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HomeMy WebLinkAbout06. Paramount Pipeline Franchise AGENDA MEMO DATE: August 10, 2010 TO: Mayor and Members of the City Council FROM: Office of the City Manager By: John Oskoui, P.E., Director of Public Works SUBJECT: ISSUANCE OF FRANCHISE FOR A PIPELINE SYSTEM TO PARAMOUNT PETROLEUM CORPORATION RECOMMENDATION: That the City Council adopt: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DOWNEY GRANTING AN OIL PIPELINE FRANCHISE TO PARAMOUNT PETROLEUM CORPORATION DISCUSSION: In 1995, the City of Downey City Council granted a ten-year franchise to Golden West Refining Company to install, operate, maintain, replace, etc., pipelines for the transportation of oil, gas, petroleum, etc., within the public streets of the City of Downey. On April 19, 2002, Paramount Petroleum Corporation purchased the pipeline from Golden West Refining Company assuming all of the seller’s rights, title and interest in the pipeline. However, Paramount Petroleum Corporation has never paid any franchise fees to the City for the operation of the pipeline. The City and Paramount Petroleum Corporation have been negotiating the terms of a new franchise agreement since late 2009. Both parties have agreed to the terms of a new agreement. The City prepared a new Ordinance (attached), setting forth the terms and conditions of the franchise for an additional twenty years. For the existing eight inch pipeline, the base rate per linear foot is established as $1.22, subject to adjustment in fees corresponding to the increase in the Consumer Price Index. In no event will the base fee be less than $1.22 per linear foot. In addition, Paramount Petroleum Corporation will pay a one-time base granting fee of $10,000, and $85,000 for the unpaid annual fees for the period from 2002 to 2009. The unpaid annual fees will be paid over a three year period. On June 22, 2010, the City Council adopted Resolution No. 10-7203, declaring its intention to grant an oil pipeline franchise to Paramount Petroleum Corporation. At its July 27, 2010 meeting, the City Council held a duly noticed public hearing, and after fully considering all oral and written testimony and facts and opinions offered, introduced an ordinance to grant such franchise. CITY OF DOWNEY, CALIFORNIA Mayor and Members of the City Council Paramount Petroleum Corporation Oil Pipeline Franchise August 10, 2010 Page 2 FINANCIAL IMPACT: As part of franchise approval by the Council, Paramount Petroleum Corporation is required to pay a one time base granting fee of $10,000 and $28,333 per year for three years for the annual fees that were not paid from 2002 to 2009. For 2010, the Paramount Petroleum Corporation franchise fee of $1.22 per linear foot for 11,869 feet of eight inch pipeline will generate a fee of $14,480.18. Attachment: Ordinance S:\AgendaMemosCC2010\08-10-10\AdoptParamountPipelineOrd ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DOWNEY GRANTING A FRANCHISE FOR THE MAINTENANCE AND OPERATION OF AN EXISTING PIPELINE FOR THE TRANSPORTATION OF OIL AND GAS IN AND ACROSS CERTAIN PUBLIC STREETS AND HIGHWAYS WITHIN THE CITY OF DOWNEY. WHEREAS , in 1995, the City of Downey (“City”) granted a 10-year franchise to Golden West Refining Company to construct, lay, operate, maintain, use, renew, repair, replace, move, change the size and number of, and remove or abandon in place a system of pipelines and appurtenances, known as the Vernon Pipeline, for the purpose of conducting, transporting, conveying and carrying liquid industrial waste and other substances, on, along, in, under and across the public streets, ways, alleys and places; and WHEREAS , such franchise was for a term of ten years, and expired by its own terms in 2005; and WHEREAS, on April 19, 2002, Paramount Petroleum Corporation ("Paramount" or "Franchisee") purchased the Vernon Pipeline assuming all of the seller’s rights, title and interest in the Pipeline Assets; and WHEREAS , the City Council of the City of Downey never approved or adopted a resolution approving the transfer of the pipeline franchise granted to Golden West Refining Company; and WHEREAS , since April 19, 2002, Paramount has operated the Vernon Pipeline within the City of Downey ("City") and has never paid any franchise fees to the City for this operation; and WHEREAS, under the Franchise Act of 1937, as amended, comprising California Public Utilities Code sections 6201-6302, the City of Downey is authorized to grant a new oil pipeline franchise; and WHEREAS , on June 22, 2010, the City Council adopted Resolution No. 10-7203, declaring its intention to grant a franchise to Paramount Petroleum, stating the character of the proposed franchise including any required bond pursuant to Section 6301 of the California Public Utilities Code, and setting forth the day, hour, and place for a public hearing on the proposed franchise, and directing the City Clerk of the City of Downey to publish notice of said public hearing in accordance with Sections 6232 and 6233 of the California Public Utilities Code; and WHEREAS , on July 27, 2010, the City Council of the City of Downey ("City Council") pursuant to Cal. Pub. Util. Code 6232 conducted a duly noticed public hearing on the subject of considering the granting of a franchise to Paramount pursuant to its application to the City of Downey; and WHEREAS, at that public hearing, all persons seeking to testify on the proposed franchise and this Ordinance were heard, and oral and written objections and comments on the same were considered and passed upon; and ORDINANCE NO. PAGE TWO WHEREAS , the adoption of this Ordinance is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15301 of the State CEQA Guidelines because the franchise granted by this Ordinance is for an existing pipeline located within certain public rights-of-way in the City of Downey, California, as more particularly described herein. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DOWNEY DOES ORDAIN AS FOLLOWS: SECTION 1. Definitions. The following words, terms, and phrases shall have the meaning set forth below, unless a different meaning or usage is specifically provided for elsewhere in this Ordinance: (a) "Affiliate" means, as to any entity, any other entity directly or indirectly controlling, controlled by, or under direct or indirect common control with, such entity. An entity shall be deemed to be “controlled by” any other entity if such other person possesses, directly or indirectly, power: (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners; or (b) to direct or cause the direction of the management and policies of such entity whether by contract or otherwise. (b) "City" means the City of Downey, California, in its present incorporated form or in any later reorganized, consolidated, enlarged or reincorporated form, and any legal subdivision of the City of Downey. (c) City Council" means the City Council of the City of Downey, California. (d) "Contaminant" shall mean any substance or constituent, chemical or waste, whether solid, liquid, semisolid, or gaseous in nature, including any hazardous substance or waste, hazardous material, chemical compound or element, petroleum (or fraction thereof), or any hydrocarbon substance, pollutant or contaminant, as those terms are defined in their broadest sense by any federal, state or local law, rule, regulation or order. (e) “Environmental Condition" shall mean the presence or likely presence of any Contaminant originating from any Facility or from Franchisee's activities conducted pursuant to this franchise, in surface water, ground water, drinking water supply, soil, land surface, subsurface strata or the air. (f) "Facility" shall mean all property owned or used by the Franchisee in connection with the franchise, including, but not limited to, pipelines, pump stations, valves, communication equipment to remotely control valves, pipeline monitoring equipment, cathodic protection devices to control electrolytic deterioration, and service connections with the Franchised Facilities, whether installed by the Franchisee or not, erected, constructed, laid, operated or maintained in, upon, over, under, along or across any Franchised Streets pursuant to any right or privilege granted by the franchise. ORDINANCE NO. PAGE THREE (g) "Franchised Facilities" means an existing 8 inch internal diameter underground pipeline or other pipelines constructed pursuant to this Ordinance for the transportation of oil, gas, gasoline, petroleum, wet gas, hydrocarbon substances, and such transportation of water, wastewater, mud, steam and other liquid substances as are incidental to the transportation of the other named substances, together with all appurtenances necessary or convenient to properly maintain and operate said pipelines. The current length of the existing underground pipeline as is now within the City is approximately 11,869 feet. (h) "Franchised Streets" means those public streets, highways, and rights-of-way, or portions thereof, within the City's boundaries identified in Exhibit “A”, which is attached hereto and incorporated herein by this reference. The affected public streets, highways, and right-of-ways are commonly known as Telegraph Road, from the east City limit to the west City limit, as shown on the attached Exhibit “A”. (i) "Franchisee" means Paramount Petroleum Corporation, and its successors and assigns. (j) "Release" shall mean any "release" (as that term is defined in Section 101(22) of CERCLA [42 U.S.C. Section 9601(22)]), or "disposal" (as that term is defined in Section 1004(3) of RCRA [42 U.S.C. Section 6903(3)]), or any discharge, active or passive migration, deposit, storage, burial, emplacement, seepage, filtration or disposal of a Contaminant into the environment originating from any Facility or from Franchisee's activities conducted pursuant to this franchise. (k) "Remediation Costs" shall mean all costs and expenses, including reasonable overhead costs, incurred by the City in performing and monitoring any Remedial Work. (l) "Remedial Work" means all "Remedial Action", as that term is defined in Section 101(24) of CERCLA [42 U.S.C. Section 9601], and all other actions as are necessary or required to fully remediate a Release or threatened Release of any Contaminant or an Environmental Condition to a condition which would allow unimpaired and unrestricted use and development and would comply with Applicable Law, including but not limited to all actions necessary to "Respond" to, "Remove", or "Remedy", as those terms are defined in Sections 101(23), 101(24) and 101(25) of CERCLA [42 U.S.C. Section 9601], a Release of a Contaminant or Environmental Condition. SECTION 2. Grant of Franchise. A right, privilege, and franchise is hereby granted to Franchisee to lay, construct, change the size of, operate, renew, remove, abandon in place, maintain and repair the Franchised Facilities in, under, along and across the Franchised Streets, in such a manner as not to inconvenience the public’s use of the Franchised Streets, for the term of twenty (20) years from the date this ordinance (the “Ordinance”) is effective. The Franchisee may request, by written notice provided at least two (2) years prior to the expiration ORDINANCE NO. PAGE FOUR of the then-current term, five (5) year extensions to the term of this Ordinance, as may be extended from time to time. The City Council may, in its sole and absolute discretion approve, deny or condition the approval of any such request. The City shall, within thirty (30) days following the City Council’s action on the Franchisee’s request, provide written notice to the Franchisee of its approval, disapproval or conditional approval of any extension request. The franchise, rights, and privileges granted herein shall be held and enjoyed subject to and only upon the compliance with the provisions, conditions, and obligations described by law and those contained in this Ordinance. Franchisee must, within thirty (30) days after the passage of this Ordinance, file with the City Clerk of the City of Downey, a written acceptance of the terms and conditions of this Ordinance. SECTION 3. Permits. Franchisee agrees to obtain all necessary and required permits and authorizations from City and to pay all fees and charges associated therewith prior to commencing any work subject to this Ordinance within or upon any Franchised Street. Such permits and authorizations may include, but are not limited to, the following: (a) any permit or authorization required for the privilege of transacting business within the City as required by the code or ordinances of the City, (b) any permit or authorization required in connection with operations in, upon, above, beneath, or across the Franchised Streets, including by way of example but not limitation, encroachment and excavation permits and authorizations to use, remove, or relocate property within the Franchised Streets, and (c) any permits or authorization for occupying any other property of City or a private entity to which access and use is not specifically granted by this Ordinance including, without limitation, permits and licenses for placing devices on or in poles, conduits, or other structures or facilities owned by City or a private entity. SECTION 4. Plat Maps and Constructed Drawings. The Franchisee, within forty-five (45) days after the effective date of this franchise, shall supply the City with drawing files of the Franchised Facilities. Prior to commencing any work within or upon the Franchised Streets in the exercise of the rights granted to it hereunder, Franchisee shall provide the City Engineer with a key map and detailed plat maps showing the additional Franchised Facilities to be installed within the Franchised Streets, including the material of construction and the approximate horizontal and vertical locations with respect to property lines and grade lines. Prior to requesting the issuance of a permit for said work, Franchisee shall file the key map and detailed improvement plan with any other entity that owns, operates, or manages nearby facilities in the Franchised Streets, so that such entities may advise the City Engineer as to any location, operation, or compatibility problems created by Franchisee’s proposed use of the Franchised Streets. The location and design of the proposed Franchised Facilities shall be subject to the approval of the City Engineer. Upon completion of all authorized work, Franchisee shall file with the City Engineer an amended Exhibit “A” and detailed plat maps reflecting the as-built condition and approximate location of Franchisee’s installed Franchised Facilities. All drawings and plat maps submitted to the City Engineer shall be approved and certified by a registered professional civil engineer licensed in the State of California. ORDINANCE NO. PAGE FIVE SECTION 5. Construction, Installation, and Maintenance . Franchisee shall be solely responsible for the construction, installation, and maintenance of the Franchised Facilities. Franchisee shall construct, install, and maintain all Franchised Facilities underground. All work performed under this Ordinance shall be done in accordance with all federal, state and City of Downey rules, regulations, ordinances, standards and specifications in force at the time of such work, and shall require the issuance of an encroachment permit by the City Engineer. In situations involving installation of parallel pipeline, lateral connections and installation of additional pipe of increased diameter, City, at its sole option, reserves the right to require amendment of this Ordinance prior to the commencement of such work. In constructing, installing and maintaining the Franchised Facilities, all excavations shall be made, restored, backfilled per the City of Downey’s construction standards in force at the time of such work. Franchisee hereby warrants that the construction, installation, and maintenance of the Franchised Facilities complies with all permits, agreements, or approvals granted for the Franchised Facilities, and any applicable statute, ordinance, rule, regulation, or order. Upon reasonable prior notice, City shall have the right at all times to inspect the Franchised Facilities to ensure compliance with this Ordinance, or any permit or authorization granted by City. All Franchised Facilities shall be located, constructed, installed, operated, and maintained so as to cause minimum interference with the City’s and the public’s use of the Franchised Streets, and the rights or reasonable convenience of property owners who adjoin the Franchised Streets, all as reasonably determined by and approved by the City Engineer. SECTION 6. Security. Prior to, and as an express condition precedent to the effectiveness of this Ordinance, Franchisee shall provide to City security in the form of a performance bond. A bond for payment and performance in a form acceptable to City with a penal sum in the amount equal to two hundred thousand dollars ($200,000). The bond shall be conditioned on Franchisee well and truly observing, fulfilling, and performing each and every term and condition of this Ordinance, and that in case of any failure of the aforementioned which is not cured within ten (10) days after receipt of notice thereof by Franchisee, City may recover against the bond. The bond shall provide for the payment of reasonable attorneys' fees incurred by City in the enforcement of the bond. The bond shall be of a non-revocable nature and shall be maintained by Franchisee as long as the franchise granted by this Ordinance is in effect. The surety supplying the bond must be an "admitted surety insurer," as defined in Section 995.120 of the Code of Civil Procedure, authorized to do surety business in the State of California, and reasonably satisfactory to City’s Risk Manager. The provision of this section nor any damages recovered by City hereunder shall be construed to excuse Franchisee’s faithful performance of its obligations under this Ordinance or limit the liability or damages of Franchisee under this section, either to the full amount of the bond or otherwise. SECTION 7. No Interference with Public or Pre-Existing Uses. Except as permitted by applicable statute, ordinance, rule, regulation, or order, or as permitted by this Ordinance, Franchisee in the exercise of its rights or performance of its obligations under this Ordinance, shall not interfere in any manner with the existence and use of any public or private sanitary ORDINANCE NO. PAGE SIX sewer, lateral, manhole, valve, railroad, fiber optic, water main, storm drain, gas main, pole, aerial, electrical or telephone wire, electrolier, cable television, or other telecommunications, utility, or municipal property, including property owned by City, pre-existing the Franchised Facilities, without the express written approval of the owner of the affected property.Nothing in this Ordinance shall be construed to permit the Franchisee to construct new poles or other above ground Facilities unless specifically provided herein. SECTION 8. Protection of Public Uses; Relocation. Pursuant to Public Utilities Code section 6297, City reserves the right to improve, construct, reconstruct, change the grade, realign, widen, vacate, or otherwise alter any highway, street, alley, public right-of-way, other public improvement or portion thereof, in, on, under, along, across or above the Franchised Streets or any portion thereof. There is further reserved to City, Los Angeles County Sanitation District, or Los Angeles County Department of Public Works the right to construct, reconstruct, install, repair, maintain, and operate in, on, under, along, across or above any Franchised Street any public improvement, including but not limited to, bridges, artificial supports, sewers, drains, water pipes, wires, cables, fiberoptic lines, telecommunications devices, power lines, signal lines, and tracks. (a) If notice in writing is given to Franchisee forty five (45) days in advance of the fact that work is to be done pursuant to any right reserved in this section, specifying the general nature of the work and the area in which the same is to be performed, then Franchisee shall do all things necessary to temporarily or permanently protect its Franchised Facilities during the progress of such work, and if ordered by the City Engineer, Franchisee shall disconnect or remove the Franchised Facilities, or shall relocate its Franchised Facilities within the Franchised Streets, to such extent, in such manner, and for such period (temporarily or permanently) as shall be necessary to permit the performance of the work in an economical manner, and in accordance with the generally recognized engineering and construction methods, and to permit the maintenance, operation and use of City’s public improvement or of the highway, street, alley or other public place, as so improved. Notwithstanding the foregoing, in the event that an emergency or unforeseen circumstances require the immediate relocation or removal of Franchised Facilities, City shall provide as much notice to Franchisee as is practicable, and may relocate and/or remove the Franchised Facilities if Franchisee does not timely do so. Such relocation and/or removal by City shall be at Franchisee’s expense, and City may recover from Franchisee all costs incurred in the course of such relocation and/or removal. If Franchisee does not timely remove or relocate the Franchised Facilities, provided that the City complies with its obligations under Section 8(d) hereof, Franchisee waives all claims for damage to Franchised Facilities in the event of relocation and/or removal by City as provided in this Section. In the event that relocation or removal of the Franchised Facilities is required, the City shall not require the Franchisee to remove its pipeline entirely from the street, way, alley or place, and the Franchisee shall work with the City Engineer to identify an alternative right of way, which shall, upon relocation of the Facilities, be covered by this Ordinance, provided that the unavailability of an alternative right of way ORDINANCE NO. PAGE SEVEN shall not relieve Franchisee of the responsibility to relocate or remove the Franchised Facilities. All of such things to be done and work to be performed by Franchisee shall be at the sole costs and expense of Franchisee, except where such work is substantially for the benefit of a non-public person or entity, which work shall not be performed at the Franchisee’s cost or expense. For purposes of the foregoing, the City and Franchisee recognize that the City may, from time to time, undertake the design, construction and/or installation of certain master- planned public infrastructure improvements by way of construction or similar agreements entered into between the City and one or more private land developers or consortiums of private land developers. In light of this, the City and Franchisee recognize that such projects shall not be deemed to be work that is “substantially for the benefit of a non-public person or entity, within the meaning of the foregoing”, but instead shall be deemed municipal projects. (b) Subject to City’s rights to require sooner relocation or removal in the event of an emergency or unforeseen circumstances, if Franchisee fails to comply or to commence and diligently proceed toward compliance with any instructions of the City Engineer with respect to the temporary or permanent protection, disconnection, relocation, or removal of any Franchised Facility within thirty (30) days after receipt of written notice thereof, then the City Engineer may immediately do whatever work is necessary to carry out the instructions at the cost and expense of Franchisee, in which case Franchisee shall reimburse City for the full costs of the work within thirty (30) days after receiving a statement detailing the costs. (c) Notwithstanding any other provision of this section, if City determines in its sole discretion that an emergency necessitates the immediate repair of any Franchised Street, or the immediate repair or any public improvement in, on, under, along, across or above any Franchised Street, and such emergency work requires City to temporarily or permanently protect or relocate any portion of the Franchised Facilities, then City, after reasonable attempts to contact the Franchisee to perform such work, is hereby authorized to immediately perform the emergency repair work itself, and Franchisee shall reimburse City for any increase in the cost of the emergency repair work due to the temporary or permanent protection or relocation of the Franchised Facilities. Such costs shall be paid by Franchisee within thirty (30) days after receiving a statement detailing the costs. (d) For any removal, relocation or modification of the Facilities by the City as provided for in this Section, the City shall coordinate with the California State Fire Marshal prior to commencing such work and comply with Chapter 5.5 of Title 5, Division 1, Part 1, of the California Government Code (Elder California Pipeline Safety Act of 1981) and all other applicable law. ORDINANCE NO. PAGE EIGHT SECTION 9. Abandonment and Removal. (a) Upon revocation or termination of this franchise or upon the permanent discontinuance of the use of all or a portion of its Facilities, the Franchisee shall, within ninety (90) days, make written application to the City Engineer for authority, as determined by the Franchisee, either: (1) to abandon all or a portion of such Facilities in place; or (2) to remove all or a portion of such Facilities. Such application shall describe the Facilities desired to be abandoned or removed and shall also describe with reasonable accuracy the physical condition of such Facilities. (b) It is expressly agreed to and acknowledged by Franchisee and the City that the Facilities subject to this Franchise have been Out-of-Service as defined by the California State Fire Marshal for years and may continue to remain Out-of- Service in the future for any length of time. In addition, it is expressly agreed to and acknowledged by Franchisee and the City, that Facilities complying with U.S. Department of Transportation maintenance and inspection requirements and defined as Out-of-Service by the California State Fire Marshal, for any amount of time, do not constitute permanent discontinuance of the use of such Facilities or a revocation, termination or abandonment of the Franchise, provided that: (i) Franchisee has complied and continues to comply with all applicable state and federal laws and regulations concerning the Facilities, including but not limited to laws and regulations requiring maintenance, inspection, and annual reporting of Out-of-Service Facilities; and (ii) Franchisee shall comply with all requirements of the California State Fire Marshal and any other regulatory body or officer, prior to returning to service the Facilities or any portion thereof. (c) The City Engineer shall determine whether the abandonment or removal which is proposed may be effected without detriment to the public interest and the conditions under which such proposed abandonment or removal may be safely effected, and whether the City Engineer proposes to accept abandonment in place. Nothing in this agreement shall obligate the City Engineer or City to accept abandonment in place of any Facilities, regardless of whether such abandonment may be effected without detriment to the public interest. The City Engineer shall then notify the Franchisee of his determination. (d) Within sixty (60) days after receipt of such notice, the Franchisee shall apply for a permit from the City to abandon or remove all or a portion of the Facilities and shall pay all reasonable fees and reasonable costs related thereto. The permit shall contain all such reasonable conditions of abandonment or removal, including, but not limited to, traffic control, pavement replacement, and compaction tests, as may be prescribed by the City Engineer. These conditions shall be fully complied with to the satisfaction of the City Engineer, whose approval shall not be unreasonably withheld, before the Facilities shall be considered abandoned or removed. Until so abandoned or removed, fees applicable to the franchise shall continue to accrue. Any abandonment shall be ORDINANCE NO. PAGE NINE conditioned, in part, upon Franchisee's agreement to comply with all applicable provisions of this ordinance. (e) The Franchisee shall, within ninety (90) days after obtaining such permit, commence and diligently prosecute to completion the work authorized by the permit. (f) If the Franchisee applies for authority to abandon all or a portion of its Facilities in place, and the City Engineer determines, in his or her sole and absolute discretion, that abandonment in place of all or part of the Facilities may be effected without detriment to the public interest, and the City Engineer is willing, in his or her sole and absolute discretion, to accept abandonment in place of the Facilities, the Franchisee shall pay to the City an abandonment fee which shall be computed by the table below. Pipelines with an Internal $ Amount Per Lineal Foot Diameter of 0-12 inches $15.00 14-18 inches $22.00 20-30 inches $28.00 SECTION 10. Damage to Facilities or Public Property. City shall not be liable for any damage to or loss of any Franchised Facility placed in, upon, above, beneath, or across the Franchised Streets pursuant to this Ordinance, except to the extent such damage or loss is caused by the negligence or willful misconduct of City. Any damage caused directly or indirectly by Franchisee to any street, highway, alley, public right-of-way or other public property or improvement, shall be promptly repaired, at Franchisee’s sole cost and expense, to the complete satisfaction of City Engineer. If Franchisee fails to repair the damage within a reasonable time after receiving notice from the City Engineer or if an emergency necessitates immediate repair of the damage, City may, in its sole discretion, choose to perform the repair work itself, in which case Franchisee shall reimburse City for the full costs of the repair work within thirty (30) days after receiving a statement detailing the costs. SECTION 11. Notice of Utility Facility Location. Upon the request of any person or agency who has contracted to perform work in the Franchised Streets, Franchisee shall provide accurate detailed information regarding the location of the Franchised Facilities. SECTION 12. Standard of Care. Franchisee agrees to undertake any work authorized by this Ordinance in a skillful and workmanlike manner, consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. SECTION 13. Conformance to Applicable Laws or Regulations. Franchisee shall obtain all necessary permits and approvals from other governmental entities for the installation, ORDINANCE NO. PAGE TEN ownership, control, operation, and management of the Franchised Facilities. Franchisee shall also keep fully informed and in compliance with all applicable statutes, ordinances, rules, regulations, orders, and decisions issued by any federal, state, or local governmental body, agency, or court with jurisdiction over the Franchised Facilities, including but not limited to statutes and regulations regarding maintenance of the Facilities. Franchisee shall at all times be in compliance with all City standards, present or future. If future changes to state or federal law, or future judicial interpretations of existing state or federal law, allow the City to regulate Franchisee, the Franchised Facilities, or its use of the Franchised Streets to a greater degree than authorized by this Ordinance, nothing in this Ordinance shall be deemed to limit, restrict, or modify City’s authority under such change to state or federal law. SECTION 14. Sale, Transfer or Assignment . Franchisee shall not sell, transfer or assign the franchise or any right or privilege granted by this Ordinance without the written consent of the City Council, which consent may be granted, withheld or conditioned in the City Council’s sole and absolute discretion. Franchisee may however transfer or assign its rights received herein to an Affiliate, so long as the City receives ninety (90) days prior written notice and the Franchisee agrees, in a written assignment and assumption agreement in a form acceptable to the City Attorney, to remain bound by the obligations hereunder.In the event any transfer or assignment in any way affects the parental guaranty provided in Section 6, the City may require additional security, in a form and amount as required by the City Engineer, in his or her sole and absolute discretion. No notice shall be required for a transfer in trust, mortgage or other hypothecation, in whole or in part, to secure any indebtedness. Any proposed purchaser, transferee, or assignee must agree to comply with all provisions of this Ordinance. No approved sale, transfer, or assignment shall be valid until evidenced by a duly executed instrument in writing, filed in the office of the City Clerk of the City of Downey. Nothing in this Ordinance shall be construed to grant to Franchisee, any right to sell, transfer or assign this franchise, or any of the rights or privileges hereby granted, except in the manner aforesaid. SECTION 15. Indemnification. Franchisee shall to the fullest extent permitted by law defend, indemnify, and hold harmless City, its elected officials, officers, employees, and agents from any and all actual or alleged claims, demands, causes of action, liability, loss, damage, or injury, to property or persons, including wrongful death, whether imposed by a court of law or by administrative action of any federal, state, or local governmental body or agency, arising out of or incident to any acts, omissions, negligence, or willful misconduct of Franchisee, its employees, agents, licensees, or contractors in connection with or arising out of any action taken under this Ordinance or the use of the Franchised Streets. This indemnification includes, without limitation, the payment of all penalties, fines, judgments, awards, decrees, attorneys’ fees, and related costs or expenses, and the reimbursement of City, its elected officials, employees, and/or agents for all legal expenses and costs incurred by each of them. This indemnification excludes only such portion of any claim, demand, cause of action, liability, loss, damage, penalty, fine, or injury, to property or persons, including wrongful death, to the extent caused by the negligence or willful misconduct of City. City shall be liable only for the cost of repair for any damage to any Franchised Facility to the extent arising from the gross negligence or willful misconduct of City or its employees or agents, and City shall not be responsible for any damage, liability, or economic loss of any kind occurring by reason of any action or omission by ORDINANCE NO. PAGE ELEVEN City or by any third party arising from the City's issuance or approval of a permit or agreement to any third-party. Franchisee's indemnification obligation herein shall survive the repeal of this Ordinance or the expiration of the franchise granted by this Ordinance. SECTION 16. Insurance. On or before commencement of any franchise operations, Franchisee shall obtain or provide satisfactory evidence of having policies of commercial or excess liability including contractor and sudden and accidental pollution liability and worker's compensation insurance from financially sound insurers of recognized responsibility. (a) The policy of commercial or excess liability insurance shall: 1. Be issued to Franchisee and name the City, and its elected officials, officers, agents, and employees, as additional insureds. 2. Defend and indemnify the insureds against all liability for personal injury, bodily injury, wrongful death and property damage arising from Franchisee’s activities conducted pursuant to the franchise by providing coverage therefore, including but not limited to, coverage for negligent acts or omissions of Franchisee and the agents, servants and employees thereof, committed in the conduct of franchise operations. 3. Provide a combined single limit liability insurance in the amount of twenty million dollars ($20,000,000.00). 4. Provide contractors, products and completed operations and sudden and accidental pollution liability coverage. 5. Be none cancelable without thirty (30) days' written notice thereof directed to the City Clerk. (b) The policy of worker's compensation insurance shall: 1. Have been previously approved as to substance and form by the California Insurance Commissioner. 2. Cover all employees of Franchisee who in the course and scope of their employment are to conduct or do work pursuant to the franchise operations. 3. Provide for every benefit and payment presently or hereinafter conferred by Division 4 of the Labor Code of the State of California upon an injured employee, including vocational rehabilitation and death benefits. 4. Be none cancelable without thirty (30) days' written notice thereof directed to the City Clerk. ORDINANCE NO. PAGE TWELVE 5. Provide for a waiver of subrogation in favor of the City. (c) Franchisee shall file with the City Clerk prior to commencement of any franchise operations certificates of insurance for each of the required policies executed by the company issuing the policy, certifying that the policy is in force and providing the following information with respect to said policy: 1. The policy number. 2. The date upon which the policy will become effective and the date upon which it will expire. 3. The subject of the insurance. 4. The type of coverage provided by the insurance. 5. The amount of limit of coverage provided by the insurance. (d) Franchise operations shall be suspended during any period that Franchisee fails to maintain the aforementioned provisions of this section in full force and effect. (e) Notwithstanding anything to the contrary contained herein, subject to approval by the City’s Risk Management Authority, the Franchisee may provide a program of self-insurance for commercial liability and any pollution exposure including sudden and accidental and such approval shall not be unreasonably withheld. Any self-insurance program maintained by the Franchisee shall be consistent with the provisions and the specified limits contained herein. Franchisee may effect for its own account any insurance not required by this Ordinance. SECTION 17. Franchise Fee. (a) Base Annual Fee. A base annual fee shall be paid within sixty (60) days after the end of each calendar year and during the life of the franchise for each and every year, including the year of granting the franchise in the following amounts: Pipe size Base rate per (internal diameter in inches) lineal foot 0-6$1.02 over 6 inches $1.22 ORDINANCE NO. PAGE THIRTEEN In determining the number of feet of pipeline upon which the annual fee will be computed, the greatest number of feet of pipeline covered by the franchise during the calendar year for which payment is due will be utilized. The base annual fee shall be paid no later than sixty (60) days following the end of the calendar year and a penalty at the rate of ten percent (10%) per month or fraction thereof beyond the payment date shall be charged. (b) Base Construction Charges. The Franchisee shall pay at the time of application for a City encroachment permit for the installation, relocation, or replacement of any pipeline or other facility covered by the franchise, a base construction charge of $6,000 for each one-half (1/2) mile of trench or fractional part thereof installed, replaced or relocated on major streets and $4,000 per one-half (1/2) mile of trench or fractional part thereof, on minor streets. City hourly inspection charges will be subtracted by this base construction charge, and any remaining funds will be returned to Franchisee upon the completion and acceptance of the work by City. The City reserves the right to change the base constructions charges established hereunder at any time after the effective date of the ordinance granting a franchise, but the base construction charges applicable to any one (1) franchise may only be changed five (5) times during the life of that particular franchise. (c) Adjustments. The annual payment for each lineal foot of pipeline shall be computed and revised each calendar year as follows: 1. The amount of each base fee specified in this Section shall be adjusted at the time payment is due by the percentage change in the Consumer Price Index, all Urban Consumers for the Los Angeles-Anaheim-Riverside area (1982-84 = 100), for the period July 1, 1991 to the date which is sixty (60) days prior to the due date of the fee. 2. In no event shall any base fee be charged which is less than the base fee amount established by this Section. 3. The indices specified in paragraph 1 of this subsection are calculated and published by the United States Department of Labor, Bureau of Labor Statistics. If the Bureau discontinues the calculation or publication of the Consumer Price Index, all Urban Consumers for the Los Angeles- Anaheim-Riverside area (1982-84 = 100), and no transposition table is available to convert to another index, then the amount of each annual adjustment in base fees shall be computed by using a comparable governmental index as determined by the City. Additionally, within thirty (30) days following the adoption of this Ordinance, Franchisee shall do both of the following: ORDINANCE NO. PAGE FOURTEEN (a) Pay to City, in lawful money of the United States, the amount of eighty-five thousand dollars exactly ($85,000) for the base annual fees from 2002-2009. This sum shall be paid simultaneously with the base annual fee for the current year in three equal installments over a three-year period. The first installment of $28,333.33 shall be paid within thirty (30) days after the City Council adopts the ordinance granting the franchise and prior to signing the written acceptance of the franchise pursuant to Section 2 of this ordinance. (b) Pay to the City, in lawful money of the United States, a base granting fee in the amount of ten thousand dollars ($10,000), which shall be paid within thirty (30) days after the City Council adopts the ordinance granting the franchise and prior to signing the written acceptance of the franchise pursuant to Section 2 of this ordinance. If any neglect, omission, or refusal of Franchisee to file the verified statements or to pay the amounts required by this section, at the time or in the manner hereinbefore provided, continues for more than thirty (30) days following notice thereof to Franchisee by City, then City by action of the City Council may declare the franchise granted by this Ordinance forfeited and any money paid to City in connection with the franchise shall be retained by City; and Franchisee shall thereupon surrender all rights in and to the same; and the franchise granted by this Ordinance shall be deemed and shall remain null, void and of no effect whatsoever. Any late payments shall be assessed interest at a rate of twelve percent (12%) per annum. SECTION 18. Proration of Payments . In the event of abandonment of Facilities with the approval of the City as stated elsewhere in this Ordinance, or in the event of removal of such Facilities by the Franchisee, the annual franchise fee required by this Ordinance shall be prorated for the calendar year in which such removal or abandonment or grant occurs as of the end of the calendar month in which this franchise was granted or when the Facilities were removed or abandoned. SECTION 19. Records . Franchisee shall keep and preserve for a period of five (5) years subsequent to the date of the most recent franchise fee determination all the records necessary to determine the amount of such franchise fee. Such records shall be subject to inspection by the City, during the Franchisee’s regular business hours, for purposes of an audit by the City. SECTION 20. Hazardous Substances . Prior to the issuance of any excavation and/or encroachment permit for the construction or installation of any pipelines for the intrastate transmission of hazardous liquid substances in a gaseous state, except natural gas, or prior to the transmission of such a substance, approval shall be obtained from the City Engineer. Such approval shall not conflict with the State Fire Marshal’s jurisdiction in this area and will be granted if the City Engineer determines that the pipeline will create no hazard or potential hazard to life or property. The Franchisee shall be exempt from this requirement for all pipeline maintenance activities including, but not limited to, the use of nitrogen to displace petroleum hydrocarbons. ORDINANCE NO. PAGE FIFTEEN SECTION 21. Release of Contaminants . In the event of Release of a Contaminant, or the discovery of an Environmental Condition caused by Franchisee's activities conducted pursuant to this franchise or by any Facility of Franchisee, except such Release of a Contaminant or discovery of an Environmental Condition caused by third party infliction of damage to any Facility of Franchisee, Franchisee shall immediately conduct such Remedial Work and pay all Remediation Costs, at its sole expense, as is necessary to fully mitigate and remediate the same in accordance with all Applicable Law, administrative order or regulation. Nothing herein shall be construed as waiving Franchisee’s rights to seek recovery from a third party for any such release. SECTION 22. Liability . Franchisee shall be fully liable to the City for damage to City property, including but not limited to damage to any Street, or any other cost incurred by the City directly caused by Franchisee's activities conducted pursuant to this franchise, or caused by any of Franchisee's Facilities or by any Person acting on Franchisee's behalf pursuant to this franchise, excepting those persons who are employees or agents of the City. In the event that Franchisee fails to promptly comply with Section 21, Franchisee shall be liable for any reasonable and customary Remediation Costs, incurred by the City for control or abatement of any Environmental Condition, Release of Contaminants, Remedial Work or any fire or explosion resulting from any activity conducted by or on behalf of Franchisee pursuant to the franchise. SECTION 23. Termination of Franchise. If Franchisee fails, neglects, or refuses to comply with any of the conditions of this Ordinance or California Public Utilities Code section 6201 et seq., and Franchisee does not within fifteen (15) days following written demand for compliance by City begin the work of compliance, and after such beginning does not continue to prosecute the work with due diligence to completion, the City by action of the City Council may declare the franchise granted by this Ordinance forfeited and any money paid to City in connection with the franchise shall be retained by City; and Franchisee shall thereupon surrender all rights in and to the same; and the franchise granted by this Ordinance shall be deemed and shall remain null, void and of no effect whatsoever. Upon termination of the franchise granted by this Ordinance, for any reason provided in this Ordinance, City may require Franchisee to remove the Franchised Facilities from the Franchised Streets in accordance with Section 9 of this Ordinance. SECTION 24.Limitations and Reservations . (a) The franchise, rights, and privileges granted to Franchisee pursuant to this Ordinance shall be for the nonexclusive use of the Franchised Streets. City does not agree to restrict the number of franchises or other City authorizations issued for the use of all or any part of the Franchised Streets to any person, firm, corporation, or entity. (b) This Ordinance only authorizes Franchisee to use the Franchised Streets as specifically identified and defined in this Ordinance, and the use of any other public property, whether located within or outside the Franchised Streets, is strictly prohibited unless authorized by a separate franchise or agreement. ORDINANCE NO. PAGE SIXTEEN (c) This Ordinance shall not be construed to convey any right, title, or interest in any highway, street, alley, public right-of-way, other public improvement or portion thereof, but shall be deemed only an authorization to use and occupy the Franchised Streets for the limited purposes stated herein. (d) No reference herein shall be deemed to be a representation or guarantee by City that its interest or other right to control the use of the Franchised Streets is sufficient to permit the uses specified in this Ordinance, and this Ordinance shall be deemed to grant no more than the rights which City may have the authority to grant. (e) Any privilege claimed by Franchisee in any public right-of-way shall be subordinate to any prior lawful occupancy or use of the Franchised Streets. (f) There is reserved to City every right and power which is required to be reserved or provided by any state law or ordinance of City, and Franchisee agrees to be bound thereby and to comply with any action or requirements of City in its exercise of such rights or power, heretofore or hereafter enacted or established. SECTION 25.Miscellaneous. (a) This Ordinance shall be construed in accordance with and governed by the laws of the State of California. Any legal action or proceeding brought to interpret or enforce this Ordinance, or which in any way arises out of the parties’ activities undertaken pursuant to this Ordinance, shall be filed and prosecuted in the appropriate California State Court in the County of Los Angeles, California. (b) Should either party bring a legal action for the purpose of protecting or enforcing its rights and obligations under this Ordinance, the prevailing party shall be entitled, in addition to other relief, to recovery of its attorneys’ fees, expenses and costs of suit. (c) Prior drafts of this Ordinance and prior correspondence regarding this Ordinance shall not be used by either party as evidence of the intent of the parties or otherwise be admissible in evidence in interpreting this Ordinance. (d) The parties agree that this Ordinance shall constitute the entire agreement between the parties with respect to the transactions contemplated hereby. Any and all previous agreements and understandings between or among the parties regarding the transactions contemplated hereby, whether written or oral, are superseded by this Ordinance. Any waiver or amendment of any requirements and/or provisions of this Ordinance must be in writing and signed by an officer or authorized representative of the waiving party in order to be effective and ORDINANCE NO. PAGE SEVENTEEN enforceable; no purported oral waiver or amendment of any requirements and/or provisions of this Ordinance shall be effective or enforceable; and no waiver or amendment of any requirements and/or provisions of this Ordinance based on course of conduct, course of dealing, or course of performance shall be effective or enforceable. (e) All notices which shall be or may be given pursuant to this Ordinance shall be in writing and delivered personally or transmitted (a) through the United States mail, by registered or certified mail, postage prepaid; (b) by means of prepaid overnight delivery service; or (c) by facsimile transmission, if a hard copy of the same is followed by delivery through the United States mail or by overnight delivery service as just described, addressed as follows: CITY OF DOWNEY Attn.: Director of Public Works 11111 Brookshire Avenue Downey, CA 90241 Telephone: (562) 904-7102 PARAMOUNT PETROLEUM CORPORATION Attn.: Steve Peyton 14700 Downey Avenue Paramount, CA 90723 Telephone: (562) 531-2060 (Ext. 2751) Fax Machine: (562) 633-8211 SECTION 26. The Mayor shall sign this Ordinance and the City Clerk shall attest thereto and shall cause the same to published and posted as required in a newspaper published and circulated in the City of Downey; and thereupon and thereafter, and upon the franchisee’s submission to the City of a written acceptance of the franchise contained herein, this Ordinance shall take effect and be enforce according to law. ADOPTED AND SIGNED this day of August, 2010. ANNE M. BAYER, Mayor ATTEST: ___________________________________ KATHLEEN L. MIDSTOKKE, City Clerk ORDINANCE NO. PAGE EIGHTEEN STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) CITY OF DOWNEY ) I HEREBY CERTIFY that the foregoing Ordinance No. was introduced at a regular meeting of the City Council of the City of Downey held on the 27th day of July, 2010, and adopted at a regular meeting of the City Council of the City of Downey held on the day of , 2010, by the following vote, to wit: AYES: Council Members: NOES: Council Member: ABSENT: Council Member: ABSTAIN: Council Member: I FURTHER CERTIFY that a Summary of the foregoing Ordinance No. , was published in the Press-Telegram, a newspaper of general circulation in the City of Downey, on July 30, 2010 (after introduction), and on , 2010 (after adoption, including the vote thereon). It was also posted in the regular posting places in the City of Downey on the same dates. KATHLEEN L. MIDSTOKKE, City Clerk