CITY OF SIMI VALLEY MEMORANDUM

Transcription

1 CITY OF SIMI VALLEY MEMORANDUM AGENDA ITEM NO. 7A October 16, 217 TO: FROM: SUBJECT: City Council Office of the City Manager SECOND READING OF ORDINANCE NO GRANTING THE RENEWAL OF A PETROLEUM PRODUCTS PIPELINE FRANCHISE TO CRIMSON CALIFORNIA PIPELINE, L.P. STAFF RECOMMENDATION It is recommended that Ordinance No be adopted. CITY MANAGER S RECOMMENDATION The City Manager requests City Council consideration to adopt Ordinance No BACKGROUND AND OVERVIEW This ordinance was introduced for first reading at the City Council meeting of June 12, 217, without modification. Prior to introduction, staff was requested to obtain certification (Attachment A, page 24) from the Office of State Fire Marshal for the most recent inspection of the Torrey Pipeline. On July 24, 217, City Council reviewed the certification and requested staff to obtain a copy of the current Executive Summary of the In Line Inspection/Smart Pig Report submitted to the Office of State Fire Marshal (Attachment B, page 25), provide a revised map of the petroleum pipeline franchise (Exhibit A, page 1), and obtain information on earthquake safety protocols prior to the second reading of the ordinance. The staff report presented on June 12, 217 is also attached for reference. Debra French, Supervising Pipeline Safety Engineer from the Office of State Fire Marshal as well as Bryan Klemm, Mark Sandon, and April Harvey from Crimson California Pipeline, LP (Crimson) are present this evening to address any concerns the City Council may have. On May 15, 217, the City Council adopted Resolution No setting the time and place for a public hearing to consider an application for renewal of a petroleum products pipeline franchise from Crimson. The franchise application is for that portion of the existing 4 & 12 Los Angeles Basin Gathering System that is located within the City of Simi Valley right-of-way. The City adopted Ordinance No. 775 in May 1992, which granted a crude oil pipeline franchise application to Unocal for the Los Angeles Basin Gathering System for a period of twenty five years for that portion of the existing fourinch Moorpark Pipeline and 12-inch Torrey Pipeline located in Avenida Simi and Tapo Canyon Road, respectively. Prior to the petroleum products pipeline franchise

2 2 expiration date of July 2, 217, control and ownership of the pipeline passed through several oil companies. The pipeline is now owned by Crimson California Pipeline, L.P. (Crimson), who submitted an application for renewal on April 1, 216. Section 621 et seq. of the Public Utilities Code contains specific requirements and procedures for the granting of a petroleum products pipeline franchise. Crimson has made an application to the City for a franchise in accordance with these procedures. The following actions have been taken to date in response to the franchise application: A Resolution of Intent to consider the franchise application was adopted by the City Council on May 15, 217. A notice of the City's intended action to consider the franchise application, including the date, time, and place of the public hearing was published on May 22, 217. An introduction of an ordinance to grant the franchise after completion of the required public hearing and consideration of protests took place on June 12, 217. On July 24, 217, the City Council reviewed certification from the Office of State Fire Marshal that was requested prior to the introduction, and postponed the second reading until October 16, 217 in order for staff to obtain a copy of the Executive Summary of the In Line Inspection/Smart Pig Report for the pipeline, a revised map of the petroleum pipeline franchise, and information on earthquake safety protocols for the pipeline. A smart pig is an internal inspection tool, run inside the pipe that has various sensors on it and a computer, measuring wall thickness, looking at weld seams and looking for a host of other abnormalities in the pipe. FINDINGS AND ALTERNATIVES Location The location of the two pipelines covered by this franchise is shown on the revised map (Exhibit A, page 1) now reflecting the four inch Moorpark Pipeline and 12-inch Torrey Pipeline. The Moorpark Pipeline enters the City limits near the intersection of Anderson Drive and Avenida Simi and runs east along Avenida Simi to Tapo Canyon where it connects to the Torrey Pipeline. The Moorpark Pipeline was declared out of service prior to Crimson s ownership in 27 when it was purged and filled with nitrogen; staff has confirmed this information with the Office of State Fire Marshal. Crimson stated on July 24, 217 that they have no plans to reactivate the pipeline as this would require new infrastructure and substantial expense. The 12-inch Torrey Pipeline begins north of Happy Camp Regional Park in Moorpark, exits the City boundaries through Brandeis-Bardin traveling through the Calabasas, Hidden Hills area, through the Santa Monica Mountains, Mandeville Canyon, Brentwood, West Los Angeles, Westchester, Inglewood, Hawthorne, Lawndale, Lennox to Torrance. The portion of the Torrey Pipeline covered by the franchise agreement runs along Tapo Canyon Road from the City s northern boundary to Alamo Street.

3 3 While the portion of the pipeline that continues south of Alamo along Tapo Canyon is in the City s right-of-way, Unocal s rights preceded the creation of the right-of-way and therefore this portion of the pipeline is not subject to the franchise. Currently active, this pipeline carries an average flow of 714, gallons of crude oil per day to Los Angeles area refineries. The pipeline is monitored by a remote leak detection system and Crimson is equipped to shut down the line (e.g. pumping systems and control valves) from their main control center in Long Beach if a leak in the Torrey Pipeline is detected or reported. In Line Inspection/Smart Pig Executed Summary In August 217, staff submitted a Public Records Request to the Office of State Fire Marshal for the most recent In Line Inspection/Smart Pig Report for the Torrey Pipeline. Specialists review the data collected from these runs, and repairs are made where warranted according to set protocols with the regulations. The inspection report was for the full length of the pipeline, miles. The Office of State Fire Marshal has found the inspection data to be satisfactory and has not required corrective action. The State Fire Marshal will require a new pipeline inspection report in 219. The Smart Pig Report identifies that the data meets a one meter 8% confidence specification with exceptions identified by a numbering system affiliated with the locations of Main Line Valves and Above Ground Markers (i.e. MLV 217 or AGM 28). Of the exceptions listed on the Executive Summary, only one (MLV 271) is located within Simi Valley. Staff has verified the coordinates of the exception on Google Earth. An exception does not indicate that pipeline damage was missed and does not apply to any anomaly data detected by the Smart Pig; it only applies to the spatial data gathered by the tools inertial mapping unit (IMU). Excessive tool speed or debris in the pipeline can sometimes cause IMU data to be out of specification. The surging and tool vibration at the location of MLV 271 (a valve) is likely caused by the tool passing through the valve. Public Notifications Section 621 et. seq. of the Public Utilities Code requires that the City publish a notice of the City's intended action to consider the franchise application, including the date, time, and place of the public hearing at which protests or objections may be heard, within 15 days after the passage of the resolution. In addition to the public notice placed in the Ventura County Star on May 22, 217 for the June 217 public hearing, staff mailed out notices of the proposed second reading of the franchise renewal on October 6, 217 to those residents and businesses located within a 65 feet radius of the segment of the Torrey Pipeline that is subject to the franchise renewal. As the Moorpark Pipeline has been filled with nitrogen and is no longer active, no notices were generated. Earthquake Protocol At the July 24, 217 City Council meeting, Mayor Huber voiced concerns about earthquake safety. Crimson has provided staff with an overview of the guidelines they

4 4 follow when an earthquake occurs, whether it is reported from a field location, reported via the news media, and/or felt at either the Crimson s Long Beach Control Center or Crimson s Bakersfield Control Center. As part of their protocol, the designated Controller immediately checks the California systems to determine if any changes have occurred. Crimson has indicated that it shuts down all California systems if a Leak Warning or Leak Detected alarm is received, or any negative imbalances [KS1] are indicated, if communications are still intact. Crimson s systems will shut down automatically once communications are out for 15 minutes and local operators of exception sites will be notified to shut down. Protocol also includes line pressure checks and shipping rates of the oil through the line (e.g. determine if an increase or decrease in the rate in which the oil travels has occurred) on all systems to ensure safety as well as a back-up control center that can be activated should the main plant need to be evacuated. Crimson coordinates with American Engineers Rebuilder Association (AERA), California Resources Corporation (CBC), and Thums Island in Long Beach to determine the severity of an earthquake and the integrity of the facilities under their control. Crimson also contracts with NRC Environmental Services and Patriot Environmental Services to maintain emergency response trailers and equipment at facilities in Long Beach and Ventura, California. The biggest enemy to pipelines continues to be third party excavators hitting the pipe. Markers are located in the pipeline right-of-way to notify people of the presence of pipelines. Should the City Council choose to not adopt the attached Ordinance, thereby expressing its intention to not award the petroleum products pipeline franchise to Crimson, the applicant which has been established as a common carrier and public utility by the California Public Utilities Commission would have three available options: The first option would be to request City approval to physically remove the pipeline from the City s right-of-way. The second option would be to leave the pipeline in its current location, but seal it where it enters and leaves the City, thereby rendering it unusable. The third option would be to initiate a condemnation action against the City in order to obtain, through eminent domain, a subsurface easement or other rights to utilize the pipeline within the City. In such a condemnation action, the applicant would have to demonstrate that public interest and public necessity requires acquisition of the easement, and the applicant would be required to pay the City its fair market value. The following alternatives are available for City Council consideration: 1. Adopt Ordinance No (page 6) granting the renewal of a petroleum franchise products pipeline franchise to Crimson California Pipeline, L.P. ; 2. Do not adopt Ordinance No granting the renewal of a petroleum franchise products pipeline franchise to Crimson California Pipeline, L.P.; 3. Provide staff with further direction. Staff recommends Alternative No. 1.

5 5 SUGGESTED CITY COUNCIL MOTION I move to adopt Ordinance No SUMMARY Crimson California Pipeline, L.P. (Crimson) submitted an application for renewal of a franchise agreement on April 1, 216 for the Moorpark and Torrey Pipeline. The Moorpark Pipeline enters the City limits near the intersection of Anderson Drive and Avenida Simi and runs east along Avenida Simi to Tapo Canyon where it connects to the Torrey Pipeline. The Torrey Pipeline begins north of Happy Camp Regional Park in Moorpark, exits the City boundaries through Brandeis-Bardin. The portion of the Torrey Pipeline covered by the franchise agreement runs along Tapo Canyon Road from the City s northern boundary to Alamo Street. While the portion of the pipeline that continues south of Alamo along Tapo Canyon is in the City s right-of-way, Unocal s rights preceded the creation of the right-of-way and therefore this portion of the pipeline is not subject to the franchise. The most recent franchise for the petroleum products pipeline, granted by the City expired on July 2, 217. An introduction of the ordinance to grant the franchise after completion of the required public hearing and consideration of protests took place on June 12, 217, and Council requested that staff obtain certification of the pipeline from the Office of State Fire Marshal. On July 24, 217, City Council postponed the second reading of the ordinance to October 16, 217, allowing both staff sufficient time to obtain a copy of the current Executive Summary of the In Line Inspection/Smart Pig Report and a revised map of the petroleum pipeline franchise, as well as information on Crimson s earthquake safety protocols. Debra French, Supervising Pipeline Safety Engineer from the Office of State Fire Marshal as well as Bryan Klemm, Mark Sandon, and April Harvey from Crimson are present this evening to address any of City Council concerns. Prepared by: Linda Swan, Deputy City Manager Eric J. Levitt, City Manager INDEX Page Ordinance... 6 June 12, 217 Staff Report Attachment A State Fire Marshal certification Smart Pig Executive Summary... 25

6 6 ORDINANCE NO AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SIMI VALLEY GRANTING THE RENEWAL OF A PETROLEUM PRODUCTS PIPELINE FRANCHISE TO CRIMSON CALIFORNIA PIPELINE, L.P. WHEREAS, THE City Council of the City of Simi Valley, California (hereinafter referred to as City Council ) declared its intent to consider the renewal of a petroleum products pipeline franchise application from Crimson California Pipeline Company, L.P. (hereinafter referred to as CRIMSON ) for that portion of the 4 petroleum pipeline and a 12 petroleum pipeline which run through the City of Simi Valley and are part of the Los Angeles Basin Gathering System Pipeline through adoption of Resolution No ; and WHEREAS, pursuant to Resolution No and Section 621 et. seq. of the California Public Utilities Code, the City Clerk published notice of the passage of Resolution No which indicated the time and place for the hearing on objections or protests to the granting of the petroleum products pipeline franchise; and NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SIMI VALLEY DOES ORDAIN AS FOLLOWS: SECTION 1. On June 12, 217, at the date and time fixed for the public hearing and pursuant to the requirements for notification in the California Public Utilities Code Section 621 et. seq., the City Council held a public hearing to consider objections or protests by any interested person against the granting of the petroleum products pipeline franchise. SECTION 2. At the time set for hearing protests, the City Council heard and passed upon all protests and determined the protests to be insufficient and/or overruled or denied them. SECTION 3. The City Council hereby grants a franchise to CRIMSON for the right, franchise and privilege from time to time to maintain, operate, repair, renew, change the size of and remove or abandon in place the petroleum products pipeline as is currently in the City of Simi Valley, the location of which is shown on the attached Exhibit A, incorporated herein by this reference. SECTION 4. Said franchise shall be for a term of twenty-five (25) years from and after the date upon which such franchise becomes effective.

7 7 ORD. NO SECTION 5. CRIMSON as franchisee agrees to perform all routine and extraordinary maintenance and repair on all above and below ground facilities and shall be liable for any and all damage resulting from the activities and facilities of the franchise and shall be bound by all duties and liabilities of the Grantee as provided by Public Utility Code Section 6291 et. seq. CRIMSON shall cooperatively schedule any operation or maintenance activities under this franchise that require the destruction and replacement of street pavement with the City Engineer. SECTION 6. The pipelines and appurtenances shall be operated, maintained, replaced or repaired in accordance with all applicable federal and/or state standards for the construction of intrastate pipelines as set forth in federal laws, rules or regulations and shall be used to transport petroleum products only. Whenever there is a conflict in the federal or state standards, the more stringent standard will prevail. SECTION 7. The pipeline and appurtenances shall be operated, maintained, replaced or repaired in conformity with all ordinances, rules or regulations in effect at the time of granting of this franchise, or as prescribed by the City Council, and in accordance with the terms and conditions of any permit issued by the City Engineer. SECTION 8. Except in an emergency, CRIMSON shall not excavate in a City street right-of-way without having first applied for and obtained an Encroachment Permit from the City. CRIMSON shall pay any fees (including inspection) required by such permit. As soon as any pipeline work is completed, all portions of the streets excavated or otherwise damaged thereby shall be placed in as good condition as they were before the commencement of such work, to the satisfaction of the City Engineer. All street repair work shall be made by CRIMSON at the expense of CRIMSON in accordance with the ordinances of the City and the conditions of the Encroachment Permit issued therefor. SECTION 9. CRIMSON acknowledges that, as of the date of adoption of this Ordinance, the Moorpark Pipeline of the Los Angeles Basin Gathering System has been purged and is filled with nitrogen. Furthermore, CRIMSON agrees to notify the City Manager not less than 9 days in advance of its intention to reactivate the pipeline for its approved use. SECTION 1. Within thirty (3) days after the effective date of this franchise, CRIMSON shall furnish to the City Clerk evidence of insurance applicable to all operations conducted under this franchise and including the liability arising out of the existence of real property, in the following forms and amounts: (1) General Liability Insurance, including coverage for the explosion, collapse, underground damage hazards, and pollution with a limit of liability of $5,, per occurrence. Such insurance shall name the City of Simi Valley, elected officials, officers, agents, and employees as additional insured with respect to liability arising out of the operation or property of CRIMSON.

8 8 ORD. NO Such insurance and any other Public Liability Insurance to the full limits thereof carried by CRIMSON shall be primary and any insurance available to the City of Simi Valley shall not be called to contribute to any loss(es) arising out of this franchise. The City, in its sole discretion, may accept evidence of self-insurance for all or a portion of the foregoing required insurance. (2) Worker's Compensation Insurance covering CRIMSON's statutory obligation under California Law for injury to employees. If CRIMSON is self-insured, evidence must be provided of current State Certificate of Self Insurer and that the required self-insurer's bond is in effect. (3) Each insurer providing insurance as required shall be rated by A.M. Best Credit Rating (or in the event A.M. Best is not in publication, its successor or equivalent). Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best s rating of no less than A:VII, unless otherwise acceptable to the City. SECTION 11. CRIMSON shall provide to the City of Simi Valley an Oil and Gas Franchise Penal Bond (Blanket Bond) in the amount of $1, to guarantee performance of all terms and conditions of the franchise to be awarded without violations. SECTION 12. CRIMSON shall defend and provide legal defense with attorney(s) acceptable to CITY, indemnify, and hold harmless CITY, its agents, officials, officers, representatives and employees, from and against all claims, lawsuits, liabilities or damages of whatever nature arising out of or in connection with, or relating in any manner to any act or omission of CRIMSON, its agents, employees, and subcontractors, and employees thereof, pursuant to the performance or nonperformance of this Ordinance. CRIMSON shall thoroughly investigate any and all such claims and indemnify the CITY and do whatever is necessary to protect the CITY, its agents, officials, officers, representatives and employees as to any such claims, lawsuits, liabilities, expenses, or damages arising out of this Ordinance. SECTION 13. CRIMSON shall pay to the City of Simi Valley a franchise fee set for a common carrier company under California Public Utilities Code Section SECTION 14. The City Council finds that the franchise is categorically exempt from the requirements of the California Environmental Quality Act. SECTION 15. This franchise is granted and shall be held and enjoyed only upon the terms and conditions herein contained, and CRIMSON must, within thirty (3) days after the passage of the ordinance granting said franchise, file with the City Clerk of the City of Simi Valley a written acceptance of such terms and conditions.

9 9 ORD. NO SECTION 16. This ordinance shall go into effect and be in full force and effect at 12:1 a.m. on the thirty-first (31st) day after its passage. The City Clerk shall cause this ordinance or a summary hereof to be published in a newspaper of general circulation, published in the County of Ventura and circulated in the City, and if applicable, to be posted, in accordance with Section of the California Government Code; shall certify to the adoption of this ordinance and shall cause a certified copy of this ordinance, together with proof of publication, to be filed in the Office of the Clerk of this City. Attest: PASSED and ADOPTED this 16 th day of October 217. Ky Spangler, Deputy Director/City Clerk Robert O. Huber, Mayor of the City of Simi Valley, California Approved as to Form: Approved as to Content: Lonnie J. Eldridge, City Attorney Eric J. Levitt, City Manager

10 1 ORD. NO EXHIBIT A N 3A2.19 WALNUT ST. --~------_...-i. 9. 5' x- 12.' CONCRETE VAULT 1 I F 12~' 16'F 4" TOWNSHIP AVE. Ct: 5' w > <[ /J ::, :IE c:t C) )t/'j I' ~ /tn k~ <[ 7,5 ~ :: CONC. VAULT 4' OF 4'' SIMI AVENIOA tr.i et:: X ' X 13,7 1 CONCRETE VAULT 1 l4 OF 12: l6 1 F 4 11 C, 842 OF 4" -l,52 MILES MOORPARK GATH. LINE. ti.i 2-4"D1A.it 9S'LG.. z ~ z < (/J ST. ALAMO D3A218. ;:; a. <C. I- TOTAL PJPE: 12"DIA ' 4"DIA. -878' r lii TORREY 12" & MOORPARK 4" m m BY!HIS DOQJMENT IS CONFIIEN11AL AND IT SHAU. NOT BE REPRODUCED DR REDIS1RIBU1ED Wl1HDUT PRIOR PEAMISSIDN. NEITl R 11 OPERATOR NOR 11 OYltlER MAKE ANY WARRANTY AS TO 11 OORREClNESS DR COIIPI.ElENESS OF lhe INl'DRMA11DN CONTAINED ON lhis DRAWING, AND lhe USER ASSUMES AU. RISK OF LOSS TO PERSONS AND PROPERTY AS A RESULT OF RELIANCE lheredn. Jr CRIMSON.::::iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiill PIPELINE LLC Kilroy Airport Way, Suite 3 Long Beach, California 986 FRANCHISE ORDINANCE NO. 775 CITY OF SIMI VALLEY ~[L~ - t-sca-l -:-N-TS--.-D-AlE-:-1-/-21-/ REV-. ~ DRAWN:.B SHEET 1 OF ~

11 11 CITY OF SIMI VALLEY MEMORANDUM AGENDA ITEM NO. 6A June 12, 217 TO: FROM: City Council Office of the City Manager SUBJECT: A PUBLIC HEARING TO CONSIDER AN APPLICATION FOR THE RENEWAL OF A PETROLEUM PRODUCTS PIPELINE FRANCHISE APPLICATION FROM CRIMSON CALIFORNIA PIPELINE, L.P., TO CONSIDER ANY OBJECTIONS OR PROTESTS AGAINST THE GRANTING OF A CRUDE OIL PIPELINE FRANCHISE, AND INTRODUCTION OF AN ORDINANCE STAFF RECOMMENDATION It is recommended that the City Council at the conclusion of the public hearing: 1. Consider protests, if any; 2. If protests have been received, determine if they are considered to be insufficient and overruled/denied; 3. If no protests are received, or if protests received are considered to be insufficient and overruled/denied, consider introducing the attached ordinance (page 8) granting a petroleum products franchise to Crimson California Pipeline, L.P. (Crimson). CITY MANAGER S RECOMMENDATION The City Manager recommends introduction of an ordinance granting the renewal of a petroleum products pipeline franchise to Crimson California Pipeline, L.P. If protests are received, I recommend considering any protests prior to introduction of the ordinance. This Franchise has been in place since 1992 by the City and is up for renewal. The facilities have been in the City and under Franchise agreement going back to BACKGROUND AND OVERVIEW On May 15, 217, the City Council adopted Resolution No setting the time and place for a public hearing to consider an application for renewal of a petroleum products pipeline franchise from Crimson. The franchise application is for that portion of the existing 4 & 12 Los Angeles Basin Gathering System that is located within the City of Simi Valley right-of-way.

12 12 On August 13, 1954, the County of Ventura adopted Ordinance No. 535 granting Unocal California Pipeline Company (Unocal) the existing pipeline franchise, which was effective for a forty-five year period, beginning on August 13, Upon the City s incorporation and following the two annexations thereafter in 1974, the City became the successor of the County as grantor of the franchise. In May 1992, the City Council adopted Ordinance No. 775, which granted a crude oil pipeline franchise application to Unocal for that portion of the existing four-inch Moorpark Pipeline and 12-inch Torrey Pipeline located in Avenida Simi and Tapo Canyon Road, respectively (Exhibit A, page 12). The pipelines covered by the franchise application are part of the Los Angeles Basin Gathering System, was granted for a period of 25 years, and expires on July 2, 217. Subsequent to the expiration, control and ownership of the pipeline passed through several oil companies. The pipeline is now owned by Crimson California Pipeline, L.P. (Crimson), who submitted an application for renewal on April 1, 216 for that portion of the pipeline identified above. The portion of the pipeline within Simi Valley is entirely underground. Section 621 et. seq. of the Public Utilities Code contains specific requirements and procedures for the granting of a petroleum products pipeline franchise. Crimson has made an application to the City for a franchise in accordance with these procedures. In order to grant the requested franchise, the City is required to take the following actions: Adopt a Resolution of Intent to consider the franchise application; Publish a notice of the City's intended action to consider the franchise application, including the date, time, and place of the public hearing at which protests or objections may be heard, within 15 days after the passage of the resolution; Conduct a public hearing to consider an ordinance awarding the pipeline franchise not less than 2 days or more than 6 days after adoption of the Resolution of Intent; Introduce an ordinance to grant the franchise after completion of the required public hearing and consideration of protests, if any. The following actions have been taken to date in response to the franchise application: A Resolution of Intent to consider the franchise application was adopted by the City Council on May 15, 217. A notice of the City's intended action to consider the franchise application, including the date, time, and place of the public hearing was published on May 22, 217. FINDINGS AND ALTERNATIVES Crimson has applied for a renewal of the franchise with the City for the operation of an existing petroleum products pipeline. The requested franchise renewal is for a 25-year period and will provide Crimson with the right and privilege to maintain and operate the existing petroleum products pipeline. The location of the two pipelines covered by this franchise is shown on Exhibit A of the ordinance (page 12).

13 13 The Moorpark Pipeline enters the City limits near the intersection of Anderson Drive and Avenida Simi and runs east along Avenida Simi to Tapo Canyon where it connects to the Torrey Pipeline. The Moorpark Pipeline was declared out of service prior to Crimsons ownership in 27 when it was purged and filled with nitrogen. Crimson has indicated that it has no plans in the foreseeable future to reactivate the pipeline. The portion of the Torrey Pipeline located within the City runs along Tapo Canyon Road from the City s northern boundary to Alamo Street. The pipeline continues south along Tapo Canyon and exits the City boundaries through Brandeis-Bardin Area. Currently active, this pipeline carries an average flow of 714, gallons of crude oil per day to Crimson s Los Angeles area refineries. The pipelines are monitored by a remote leak detection system and Crimson is equipped to shut down the line (e.g. pumping systems and control valves) from their main control center in Long Beach if a leak in the Torrey Pipeline is detected or reported. The history of these pipelines dates back to the mid 195 s. The Torrey Pipeline was originally constructed in The pipelines are under cathodic protection (a technique used to control the corrosion of a metal surface) and also have an additional protective coating. Since inception of the Unocal franchise agreement, the California State Legislature has established several additional regulations that ensure pipeline safety. In 1981, the California Legislature established the Hazardous Liquid Pipeline Safety Act with the intent that the Office of the State Fire Marshal (OSFM) will exercise exclusive safety regulatory and enforcement authority over intrastate hazardous liquid pipelines. The State Fire Marshall conducts periodic inspections on the Moorpark and Torrey Pipeline. Subsequent bills included the Pipeline Safety Reauthorization Act of 1988, which amended the Pipeline Act of 1968 and set a maximum allocation of 2 percent for pipeline safety grant indirect expenses, directed the Secretary of Transportation to make certain unexpended funds available to States which undertook new responsibilities relating to State pipeline safety certification programs and implemented a one-call damage prevention program established under State law. The Pipeline Safety Act of 1992, increased safety standards to meet the need for protection of the environment and corrective action when any pipeline facility is hazardous to the environment. The Accountable Pipeline Safety and Partnership Act of 1996, and now the Pipeline Safety Improvement Act of 22 mandated the Department of Energy, Department of Transportation, and the National Institute and of Standards and Technology in the Department of Commerce to work together on the development and application of performance measures to evaluate the effectiveness of pipeline facility research, development, and demonstration projects. To that end, the natural gas and hazardous liquid pipeline industries are held to higher standards today to ensure the safety and integrity of their pipelines. In addition, since the Refugio Beach spill in 215, the Office of the State Marshall has increased the inspection frequency of pipelines. The City has been receiving annual franchise payments pursuant to Section of the California Public Utilities Code. The fees and rates are specified in the Public Utilities Code and are not subject to negotiation. If the franchise extension is granted, Crimson will continue to pay franchise fees to the City as specified in this Code section based on pipe diameter sizes and lengths, multiplied by specified rates. The most recent annual payment in the amount of $26,192 was received in 216 for the Moorpark and Torrey Pipeline in May of 216. These rates are adjusted each year based on the change in the Consumer Price Index.

14 14 The City's action to grant a franchise for the existing petroleum products pipeline is categorically exempt from the provisions of the California Environmental Quality Act in accordance with Section 1561(b)(3). Accordingly, a Notice of Exemption (Attachment A, page 13) was prepared by the Department of Environmental Services on May 8, 217. Section 6234 of the Public Utilities Code provides for the submission of protests objecting to the granting of a franchise. Any interested person may make a protest stating objections to the granting of the franchise. The protest(s) shall be signed by the person presenting the protest and shall be delivered to the City Clerk prior to the start of the hearing. No protests have been received to date. If any protests are received subsequent to the preparation and distribution of this staff report, a supplemental memorandum will be provided to the City Council. At the public hearing, the City Council must hear and pass upon any protests. The Public Utilities Code provides that if no protests are received prior to the start of the hearing, or if such protests are heard and determined to be insufficient and/or are overruled and denied, the City Council may introduce an ordinance granting the franchise. Should the City Council choose to not introduce the attached ordinance, thereby expressing its intention to not award the petroleum products pipeline franchise to Crimson, the applicant which has been established as a common carrier and public utility by the California Public Utilities Commission, would have three available options. The first option would be to request City approval to physically remove the pipeline from the City s right-of-way. The second option would be to leave the pipeline in its current location, but seal it where it enters and leaves the City, thereby rendering it unusable. The third option would be to initiate a condemnation action against the City under the Public Utilities Code in order to obtain, through eminent domain, a subsurface easement or other rights to utilize the pipeline within the City. In such a condemnation action, the applicant would have to demonstrate that public interest and public necessity requires acquisition of the easement, and the applicant would be required to pay the City its fair market value. The following alternatives are available for City Council consideration: 1. a. Consider protests, if any; b. If protests have been received, determine if they are considered to be insufficient and overruled/denied; c. If no protests are received, or if protests received are considered to be insufficient and overruled/denied, consider introducing the attached ordinance (page 8) granting the renewal of a petroleum products pipeline franchise to Crimson. 2. Continue the matter to another date to consider any protests;

15 15 3. Provide other direction to staff. Staff recommends Alternative No. 1. a., b., and c. SUGGESTED CITY COUNCIL MOTION I move to introduce an ordinance granting the renewal of a petroleum products pipeline franchise to Crimson California Pipeline, L.P. should protests, if any, be considered insufficient and denied. SUMMARY Crimson California Pipeline, L.P. is the owner of a 4 petroleum pipeline and a 12 petroleum pipeline, which run underground through the City of Simi Valley and are part of the Los Angeles Basin Gathering System. The most recent franchise for the petroleum products pipeline, granted by the City, is set to expire on July 2, 217. Crimson is requesting that the City grant a renewal of the pipeline franchise for the portion of the pipeline located within the City of Simi Valley. The California Public Utilities Code specifies that granting of a franchise requires the granting body to hold a public hearing and adopt an ordinance. As required by the Public Utilities Code, the City adopted a Resolution of Intent to consider the franchise application on May 15, 217 and published a notice of its intended action to consider the franchise application at a public hearing. After completion of the public hearing, it is recommended that the City Council consider protests, if any; if protests have been received, determine if they are considered to be insufficient and overruled/denied; and, if they are considered to be insufficient and overruled/denied, consider introducing the attached ordinance granting a petroleum products pipeline franchise to Crimson. Prepared by: Linda Swan, Assistant to the City Manager Eric Levitt, City Manager INDEX Page Public Hearing Procedure... 6 Ordinance... 8 Exhibit A Location Map Attachment A Notice of Exemption... 13

16 16 PUBLIC HEARING PROCEDURE HEARING DATE: June 12, MAYOR: This is the time and place set for a public hearing to consider the renewal of an a petroleum products pipeline franchise application from Crimson California Pipeline, L.P., and consider any protests against the granting of a petroleum products pipeline franchise, and introduction of an ordinance. 2. CLERK: [Reads ordinance] May I have a reading of the ordinance? 3. MAYOR: May we have an oral report on this matter by staff? 4. STAFF: (Report) 5. ANY COUNCIL MEMBER : (Questions of staff and staff response) 6. MAYOR: Does the applicant wish to be heard on this matter? 7. APPLICANT: (Comments) 8. MAYOR: Is there anyone in the City Council Chamber wishing to be heard on this matter? 9. AUDIENCE: (Comments) 1. MAYOR: Were any written comments on the proposed petroleum products pipeline franchise received by staff prior to this hearing? 11. STAFF: (Indicate whether or not any written comments were received) 12. MAYOR: The hearing is closed. Are there any comments or questions from members of the City Council? If the City Council has any further questions of staff or the applicant at this time, the Public Hearing may need to be re-opened. 13. ANY COUNCIL MEMBER : (Comments) 14. MAYOR: The Chair will now entertain a motion.

17 ANY COUNCIL MEMBER : City Council Actions (by motion of any Council Member): If protests are received--city Council action as follows: 1) I move that the City Council determine that any protests received are insufficient/sufficient and that they be denied/upheld. (requires a second and a vote) -OR- If no protests were received, or if protests were received but denied then: 2) I move introduction of Ordinance No granting a the renewal of a petroleum products pipeline franchise to Crimson California Pipeline, L.P. (does not require a second or a vote) -OR- If protests were received and upheld: 3) I move to not grant a renewal of a petroleum products pipeline franchise to Crimson California Pipeline, L.P. (requires a second or a vote) 16. MAYOR: (Call for vote) 17. MAYOR: Proceed to the next item. * Any action to refer the matter back to staff or to continue the matter requires a second and a vote.

18 18 ORDINANCE NO AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SIMI VALLEY GRANTING THE RENEWAL OF A PETROLEUM PRODUCTS PIPELINE FRANCHISE TO CRIMSON CALIFORNIA PIPELINE, L.P. WHEREAS, THE City Council of the City of Simi Valley, California (hereinafter referred to as City Council ) declared its intent to consider the renewal of a petroleum products pipeline franchise application from Crimson California Pipeline Company, L.P. (hereinafter referred to as CRIMSON ) for that portion of the 4 petroleum pipeline and a 12 petroleum pipeline which run through the City of Simi Valley and are part of the Los Angeles Basin Gathering System Pipeline through adoption of Resolution No ; and WHEREAS, pursuant to Resolution No and Section 621 et. seq. of the California Public Utilities Code, the City Clerk published notice of the passage of Resolution No which indicated the time and place for the hearing on objections or protests to the granting of the petroleum products pipeline franchise; and NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SIMI VALLEY DOES ORDAIN AS FOLLOWS: SECTION 1. On June 12, 217, at the date and time fixed for the public hearing and pursuant to the requirements for notification in the California Public Utilities Code Section 621 et. seq., the City Council held a public hearing to consider objections or protests by any interested person against the granting of the petroleum products pipeline franchise. SECTION 2. At the time set for hearing protests, the City Council heard and passed upon all protests and determined the protests to be insufficient and/or overruled or denied them.. SECTION 3. The City Council hereby grants a franchise to CRIMSON for the right, franchise and privilege from time to time to maintain, operate, repair, renew, change the size of and remove or abandon in place the petroleum products pipeline as is currently in the City of Simi Valley, the location of which is shown on the attached Exhibit A, incorporated herein by this reference. SECTION 4. Said franchise shall be for a term of twenty-five (25) years from and after the date upon which such franchise becomes effective.

19 19 SECTION 5. CRIMSON as franchisee agrees to perform all routine and extraordinary maintenance and repair on all above and below ground facilities and shall be liable for any and all damage resulting from the activities and facilities of the franchise and shall be bound by all duties and liabilities of the Grantee as provided by Public Utility Code Section 6291 et. seq. CRIMSON shall cooperatively schedule any operation or maintenance activities under this franchise that require the destruction and replacement of street pavement with the City Engineer. SECTION 6. The pipelines and appurtenances shall be operated, maintained, replaced or repaired in accordance with all applicable federal and/or state standards for the construction of intrastate pipelines as set forth in federal laws, rules or regulations and shall be used to transport petroleum products only. Whenever there is a conflict in the federal or state standards, the more stringent standard will prevail. SECTION 7. The pipeline and appurtenances shall be operated, maintained, replaced or repaired in conformity with all ordinances, rules or regulations in effect at the time of granting of this franchise, or as prescribed by the City Council, and in accordance with the terms and conditions of any permit issued by the City Engineer. SECTION 8. Except in an emergency, CRIMSON shall not excavate in a City street right-of-way without having first applied for and obtained an Encroachment Permit from the City. CRIMSON shall pay any fees (including inspection) required by such permit. As soon as any pipeline work is completed, all portions of the streets excavated or otherwise damaged thereby shall be placed in as good condition as they were before the commencement of such work, to the satisfaction of the City Engineer. All street repair work shall be made by CRIMSON at the expense of CRIMSON in accordance with the ordinances of the City and the conditions of the Encroachment Permit issued therefor. SECTION 9. CRIMSON acknowledges that, as of the date of adoption of this Ordinance, the Moorpark Pipeline of the Los Angeles Basin Gathering System has been purged and is filled with nitrogen. Furthermore, CRIMSON agrees to notify the City Manager not less than 9 days in advance of its intention to reactivate the pipeline for its approved use. SECTION 1. Within thirty (3) days after the effective date of this franchise, CRIMSON shall furnish to the City Clerk evidence of insurance applicable to all operations conducted under this franchise and including the liability arising out of the existence of real property, in the following forms and amounts: (1) General Liability Insurance, including coverage for the explosion, collapse, underground damage hazards, and pollution with a limit of liability of $5,, per occurrence. Such insurance shall name the City of Simi Valley, elected officials, officers, agents, and employees as additional insured with respect to liability arising out of the operation or property of CRIMSON.

20 2 Such insurance and any other Public Liability Insurance to the full limits thereof carried by CRIMSON shall be primary and any insurance available to the City of Simi Valley shall not be called to contribute to any loss(es) arising out of this franchise. The City, in its sole discretion, may accept evidence of self-insurance for all or a portion of the foregoing required insurance. (2) Worker's Compensation Insurance covering CRIMSON's statutory obligation under California Law for injury to employees. If CRIMSON is self-insured, evidence must be provided of current State Certificate of Self Insurer and that the required self-insurer's bond is in effect. (3) Each insurer providing insurance as required shall be rated by A.M. Best Credit Rating (or in the event A.M. Best is not in publication, its successor or equivalent). Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best s rating of no less than A:VII, unless otherwise acceptable to the City. SECTION 11. CRIMSON shall provide to the City of Simi Valley an Oil and Gas Franchise Penal Bond (Blanket Bond) in the amount of $1, to guarantee performance of all terms and conditions of the franchise to be awarded without violations. SECTION 12. CRIMSON shall defend and provide legal defense with attorney(s) acceptable to CITY, indemnify, and hold harmless CITY, its agents, officials, officers, representatives and employees, from and against all claims, lawsuits, liabilities or damages of whatever nature arising out of or in connection with, or relating in any manner to any act or omission of CRIMSON, its agents, employees, and subcontractors, and employees thereof, pursuant to the performance or nonperformance of this Ordinance. CRIMSON shall thoroughly investigate any and all such claims and indemnify the CITY and do whatever is necessary to protect the CITY, its agents, officials, officers, representatives and employees as to any such claims, lawsuits, liabilities, expenses, or damages arising out of this Ordinance. SECTION 13. CRIMSON shall pay to the City of Simi Valley a franchise fee set for a common carrier company under California Public Utilities Code Section SECTION 14. The City Council finds that the franchise is categorically exempt from the requirements of the California Environmental Quality Act. SECTION 15. This franchise is granted and shall be held and enjoyed only upon the terms and conditions herein contained, and CRIMSON must, within thirty (3) days after the passage of the ordinance granting said franchise, file with the City Clerk of the City of Simi Valley a written acceptance of such terms and conditions.

21 21 SECTION 16. This ordinance shall go into effect and be in full force and effect at 12:1 a.m. on the thirty-first (31st) day after its passage. The City Clerk shall cause this ordinance or a summary hereof to be published in a newspaper of general circulation, published in the County of Ventura and circulated in the City, and if applicable, to be posted, in accordance with Section of the California Government Code; shall certify to the adoption of this ordinance and shall cause a certified copy of this ordinance, together with proof of publication, to be filed in the Office of the Clerk of this City. Attest: PASSED and ADOPTED this Ky Spangler, Deputy Director/City Clerk Robert O. Huber, Mayor of the City of Simi Valley, California Approved as to Form: Approved as to Content: Lonnie J. Eldridge, City Attorney Eric J. Levitt, City Manager

22 22 ORD. NO EXHIBIT A CRIMSON PIPELINE LLC 376 Kilroy Airport Way, Suite 3 Long Beach, California 986 4

23 NOTICE OF EXEMPTION 23 ATTACHMENT A To: Ventura County Clerk 8 S. Victoria Avenue Ventura, CA 931 From: City of Simi Valley 2929 Tapo Canyon Road Simi Valley, CA 9363 Project Title: Award Of Petroleum Products Pipeline Franchise To Crimson California Pipeline, L.P Project Location - Specific: _C_it~y~w_id_e Project Location - City : S_im_i _V_a_ll_e~y Project Location - County: Ventura Description of Project: The award of a pipeline franchise for the continued operation and maintenance of an existing oil pipeline that runs through the City of Simi Valley. Name of Public Agency Approving Project: _C_it_.y. o_f _S_i_m_i_V_al_le_y. _ Date of Approval Name of Person or Agency Carrying Out Project: _C_it_.yc_. o_f _S_i_m_i_V_a_l_le~y' Exempt Status: (check one) X Ministerial [Sec. 218(b)(1 ); 15268]; Declared Emergency [Sec. 218(b)(3); 15269(a)]; Emergency Project [Sec. 218(b) (4); (b) (c)]; Categorical Exemption - State type and section number Statutory Exemptions - State code number Gener a I Rule [Sec (b)(3)] Text of exemption and reasons why project is exempt: Section 1561 (b)(3) states that: "A project is exempt from CEQA if the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA." The proposed award of the pipeline franchise to Crimson California Pipeline will simply continue the existing operation and maintenance of an existing pipeline. No new development or intensification of development would result from the franchise. Therefore, the activity would not have any potential for a significant effect on the environment and is exempt from further review under CEQA. Lead Agency Contact Person: Linda Swan Area Code/Telephone (85) Signature~ :' ~~ Date: ) 7Title: Senior Planner Lauren F naiole _ Dept. of Environmental Services _1l Signed by Lead Agency

24 STATE OF CALIFORNIA-NATURAL RESOURCES AGENCY 24 ATTACHMENT A Edmund G. Brown Jr., Governor DEPARTMENT OF FORESTRY AND FIRE PROTECTION OFFICE OF THE STATE FIRE MARSHAL Pipeline Safety Division 395 Paramount Blvd., Suite 21 LAKEWOOD, CA 9712 (562) Website: July 7, 217 Mr. Eric Levitt City Manager City of Simi Valley 2929 Tapo Canyon Road Simi Valley, CA 9363 RE: Crimson Pipeline Torrey to Torrance (OSFM LINE# 455) Dear Mr. Levitt: The office of the State Fire Marshal confirms that an Integrity Management Program inspection was conducted on June 12-14, 217 and a Pipeline Control Room Management Program inspection was conducted on June 26-28, 217 in Long Beach, CA. The reports have not been fully completed. Crimson's line 6A (CSFM#455) Torrey to Torrance is a 12" crude oil pipeline that extends from Torrey pump station V-48 in the City of Simi Valley to Torrance TF V-48 in the City of Torrance. The pipeline is miles in total length. Crimson Pipeline is required to operate and maintain its pipelines pursuant to the California Pipeline Safety Act and the U.S. DOT Code of Federal Regulations (CFR). An In-line-inspection test (Smart Pig) was last conducted on September 9, 214. If you have any questions, please do not hesitate to contact me. Sl21~ Debra French Supervisor Pipeline Safety Engineer "1he Department of Fores/I)' and Fire Protection serves and safeguards the people and protects the property and resources of Califomia."

25 25 K36 DEF MFL GMF ( *-I~ -,rf, L SMFL i, LFM I-. XYZ LGT l,, ( L_- (--~ - I '--+l :w. T~D. William e Sn Pipeline Perf ormancetu Pipeline Inspection R epor1