Ownership of LNG Site Challenged

A lawsuit filed in Baja California state court claims Sempra Energy LNG does not own the property on which it plans to build a liquefied natural gas receiving terminal.

Jan. 27—ENSENADA, Calif. — A lawsuit filed in Baja California state court claims Sempra Energy LNG does not own the property on which it plans to build a liquefied natural gas receiving terminal.

Ensenada lawyer Carlos Gonzalez Castro filed the action on behalf of a Mexico City businessman who says he owns the land. Gonzalez says the property Sempra owns is really about three miles south of the parcel where the company is preparing to build its $670 million LNG complex. "All the studies and research and environmental analyses have been made on the wrong lots," Gonzalez said. "All the (government) authorizations are for the wrong point. The permits are not valid."

The suit was filed in Baja California state court in mid-November. A judge has ordered a legal notice to be included in Ensenada land records noting that the parcel's ownership is in dispute.

Sempra contends in a filing that the lawsuit's claims are fraudulent. "We believe this lawsuit has no merit, that it's factually defective," Sempra spokeswoman Jennifer Andrews said yesterday. She said the company "is confident it will prevail."

Action on the matter is not expected until all parties involved have responded to the suit.

Opponents of the project on both sides of the U.S.-Mexico border argue that Sempra should not be allowed to build the massive LNG complex on Costa Azul. The plateau, about 14 miles north of Ensenada adjacent to the Bajamar golf and residential resort, is one of the few undeveloped coastal areas between Tijuana and Ensenada.

Sempra is building a road to the site and has awarded $670 million in contracts to companies to erect the onshore LNG receiving terminal and an adjacent breakwater in the Pacific Ocean.

Construction is scheduled to begin during the first half of this year. The project is expected to be completed in 2008 and supply natural gas to Baja California and Southern California.

According to a Mexico City news report, Mexico's Senate recently weighed in on the project, urging Baja California state and Tijuana, Rosarito and Ensenada municipal officials to respect a regional master plan that bans industrial development along the coastal corridor.

Sempra has not heard of or reviewed any action by the Mexican Senate, spokeswoman Andrews said. "But we're confident that all entities that granted permits for the project complied with the (master plan) guide lines," she said.

Attorney Gonzalez has been at the forefront of other efforts to halt construction of the Costa Azul project.

In 2003, he asked a federal court to void the environmental permit that the Mexican government granted Sempra. The court dismissed the request, saying the attorney did not have legal standing to challenge the permit. Last summer, Gonzalez sent Baja California Gov. Eugenio Elorduy Walther, members of his cabinet, Ensenada's mayor and the city's fire chief copies of a federal court's preliminary injunction nullifying the project's permits. The injunction was among several sought on behalf of Bajamar developer Roberto Valdes.

While Valdes says the injunction still stands, Sempra insists that all legal issues in that matter have been resolved.

Gonzalez's most recent case takes issue with the company's property title.

"We think Sempra did buy the lots, but they're not where they think they are.

They're five kilometers south," he said. "This is the property of my client." The attorney believes the confusion stems from the numbering of land parcels when the Departamento de Asuntos Agrarios y Colonizacion created Colonia Costa Azul in 1957.

In the intervening years, he said, numbers identifying the parcels were somehow reversed from south to north in property records. But in the titles, he claims, the parcel numbers remain as originally designated. "I don't think Sempra did a title search when they bought the property," Gonzalez said.

Bolstering his claim, he said, is that the longitude and latitude coordinates by which Sempra's property is identified in federal government developmental and environmental permits refer not to the property where the company plans to develop the LNG project but to a location three miles south.

Last March, the issue of title irregularities forced Marathon Oil Corp. to abandon plans to build an energy complex, including an LNG receiving terminal, near Tijuana. State officials said then that they seized the company's land to clear up confusion over ownership due to overlapping property titles.

A Baja California spokesman did not respond yesterday to a query asking whether the government planned to intervene in the Sempra land title matter. Such disputes are common in Mexico, said Alberto Szekely, a former Mexican U.N. ambassador and Mexico City lawyer who specializes in environmental and property law.

"It's one of the most worrisome issues in Mexico," Szekely said. "The law is so cumbersome and subject to influence that people work around the law." The suit, he said, "could delay the project if Sempra is trying to develop it on land that isn't theirs."

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© 2005, The San Diego Union-Tribune. Distributed by Knight Ridder/Tribune Business News.