City Council meeting
march 11, 2024
Agenda Items 11-A & 11-B
11-A) Consideration and possible action to conduct a public hearing to consider granting an oil pipeline franchise to SFPP, L.P. and read by title, waive further reading, and introduce Ordinance No. 1427 – An Ordinance granting to SFPP, L.P., an oil pipeline franchise within the City of Bellflower; and 11-B) Consideration and possible action to conduct a public hearing to consider granting an oil pipeline franchise to Air Products Manufacturing, LLC, and read by title, waive further reading, and introduce Ordinance No. 1428 – An Ordinance granting to Air Products Manufacturing, LLC an oil pipeline franchise within the City of Bellflower.
Good evening, members of the City Council.
Tonight, I present items 11-A and 11-B – A public hearing to consider granting an oil pipeline franchise to SFPP, L.P. and Air Products Manufacturing, LLC and introduce Ordinances No. 1427 and 1428.
1 Background
Public Vs. Non-Public Utility Oil Pipelines
Public Utility Oil Pipelines
Known in the industry as “common carrier” pipelines.
Can be utilized by refiners, marketers, and others who wish to transport oil products in exchange for payment to the owner of the pipeline.
Franchise fees are set by California Public Utilities Code (CPUC); therefore, the fees are non-negotiable.
I’d like to start us off with a very brief background on oil pipelines.
Oil pipelines can be categorized as either public utility or non-public utility.
Public Utility Oil pipelines are also known as common carrier pipelines which allow various parties to access the pipelines to transport oil products in exchange for payments. Furthermore, the franchise fees for public utilities are set by the California public utilities code; therefore, fees are non-negotiable. 2 Background
Non-public Utility Oil Pipelines
Known in the industry as “non-common carrier” pipelines.
Proprietary pipelines used exclusively by the owner of the pipeline.
Franchise fees are negotiable.
On the other hand, non-public utility oil pipelines are known as “non-common carrier” pipelines.
These are for the exclusive use by the owners of the pipeline assets. The franchise fees are negotiable. 3 Ordinance no. 1427– sfpp, l.p.
On December 14, 1998, the City Council adopted Ordinance No. 941, granting a 25-year public utility service pipeline franchise agreement.
Franchise Agreement with the City expired on January 12, 2024.
SFPP seeks to be granted a new franchise agreement for ten (10) years, with the option for one (1) 10-year extension.
If the City Council adopts Ordinance No. 1427, the franchise would be in effect for the ten-year period thirty (30) days after the adoption of Ordinance No. 1427.
Transporting Petroleum Products
4 SFPP, L.P. Pipeline map
ordinance no. 1427
SFPP’s pipeline consists of four thousand five hundred twenty-nine (4,529') feet of sixteen-inch (16”) pipes.
SFPP's pipeline runs in Alondra Blvd from Hayter Avenue and continues east to the County of Los Angeles Metropolitan Transportation Authority railroad right-of-way between Pacific Avenue and Flora Vista Street.
5 Ordinance no. 1428 – air products manufacturing, llc.
On July 17, 1996, Paramount Petroleum purchased a portion of the pipeline from ARCO (assigned and adopted under Ordinance 823) On June 23, 2014, the City Council adopted Ordinance No. 1276 granting a non-public utility pipeline franchise to Paramount Petroleum Corporation set to expire on January 25, 2024.
On April 8, 2019, the City Council approved and adopted Resolution No. 19-22, approving the transfer of the Franchise Agreement from Paramount Petroleum to Paramount Pipeline, LLC.
The entire pipeline underwent a hydro test on 11/10/14. Then, Paramount Pipeline (the previous pipeline owners) sent a letter to the California Fire MArshal for the Official Deferment of Line 35 on October 29, 2019 and received confirmation from the Office of the State Fire Marshal on April 3, 2020.
This line is currently not active; therefore, there is a deferment in place from the State Fire Marshal regarding the testing requirement as of October 29, 2019. 6 Ordinance no. 1428 – air products manufacturing, llc —Continued On November 14, 2023, Air Products Manufacturing, LLC (“Buyer”) completed its Asset Purchase and Sale Agreement with Paramount Pipeline (“Seller”).
Paramount Pipeline's Franchise Agreement expired on January 25, 2024.
Air Products now seeks to be granted a new franchise agreement for ten (10) years, with the option for one (1) 10-year extension.
If the City Council adopts Ordinance No. 1428 the franchise would be in effect for the ten-year period thirty (30) days after the adoption of Ordinance No. 1428.
The entire pipeline underwent a hydro test on 11/10/14. Then, Paramount Pipeline (the previous pipeline owners) sent a letter to the California Fire MArshal for the Official Deferment of Line 35 on October 29, 2019 and received confirmation from the Office of the State Fire Marshal on April 3, 2020.
This line is currently not active; therefore, there is a deferment in place from the State Fire Marshal regarding the testing requirement as of October 29, 2019. 7 Air products manufacturing, llc pipeline map
ordinance no. 1428
Air Product’s pipeline in the City of Bellflower consists of ten thousand one hundred thirty-nine (10,139') feet of four-inch (4”) pipes.
Air Products' pipeline runs in Lakewood Boulevard from Somerset Boulevard to the South City boundary approximately 230' south of Rose St. 8 Agreement terms
SFPP’s pipeline is a public utility whereas Air Products’ pipeline is a non-public utility.
Both proposed franchises are for the duration of 10 years with the option for one 10-year extension.
Since SFPP is a public utility, there is neither granting nor renewal fee should SFPP elect to extend the franchise agreement. As a non-public utility, Air Products will pay a one-time granting fee of $10,000 and a renewal fee of $6,000 – should they elect to extend the agreement. Both oil companies will be required to post $100,000 performance bonds within the timeline stipulated in their respective ordinances. The 2023 franchise fee for SFPP was $3,202.76 whereas Air Products’ 2023 franchise fee was $4,049.27. The franchise fees are calculated by multiplying the rate per linear foot with the total linear feet and CPI calculations. Franchise Fees are adjusted for CPI increases every year. 9 Staff Recommendation
Open the public hearing; take testimonial and documentary evidence; and after considering the evidence, read by title only, waive further reading, and introduce Ordinance No. 1427 and 1428; or
Alternatively, discuss and take other action related to this item.
10 City Council meeting
march 11, 2024
Agenda Item 11-C
Consideration and possible action to conduct a public hearing to consider granting an oil pipeline franchise to SFPP, L.P., and read by title, waive further reading, and introduce Ordinance No. 1429 – An Ordinance granting to SFPP, L.P., an oil pipeline franchise within the City of Bellflower.
11 Ordinance no. 1429 – sfpp, l.p.
On February 24, 1997, the City Council adopted Ordinance No. 884, granting a 10-year public utility service oil pipeline Franchise Agreement.
SFPP's 10-year Agreement with the City of Bellflower (“City”) expired on February 23, 2007.
SFPP now seeks to be granted by the City a new franchise agreement for ten (10) years, with the option for one (1) 10-year extension.
If the City Council adopts Ordinance No. 1429 the franchise would be in effect for the ten-year period thirty (30) days after the adoption of Ordinance No. 1429.
SFPP's 10-year Agreement with the City of Bellflower (“City”) expired on February 23, 2007; however, SFPP maintained the franchise agreement in holdover status by annually submitting payment of franchise fees.
12 SFPP, L.P. Pipeline map
ordinance no. 1429
SFPP’s pipelines within the City’s public right-of-way consist of approximately ten thousand seven hundred and eight (10,708') feet of sixteen-inch (16”) pipes and approximately fourteen thousand four hundred and twenty-five (14,425') feet of twenty-four-inch (24”) pipes.
SFPP's pipeline consists of approximately ten thousand seven hundred and eight (10,708) feet of sixteen-inch (16") pipes beginning at Downey Avenue and south City boundary; then north in Downey Avenue to Rose Street; then east in Rose Street to the east right-of-way line of Woodruff Avenue; then across private easements to Carpintero Avenue, then south in Carpintero Avenue; then continuing east across private easements to Palo Verde Avenue; then north in Palo Verde Avenue to the Southern Pacific Transportation Company railroad right-of-way and east City boundary.
SFPP's pipeline also consists of approximately fourteen thousand four hundred and twenty-five (14,425) feet of twenty-four-inch (24") pipes beginning at the intersection of Park Street and Downey Avenue, then proceeding easterly in Park Street to Lakewood Boulevard; then northerly in Lakewood Boulevard to Walnut Street; then easterly in Walnut Street to the Southern Pacific Railroad right-of-way continuing easterly from the railroad in Flora Vista Street to the Los Angeles County Flood Control property to the approximate easterly boundary line of the City of Bellflower.
13 Agreement terms
SFPP’s pipeline is a public utility.
The duration of the agreement will be ten years with the option for one (1) 10-year extension.
As a public utility oil pipeline, SFPP will pay neither granting nor renewal fee.
SFPP will post a performance bond in the amount of $100,000 within the time frame stipulated in the ordinance.
The 2023 franchise fee was $28,748.63
14 Staff Recommendation
Open the public hearing; take testimonial and documentary evidence; and after considering the evidence, read by title only, waive further reading, and introduce Ordinance No. 1429; or Alternatively, discuss and take other action related to this item.
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