Tenneco Oil Threatens to Sue Santa Clarita If It Halts Power Plant

Tenneco Oil Co. has threatened to sue Santa Clarita unless the city rescinds an order blocking the company from building a power plant in Newhall.

The City Council, after a lengthy closed meeting that ended early Friday morning, did not respond to Tenneco’s threat but will take up the issue again at a public meeting Sept. 30.

Central to the dispute are four building permits Tenneco was issued in the spring to build a gas-burning plant on an old oil field near Placerita Canyon Road and Sierra Highway. The permits were issued by Los Angeles County on the new city’s behalf because Santa Clarita was still organizing its government.

City Manager George Caravalho said Friday the county erred in granting the permits because the city already had approved a moratorium prohibiting construction on the power plant site. On Sept. 1, the city ordered Tenneco to halt construction that had gone on for months.

“Tenneco was shocked by this action,” said Robert T. Bogan, Tenneco vice president and division general manager. Bogan told the council Thursday night that Tenneco obtained the permits in good faith and “will not willingly sustain the loss from this error.” The company has spent $16 million on the project so far, he said.

Moreover, Tenneco is up for sale--Sept. 30 is the deadline for bids to buy the company--and Bogan said the dispute could cause potential buyers to offer lower bids.

Gregory C. Brown, a Tenneco attorney, also said the moratorium does not apply to the power plant because the Los Angeles County Board of Supervisors granted the project grading and conditional-use permits a few days before Santa Clarita was incorporated Dec. 15. Santa Clarita City Atty. Carl K. Newton said the moratorium applies to the plant.

After its regular meeting and Bogan’s presentation Thursday night, council members went into closed session. Then, the council took the unusual step of continuing the meeting until Sept. 30, the same day Tenneco hopes to receive bids for purchase of the company.

The city tried to torpedo the plant earlier this year when it joined the Placerita Canyon Homeowners Assn. in a lawsuit contending that the county should have required Tenneco to prepare an environmental impact report before granting permits for the project.

On Feb. 2, a Los Angeles Superior Court judge ruled against the homeowners and the city. They are appealing the decision.