had the opportunity to consult with its own City Attorney or other legal counsel in this matter. c. Acknowledgment of No Other Promises or Agreements and Disclaimer of Reliance. Each of the Settling Class Cities expressly warrants and does hereby authorize Class Counsel, as Agents of the Settling Class Cities, to state and represent that no promise or agreement which is not herein expressed has been made to any of the Settling Class Cities or their Counsel in exchange for entering into and executing this Release and Settlement Agreement, and that none of the Settling Class Cities or their Counsel is relying upon any statement or representation of any agent of or Counsel for the Settling Defendants being released hereby. In making the decision to settle and by approving the execution of this Release and Settlement Agreement by Class Counsel, the Settling Class Cities have relied on their own knowledge and judgment and that of Class Counsel and/or their City Attorney or other independent counsel, if any, and not in reliance upon any representation, warranty, advice, or statement of any kind made by or on behalf of the Settling Defendants or their Counsel, unless and except to the extent that such representation, warranty, advice, or statement is expressly contained in this Release and Settlement Agreement. 12. NO MODIFICATION. This Full and Final Release and Settlement Agreement shall not be modified unless any such modification is made in writing and signed by all the parties hereto or their counsel. 13. BINDING UPON SUCCESSORS. This Full and Final Release and Settlement Agreement shall be binding on, inure to the benefit of, and be enforceable by, the Settling Defendants and their successors, heirs, assigns, trustees, administrators, and legal and personal representatives. 14. CONSTRUCTION. This Full and Final Release and Settlement Agreement is the result of mutual negotiations between and among the various parties and their Counsel, and as such shall not be construed more strictly against one party. Paragraph captions are for convenience only and shall not be used to interpret or construe the paragraph to which they relate. Final Release & Settlement Agreement January 27, 2000 (5:55pm) - 8 - 15. MULTIPLE ORIGINALS. This Full and Final Release and Settlement Agreement may be executed simultaneously in one or more duplicate originals, each one of which shall be deemed an original. EXECUTED this the _ day of , 2000. the The Cities of San Benito, Primera, and Port Isabel, Individually and as Class Representatives for Settling Class Cities and Releasing Parties, By: Ramon Garcia, Class Counsel Final Release & Settlement Agreement January 27, 2000 (5:55pm) - 9 - EXHIBIT "B" TO FULL & FINAL RELEASE AND SETTLEMENT AGREEMENT LIST OF ANCILLARY LAWSUITS IN WHICH ALL CLAIMS AGAINST PG&E DEFENDANTS WILL BE DISMISSED WITH PREJUDICE 1. Cause No. C-4558-95-G-3 City of Alton and City of Donna vs. Rio Grande Valley Gas Co., PG&E Gas Transmission. Texas Corporation f/k/a Valero Eneray Corporation, VT Company f/k/a Valero Transmission Company, PG&E Texas Natural Gas Company, f/k/a Valero Natural Gas Company. PG&E Eneray Trading Holdings Company f/k/a Valero Gas Marketing Company f/k/a Reata Industrial Gas Company, PG&E Texas Pipeline, L.P. f/k/a Valero Transmission, L.P., and PG&E Reata Eneray, L.P. f/k/a Reata Industrial Gas, L.P.; In the 370'h Judicial District Court, Hidalgo County, Texas 2. Cause No. C-7079-96-B, City of San Juan, City of La Villa, City of Penitas, City of Edcouch, and City of Palmview v. Rio Grande Valley Gas Co.. PG&E Gas Transmission, Texas Corporation f/k/a Valero Energy Corporation, VT Company f/k/a Valero Transmission Company, PG&E Texas Natural Gas Company, f/k/a Valero Natural Gas Company, PG&E Energy Trading Holdings Company f/k/a Valero Gas Marketing Company f/k/a Reata Industrial Gas Company, PG&E Texas Pipeline, L.P. f/k/a Valero Transmission. L.P., and PG&E Reata Energy, L.P. f/k/a Reata Industrial Gas, L.P.• In the 93`d Judicial District Court, Hidalgo County, Texas Final Release & Settlement Agreement January 27, 2000 (5:55pm) AGENDA REQUEST BUSINESS OF THE CITY COUNCIL CITY OF PEARLAND, TEXAS AGENDA OF: 2/28/00 ITEM NO. / DATE SUBMITTED: DEPARTMENT OF ORIGIN : LEGAL PREPARED BY: DARRIN COKER PRESENTOR: DARRIN COKER SUBJECT: CLASS ACTION LITIGATION EXHIBITS: ORDINANCE NO. 955 AND RELEASE AND SETTLEMENT AGREEMENT EXPENDITURE REQUIRED - n/a AMOUNT BUDGETED - n/a ACCOUNT NO. ADDITIONAL APPROPRIATION REQUIRED ACCOUNT NO. FUNDS AVAILABLE (Finance Department Approval) EXECUTIVE SUMMARY See attached memo. RECOMMENDED ACTION Consider proposed ordinance. Darrin M. Coker City Attorney (281) 652-1666 Telecopier (281) 652-1679 Lisa D. Jones Legal Secretary (281) 652-1664 PRIVILEGED AND CONFIDENTIAL ATTORNEY -CLIENT COMMUNICATIONS TO: HONORABLE MAYOR AND CITY COUNCILMEMBERS FROM: DARRIN M. COKER, CITY ATTORNEY DATE: FEBRUARY 24, 2000 SUBJECT: CLASS ACTION LITIGATION Nghiem V. Doan Assistant City Attorney (281) 652-1665 Telecopier (281) 652-1679 In November of last year, the City Council adopted an ordinance on its first reading intended to settle a class action suit captioned City of San Benito v. PG&F Gas Transmission, et al. Due to changes made to the final settlement, the City Council must once again consider a proposed Ordinance and Release and Settlement Agreement to conclude the City's participation in the litigation. This litigation was originally filed on December 31, 1996, against numerous defendants, including Rio Grande Valley Gas Company, Southern Union Gas Company, and Mercado Gas Services. Subsequently, several defendants were non -suited and a class action was certified against Valero and PG&E, Defendants, on November 5,1997. The main plaintiffs in the case claimed that the Defendants improperly trespassed on city rights -of -way without the consent of the cities. Although Defendants may have had easements and consents through certain areas, there were some cities where a lack of consent for the use of city rights -of -way existed. Plaintiffs, therefore, argued that this raised an issue of a trespass on city rights -of -way. After three years of litigation, the parties have reached an agreement to settle all claims. Defendants have agreed to pay $12.2 million to settle the claims of the class members and to pay for attorneys' fees and costs incurred by class counsel in litigating this action. During the litigation, it was discovered that the Defendants had 40 feet of pipeline located in the City of Pearland right-of-way that was not properly documented. Consequently, the agreed -to settlement resulted in damages of approximately $714.00 to the City for Defendants' illegal trespass. In addition, the settlement requires Defendants to enter into a franchise agreement granting consent for transmission pipelines along, across, and under the City's right-of-way. Pursuant to the franchise agreement, Defendants will pay a one-time fee equal to $2,000.00 per year for a 25-year term, reduced to present value using a 6% per year discount rate. Translated, the City will receive an approximate 3519 LIBERTY DRIVE • PEARLAND, TEXAS 77581-5416-19 • (281) 485-2411 • www.ci.pearland.tx.us Mayor and Councilmembers February 24, 2000 Page 2 payment equal to $25,700.00. As part of the settlement, Defendants' class counsel has requested that the City pass a resolution accepting the negotiated settlement and additionally pass a consent ordinance which allows the Defendants to continue to do business within the City rights -of -way. If you have any questions or comments regarding these matters, please feel free to contact my office at (281) 652-1666. Sincerely, M, Coft4. Darrin M. Coker City Attorney DMC/Idj 298