TO:
Honorable Mayor and Members of the City Council
THROUGH:
Bruce Moe, City Manager
FROM:
Erick Lee, Public Works Director
Katherine Doherty, City Engineer
Erika King, Senior Management Analyst
SUBJECT:Title
Consideration of a Resolution Declaring an Intention to Adopt an Ordinance Granting an Extension of an Existing Franchise to Zenith Energy West Coast Terminals LLC and Setting the Public Hearing on the Adoption of the Ordinance for July 16, 2024 (Public Works Director Lee).
ADOPT RESOLUTION NO. 24-0077
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RECOMMENDATION:
Staff recommends that the City Council adopt Resolution No. 24-0077 declaring an intention to adopt an ordinance granting an extension of an existing franchise to Zenith Energy West Coast Terminals LLC and setting the Public Hearing on the adoption of the Ordinance for July 16, 2024.
FISCAL IMPLICATIONS:
There are no fiscal implications associated with the adoption the resolution. Franchise fees for utility pipeline franchises are regulated by the State of California under the Public Utilities Code. In 2023, Zenith Energy West Coast Terminals LLC, as grantee, paid approximately $7,400 in franchise fees under the existing franchise. If the proposed ordinance is adopted extending the franchise for 25 years, Zenith Energy West Coast Terminals LLC, as grantee, shall continue to pay to the City an annual sum of money that shall be equivalent to the base rate per lineal foot as set forth in Public Utilities Code Section 6231.5.
BACKGROUND:
On April 19, 1967, City Council approved a pipeline franchise agreement with Southern California Edison (“SCE”) to operate a pipeline carrying petroleum products between SCE facilities.
On July 20, 1999, the City Council adopted Ordinance No. 2002 which granted SCE, as grantee, a new 25-year franchise (“franchise”) to operate a pipeline within the City. Ordinance No. 2002 granted a franchise to SCE for a pipeline that runs generally along Highland Avenue from the north boundary of the City southerly to and including the intersection of Highland Avenue and Rosecrans Avenue, then easterly to the intersection of Elm Avenue and Rosecrans Avenue, then southerly to the intersection of Elm Avenue and Marine Avenue, then easterly along Marine Avenue to the eastern boundary of the City. Under the franchise, SCE was granted the right to conduct, transport, convey or carry gas, oil, petroleum products, water, and wastewater, excepting the carrying of any Class 1 flammable liquids that are not crude oils or flammable gases. The pipeline is approximately 8,333 feet long.
Zenith Energy West Coast Terminals LLC (hereinafter “Zenith” or “Grantee”) is a public utility regulated by the California Public Utilities Commission and is successor in interest to SCE. In August of 2003, SCE notified the City that SCE had assigned all of its right, tittle, interest and obligations in and to that certain Ordinance No. 2002 to Pacific Terminals LLC. In June of 2009, Pacific Terminals LLC notified the City that it had changed its name to Plains West Coast Terminals LLC. In October 2020, Plains West Coast Terminals LLC notified the City that it had changed its name to Zenith Energy West Coast Terminals LLC. Pursuant to Ordinance No. 2002, the existing franchise will expire on August 19, 2024. Zenith has filed an application with the City requesting that the existing franchise be extended for an additional 25 years.
DISCUSSION:
The proposed ordinance will be submitted to Zenith for their review. The terms, conditions and provisions of the ordinance will protect the City and provide revenue to the City in exchange for allowing the Grantee to maintain its pipeline through the City.
If the extension is granted by adoption of an ordinance, the franchise shall require that the Grantee comply with the Manhattan Beach Municipal Code, the Franchise Act of 1937, and the terms and conditions of the ordinance including but not limited to the requirement that the Grantee pay to the City during the life of the 25-year franchise the sum provided by law as set forth in Public Utilities Code Section 6231.5.
Under the proposed ordinance, the Grantee shall also post a performance bond; provide insurance that names the City and its officers and employees as additional insureds; and defend, indemnify and hold harmless the City and its officers, employees and agents with regard to claims, losses and/or liabilities resulting from the Grantee’s operation or possession of the franchise. In order for the franchise to be effective, the Grantee shall be required to file a written acceptance of its terms and conditions.
PUBLIC OUTREACH:
Adoption of the proposed resolution will set a public hearing date for July 16, 2024. Notice of the public hearing will be published in The Beach Reporter Newspaper within 15 days after adoption of the resolution. The public hearing will provide an opportunity for members of the public to comment upon and register any protests to the proposed extension of the franchise. Following the public hearing, the City Council will also have an opportunity to rule upon any protests and consider adoption of the proposed ordinance.
ENVIRONMENTAL REVIEW:
This item is not subject to the California Environmental Quality Act (California Public Resources Code Section 21000 et seq.) and the State CEQA Guidelines (collectively “CEQA”) because it is not a “project” as defined under Section 15378(b) of the CEQA Guidelines. This item is also exempt from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines because it can be seen with certainty that the approval of a proposed resolution of intention to set a public hearing will not have a significant effect on the environment. The adoption of the ordinance will be considered under a separate environmental assessment.
LEGAL REVIEW:
The City Attorney has approved the resolution as to form.
ATTACHMENTS:
1. Resolution No. 24-0077
2. Ordinance No. 2002
3. Pacific Terminals LLC Notice of Assignment as SCE’s Authorized Successor
4. Plains West Coast Terminals LLC Name Change Form
5. Zenith Energy West Coast Terminals LLC Name Change Form