◆ SpookStack

UNCLASSIFIED To: San Diego From: San Diego Re: 205-SD-72665, 06/15/2011 request of Ensenada. and the amount. contributed to the trust. $7 million, was mutually agreed upon by Sempra and The memorandum further states that "AS a result [of the trust agreementl, on August 12. 2003 the Land b6 Use permit was signed by the T The land use permit was b7C required for Sempra to build an LNg plant in Ensenada. The Trust formed the Advisory Council and Technical Committee and bf the Technical Committee. The memo states that subsequent to a $5oo,0oo initial contribution to. the Trust, Sempra's final permit, the construction license, was signed by the head of the Ensenada City Urban Development Agency, who reported directly to The memo further states,. "...after the construction issued, Sempra contribut the second payment of $5oo, 00o usd to the Trust..." When finally states, "During Q4 2005, subject to no unplanned. permitting impediments, Sempra will contribute $5,ooo,00o usd to the Trust." The memo concluded that the establishment and funding of the trust was a cost associated with developing the LNG facility and such cost should be capitalized as part of the plant. SUMMARY OF INVESTIGATION: On 04/29/2011, Sempra outside counsel provided a presentation concerning the Ensenada Trust, which is documented in detail in a separate EC. Prior to enacting the Trust, Sempra obtained an opinion letter from an independent law firm. specifically for the purpose of determining whether the terms of the Trust would violate any provision of the FcpA. The opinion letter concluded that, based on the Trust's operating rules,. noting that the rules specifically mention. prohibitions of benefits to family members of the trust members and government officials, and require all actions to be in compliance with FcpA, the Trust~was not in danger of violating the provisions of FcpA: The letter further asserted that all major project permits, including land use permits, required to be issued by the City of that the funding of the Trust was contingent upon the granting of essential permits by the City. Sempra confirmed that any additional permits required to complete construction of the liquified natural gas plant in Ensenada at the time of issuance of the opinion letter were construction permits issued with little discretion by the city of Ensenada, or were project permits issued by federal or state entities and not the City. UNCLASSIFIED 4