SR-06-10-2014-3KCity Council Meeting: June 10, 2014
Agenda Item:
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 July 8, 2014 to hear all
interests and objections and to consider first reading of the proposed franchise
ordinance.
Executive Summary
Staff recommends that Council set a public hearing for July 8, 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 California Pipeline to continue to operate
and maintain the pipeline for the purpose of transporting crude petroleum products.
At its meeting of March 18, 2014, Council considered at first reading a proposed 20 year
franchise agreement with Crimson California Pipeline. Rather than approve the 20 year
franchise, Council directed staff to return with a proposed 10 year franchise. The
proposed franchise agreement is for a 10 -year term. With the change in franchise
length, the franchise fees are reduced from $148,705 for a 20 year franchise to $83,085
for a 10 year franchise. All other proposed franchise provisions are the same as what
Council considered on March 18, 2014.
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 20 years.
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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).
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 23`d Street, then south to Dewey Street, then east to the southerly City border
(see Figure 1 below).
Figure 1.
City of Santa Monica
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Legend:
10' Crimson Pipe Line
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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
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 10 -year term and
set the rules under which Crimson would operate the pipeline. Ultimately, 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.
On March 18. 2014, Council considered at first reading a proposed 20 year franchise
agreement with Crimson California Pipeline. Rather than approve the 20 year
franchise, Council directed staff to return with a proposed 10 year franchise. The
proposed franchise agreement is for a 10 -year term. With the change in franchise
length, the franchise fees are reduced from $148,705 for a 20 year franchise to $83,085
for a 10 year franchise. All other proposed franchise provisions are the same as what
Council considered on March 18, 2014.
A draft copy of the proposed franchise is attached to this staff report as an exhibit to the
Resolution.
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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 Council later approves a franchise
ordinance, the City would receive a franchise payment in accordance with the
provisions of the franchise. Staff would deposit the revenue in account 01274.400110.
Prepared by: Greg de Vinck, PE, Principal Civil Engineer
Approved:
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Martin Pastucha
Director of Public Works
Forwarded to Council:
Rod Gould
City Manager
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Attachment:
1 — Resolution and Proposed Franchise Agreement with Exhibits A, B, C and D
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