SR-02-25-2014-3GCity of I�
Santa Monica
City Council Meeting: February 25, 2014
Agenda Item: 3® (``t
To: Mayor and City Council
From: Martin Pastucha, Director of Public Works
Subject: Resolution of Intention to Set a Public Hearing for a First Reading of an
Ordinance Granting a Franchise Agreement to Crimson California
Pipeline, L.P. for a Crude Petroleum Pipeline
Recommended Action
Staff recommends that the City Council adopt the attached Resolution of Intention to
grant Crimson California Pipeline, L.P., a franchise to maintain a crude petroleum
pipeline in the public right of way and to set a public hearing for March 18, 2014 to hear
all interests and objections and to consider first reading of the proposed franchise
ordinance.
Executive Summary
Staff recommends that the City Council set a public hearing for March 18, 2014, at 5:30
PM in the City Council Chambers, for a first reading and public comment regarding the
adoption of an ordinance granting a franchise agreement to Crimson California Pipeline,
L.P. to operate an existing crude petroleum pipeline that runs north to south beneath the
City. The franchise agreement would allow Crimson to continue to operate and
maintain the pipeline for the purpose of transporting crude petroleum products. The
proposed franchise agreement is for a 20 -year term.
Discussion
On September 12 1989, Council adopted Ordinance No. 1492 (CCS) entitled: "An
ordinance of the City of Santa Monica granting a franchise to Shell California Pipeline
Company to operate, maintain, inspect, repair, remove, replace and abandon a pipeline
and appurtenant facilities in certain public streets of the City of Santa Monica."
This franchise was granted for a term of twenty years.
On April 7, 2005, the California Public Utilities Commission authorized Shell California
Pipeline Company LLC (Shell) to sell certain public utility pipeline assets, rights of way
and permits to Crimson California Pipeline L.P., (Crimson) including the portion of the
Ventura 10" crude line within the Santa Monica City boundaries (Pipeline).
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The 10" diameter steel pipeline runs 3.9 miles long within the City along 26th Street from
the northerly City border south to Colorado Ave., then west along the latter to
Cloverfield Blvd., then south along the latter to Ocean Park Blvd., then west along the
latter to 23rd Street, then south to Dewey Street, then east to the southerly City border
(see Figure 1 below).
Figure 1.
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Pipe Lino
Crimson is a common carrier and continues to operate and maintain the Pipeline in
accordance with Ordinance No. 1492 (CCS), as the lawful successor to Shell although
the franchise agreement expired on September 12, 2009.
State law significantly governs common carrier petroleum pipelines. The proposed
franchise with Crimson would be in accordance with California Public Utilities Code
2
Section 6201 et seq. Among other things, state law establishes the franchise payment
for common carrier pipelines. The proposed franchise would be substantially similar to
Ordinance No. 1492 (CCS). The proposed franchise would be for a 20 -year term and
set the rules under which Crimson would operate the pipeline. Ultimately, the City
Council has the option to reject a pipeline franchise agreement with Crimson. However,
should a franchise be rejected, Crimson, operating as a regulated common carrier
pipeline utility, may have eminent domain and other rights under state law that may
allow it to continue to operate the pipeline.
A draft copy of the proposed franchise is attached to this staff report as an exhibit to the
Resolution.
Financial Impacts & Budget Actions
There is no immediate financial impact or budget action necessary as a result of holding
a public hearing and receiving public comment. If the City Council later approved a
franchise ordinance, the City would receive a franchise payment in accordance with the
provisions of the franchise. Staff would request the revenue be budgeted to account
01274.400110 for fiscal year 2013 -14.
Prepared by: Greg de Vinck, PE, Principal Civil Engineer
Approved:
Forwarded to Council:
Martin Pastucha Rod Gould
Director of Public Works City Manager
Attachment: 1 — Resolution and Proposed Franchise Agreement
91
Reference:
Resolution No. 10801
(CCS)