9B
Date: November 19, 2024
To: Honorable Mayor and Members of the City Council
From: Michelle G. Ramirez, Community Development Director By: Oscar Martinez, Planning Manager | [email protected] Subject: Community Development – Conduct Public Hearing, Adopt Categorical Exemption Under California Environmental Quality Act (CEQA), and Adopt Pipeline Franchise ORDINANCE Replacing Pipeline Franchise Ordinance No. 3474 Zenith Energy West Coast Terminals LLC. Expenditure: None.
RECOMMENDATION
Recommendation of the Community Development Director that City Council:
1. Conduct a Public Hearing to consider replacing expired Pipeline Franchise Ordinance No. 3474 with Zenith Energy West Coast Terminals LLC; and
2. Adopt a Categorical Exemption under California Environmental Quality Act (CEQA) pursuant to Section 15301 (existing facilities) of the Guidelines implementing CEQA; and
3. Adopt a Pipeline Franchise ORDINANCE with Zenith Energy West Coast Terminals LLC for a ten-year term, with one ten-year option to extend; and
4. Approve an Ordinance Summary for Publication.
FUNDING
None required.
DISCUSSION
On September 14, 1999, City Council approved Ordinance No. 3474 granting Southern California Edison Company (SCE) an oil pipeline franchise with a 25-year term allowing SCE, its successors and assigns, to construct, lay, operate, test, maintain, use, renew, repair, replace, move, change the size and number of and remove or abandon in place a system of pipes and appurtenances not to exceed sixteen inches in internal diameter. This Franchise Ordinance included 16-inch (26,514 feet in length) and 12-inch (511 feet in length) fuel oil pipelines.
In 2003, SCE partially assigned Pacific Terminals LLC of its rights, title, interests and obligations of the Ordinance No. 3474 of the 16-inch fuel oil pipelines. SCE, however, retained the rights of the 12-inch fuel oil pipelines. SCE subsequently abandoned the 12-inch fuel oil pipelines. After the acquisition, Pacific Terminals LLC changed its name to Plains West Coast Terminals LLC in 2009 and again in 2020, to Zenith Energy West Coast Terminals LLC.
City Council
November 19, 2024
The Ordinance contains pipelines that are common carrier which allows other carriers to utilize the pipelines to carry products. The rates for common carrier pipelines are set by the Public Utilities Commission and are non-negotiable. When Franchise Ordinance No. 3474 was adopted in 1999, the annual franchise fee was set at $11,638.97. Per Section 6231.5 of the Public Utilities Code (PUC), franchise fees are calculated based on length (26,514 feet) and size of pipeline (16- inch pipe @ $0.352 per foot ($9,332.93)) plus the Consumer Price Index (CPI) from 1989 as escalation factor. In 2024, the City received $23,613.20 from Zenith Energy West Coast Terminals LLC.
Zenith Energy West Coast Terminals LLC has made application to extend its existing Franchise held under Franchise Ordinance Number 3474. The requested franchise is for a 10-year period with one 10-year option to extend and will provide Zenith Energy West Coast Terminals LLC with the right and privilege to maintain and operate the existing fuel oil pipelines.
While the rates for common carrier pipelines are set by the Public Utilities Commission and are non-negotiable, the franchise payment will be calculated as previously described and would pay the highest authorized rate. Additionally, staff has included an extension fee of $15,000 to cover staff time and the use of consultant. Zenith Energy West Coast Terminals LLC is in agreement with the said fees.
The City’s action to grant a franchise for the existing petroleum product pipelines is categorically exempt from the provisions of the California Environmental Quality Act in accordance with Section 15301 (Existing Facilities). The proposed project is exempt from CEQA which applies to projects involving the operation, repair, maintenance, permitting, leasing, licensing or minor alteration of existing public or private structures, facilities, mechanical equipment or topographical features involving negligible or no expansion of use beyond that existing at the time of the lead agency’s determination. The proposed project is a renewal of a Pipeline Franchise Ordinance with no expansion of use. No special circumstances exist that would create a reasonable possibility that the project will have a significant adverse effect on the environment. Therefore, the project is exempt under CEQA.
In conclusion, it is recommended that the City Council adopt a new Pipeline Franchise Ordinance with Zenith Energy West Coast Terminals LLC for a ten-year term that also includes one ten-year option to extend.
ENVIRONMENTAL FINDINGS
Categorical Exemption under California Environmental Quality Act (CEQA) pursuant to Section 15301 (existing facilities) of the Guidelines implementing CEQA
ATTACHMENTS
1. Proof of Publication
2. Pipeline Franchise Ordinance
3. Ordinance Summary
4. RESOLUTION OF INTENT to conduct Public Hearing
5. Council item dated October 29, 2024
City Council
November 19, 2024
6. Letter from Zenith Energy West Coast Terminals LLC
7. Letter from State Fire Marshal