city council agenda report

Agenda Item No. V.1

v. 2/01/2014 V1 PW Crimson Franchise Agenda.docx Revision Date: 1/16/2020 11:20 AM

City Council Agenda Report

Meeting Date: January 21, 2020

TO: HONORABLE MAYOR & COUNCIL MEMBERS FROM: JIM SADRO, CITY MANAGER By: Elias Saykali, Director of Public Works SUBJECT: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF

LA HABRA, ORANGE COUNTY, CALIFORNIA GRANTING A PIPELINE FRANCHISE TO CRIMSON CALIFORNIA PIPELINE, LP TO OPERATE AND MAINTAIN CERTAIN PIPELINES AND APPURTENANCES FOR THE TRANSPORTATION OF PETROLEUM, OIL, GAS, GASOLINE, WATER, AND OTHER LIKE SUBSTANCES IN THE CITY OF LA HABRA.

SUMMARY RECOMMENDATION: Approve and adopt an ordinance granting a pipeline franchise to Crimson California Pipeline, LP (Crimson) to operate and maintain certain pipelines and appurtenances for the transportation of petroleum, oil, gas, gasoline, water, and other like substances in the City of La Habra; and approve and authorize the Mayor to execute a Franchise Agreement with Crimson. DISCUSSION: The subject pipeline consists of 17,156.30 linear feet of pipeline, including 14,367.40 linear feet of 8-inch pipeline and 2,788.90 linear feet of 10-inch pipeline. It is generally described as beginning in La Habra Boulevard (formerly Central Avenue) at the East City limits a boundary between the City of La Habra and the City of Brea; thence Westerly along La Habra Boulevard a distance of approximately 3,998.57 feet of 8-inch pipeline to the intersection of La Habra Boulevard and Harbor Boulevard; thence continuing Westerly along La Habra Boulevard a distance of approximately 2,529.19 feet of 8-inch pipeline to the intersection of La Habra Boulevard and Cypress Street; thence continuing Westerly along La Habra Boulevard a distance of 2,788.90 feet of 10-inch pipeline to the intersection of La Habra Boulevard and Walnut Street; thence continuing Westerly along La Habra Boulevard a distance of approximately 2,603.88 feet of 8-inch pipeline to the intersection of La Habra Boulevard and Idaho Street; thence continuing Westerly along La Habra Boulevard a distance of approximately 2,676.55 feet of 8-inch pipeline the intersection of La Habra Boulevard and Beach Boulevard; thence continuing Westerly

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along La Habra Boulevard a distance of approximately 2,559.21 feet of 8-inch pipeline to a point in La Habra Boulevard; said point being on the West City limits of the City of La Habra the boundary between the City of La Habra and the City of Whittier. Effective December 15, 1999, the City awarded a new 20-year franchise agreement for these pipelines to Unocal California Pipeline Company pursuant to Ordinance No. 1564. In 2001, Tosco Corporation, the parent company of Unocal California Pipeline Company, was purchased by Phillips Petroleum Company. In 2005, Phillips Petroleum Company merged with Conoco, Inc. On May 10, 2010 ConocoPhillips assigned the franchise to Crimson California Pipeline, LP following authorization by the La Habra City Council through Ordinance No. 1711. The original franchise agreement (Ord. No. 1564) is set to expire on December 15, 2019 and a new franchise ordinance and agreement is needed. The new franchise agreement is for a twenty-year term, which expires on December 15, 2039. The agreement has been updated to provide greater protections for the City and will clarify existing rules and procedures involving the City’s pipeline franchise with Crimson. Crimson will be required to remit franchise fee payments which are due each April 1. Crimson has paid in full its entire franchise fee obligation for the period of time they owned the pipeline. The agreement requires Crimson to maintain a 24-hour emergency contact line, and they have pledged to adhere to all of the terms and conditions in the new franchise agreement. FISCAL IMPACT / SOURCE OF FUNDING: As required by Municipal Code Chapter 5.48 governing pipeline franchises, Crimson has filed an application for a pipeline franchise and remitted the required $5,000 application fee and the $100,000 surety bond. Crimson has also provided proof of insurance specified in the new franchise agreement. Crimson will be responsible for payment of annual franchise fees by April 1st of each year. Franchise fees are set by the Public Utilities Commission, based on the diameter and linear feet of the pipeline (Public Utilities Code Section 6231.5). Based on the 17,156.30 total linear feet of 8” and 10” pipeline and the formula set by the PUC, the annual franchise fees on this pipeline would be approximately $6,740.06 for the first year, with annual CPI increases applying thereafter. GENERAL PLAN RELEVANCE: ED 9.1 Balanced Fiscal Practices. RECOMMENDATION / REQUESTED ACTION: Approve and adopt an ordinance granting a pipeline franchise to Crimson California Pipeline, LP (Crimson) to operate and maintain certain pipelines and appurtenances for the transportation of petroleum, oil, gas, gasoline, water, and other like substances in the City of La Habra; and approve and authorize the Mayor to execute a Franchise Agreement with Crimson. ATTACHMENTS: 1. Ordinance

2. Franchise Agreement 3. Legal Notice

ORDINANCE NO. ______

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LA HABRA, ORANGE COUNTY, CALIFORNIA GRANTING A PIPELINE FRANCHISE TO CRIMSON CALIFORNIA PIPELINE, LP TO OPERATE AND MAINTAIN CERTAIN PIPELINES AND APPURTENANCES FOR THE TRANSPORTATION OF PETROLEUM, OIL, GAS, GASOLINE, WATER, AND OTHER LIKE SUBSTANCES IN THE CITY OF LA HABRA.

A. RECITALS WHEREAS, Article 1 of Chapter 2 of Division 3 of the Public Utilities Code,

beginning with Section 6201, imposes provisions for the granting of petroleum, gas, oil, electric and water franchises by municipalities; and

WHEREAS, Chapter 5.48 of the La Habra Municipal Code adopts the

applicable provisions of the Public Utilities Code by reference, and provides an application process for the review and granting of pipeline franchise applications; and

WHEREAS, on December 10, 2019, Crimson California Pipeline, LP (Grantee)

filed an application for the granting of a pipeline franchise; and WHEREAS, Crimson California Pipeline, LP has requested a new franchise

agreement for a 20-year period; and WHEREAS, pursuant to Resolution No. 5931 adopted on December 16, 2019,

the City Council declared its intention to grant a franchise to Grantee under and pursuant to the provisions of Article 1 of Chapter 2 of Division 3 of the Public Utilities Code, commencing at Section 6201, for certain purposes; and

WHEREAS, pursuant to Resolution No. 5931, a public hearing was duly

noticed and held on Monday, January 21, 2020, at 6:30 p.m. to consider the franchise application and hear objections to said franchise; and

WHEREAS, after hearing all public testimony and considering the franchise

application, it is the desire of this Council to grant said franchise in accordance with the terms and conditions specified in a Franchise Agreement between the City of La Habra and the Grantee, which is incorporated by reference and on file in the Office of the City Clerk.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LA HABRA

DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. All legal prerequisites to the enactment of this Ordinance have

occurred, and in all respects as set forth in the Recitals, Part A, of this Ordinance.

ATTACHMENT 1

SECTION 2. The City Council hereby finds and determines that it can be seen with certainty that there is no possible effect on the environment as a result of the granting of the franchise contemplated herein, and accordingly, pursuant to the provisions of §15061 (b) (3) of Division 6 of title 14 of the California Code of Regulations, the adoption of this Ordinance is not subject to the requirements of the California Environmental Quality Act of 1970, as amended.

SECTION 3. The right, privilege and franchise, subject to each and all of the terms and conditions as contained in this Ordinance and a separate Franchise Agreement adopted herein by reference, and pursuant to the provisions of Article 1 of Chapter 2, of Division 3 of the Public Utilities Code of the State of California, shall be and the same hereby are granted to Grantee to pipelines for the transportation of petroleum, oil, gas, gasoline, water, or other like substances, together with all scraper traps, manholes, flanges, conduits, culverts, valves, appliances, cathodic protection systems, and other appurtenances necessary or convenient for the maintenance and operation of the pipelines for the transportation of petroleum, oil, gas, gasoline, water, or other like substances in, under, along, and across certain public streets, highways, and alleys in the City of La Habra more particularly described in the Franchise Agreement adopted herein by reference, and on file in the Office of the City Clerk.

SECTION 4. The Mayor is hereby authorized to execute said Franchise Agreement, which shall become effective upon the effective date of this Ordinance. The Franchise Agreement may be amended as necessary upon approval of the City Council.

SECTION 5. This Ordinance shall become effective thirty (30) days from and after its adoption. The City Clerk shall certify to the adoption of this Ordinance and shall cause the same to be published as required by law. PASSED, APPROVED AND ADOPTED this 3rd day of February, 2020. ____________________________ Tom Beamish, Mayor ATTEST: _________________________________ Laurie Swindell, CMC City Clerk

STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS. CITY OF LA HABRA ) I, Laurie Swindell, CMC, City Clerk for the City of La Habra, do hereby certify that the above and foregoing is a true and correct copy of Ordinance No. ______ introduced at a joint regular meeting of the City Council of the City of La Habra held on the 21st day of January, 2020 and was finally adopted at a regular meeting held on the 3rd day of February, 2020, by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSTAIN: COUNCILMEMBERS: ABSTENT: COUNCILMEMBERS:

Witness my hand and the official seal of the City of La Habra this 3rd day of February, 2020. ________________________________ Laurie Swindell, CMC

City Clerk

FRANCHISE AGREEMENT BETWEEN THE CITY OF LA HABRA

AND CRIMSON CALIFORNIA PIPELINE, L.P. FOR OIL PIPELINES AND APPURTENANCES WITHIN THE

CITY OF LA HABRA

ATTACHMENT 2

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FRANCHISE AGREEMENT BETWEEN THE CITY OF LA HABRA

AND CRIMSON CALIFORNIA PIPELINE, L.P. FOR OIL PIPELINES AND APPURTENANCES WITHIN THE CITY OF LA HABRA

TABLE OF CONTENTS

R E C I T A L S . .......................................................................................................................................... 1

SECTION 1 CALIFORNIA ENVIRONMENTAL QUALITY ACT .................................................. 2

SECTION 2 DEFINITIONS .................................................................................................................... 2

2.1 CITY ............................................................................................................................................... 3 2.2 CITY ENGINEER ............................................................................................................................. 3 2.3 CITY MANAGER............................................................................................................................. 3 2.4 DIRECTOR ...................................................................................................................................... 3 2.5 EFFECTIVE DATE OF THIS AGREEMENT ........................................................................................ 3 2.6 FRANCHISE .................................................................................................................................... 3 2.7 FRANCHISE FEE ............................................................................................................................. 3 2.8 GRANTEE ....................................................................................................................................... 3 2.9 HAZARDOUS SUBSTANCE ............................................................................................................. 4 2.10 HAZARDOUS WASTE ..................................................................................................................... 4 2.11 LAY AND USE ................................................................................................................................ 4 2.12 OIL ................................................................................................................................................. 4 2.13 PERSON .......................................................................................................................................... 4 2.14 PIPELINE ........................................................................................................................................ 5 2.15 PIPES AND APPURTENANCES ........................................................................................................ 5 2.16 STREETS ......................................................................................................................................... 5 2.17 USE ................................................................................................................................................ 5

SECTION 3 GRANT OF FRANCHISE ................................................................................................. 6

SECTION 4 PIPELINE LOCATION ..................................................................................................... 6

SECTION 5 TERM .................................................................................................................................. 6

SECTION 6 FRANCHISE FEE .............................................................................................................. 6

6.1 AMOUNT OF FEE............................................................................................................................ 6 6.2 COMPUTATION OF PAYMENTS ...................................................................................................... 7

SECTION 7 PRIOR FRANCHISES ....................................................................................................... 8

SECTION 8 ACCEPTANCE OF FRANCHISE.................................................................................... 8

SECTION 9 EMINENT DOMAIN ......................................................................................................... 8

SECTION 10 OPERATIONS AND MAINTENANCE ........................................................................... 8

10.1 CONSTRUCT, INSTALL, OPERATE AND MAINTAIN ....................................................................... 8 10.2 PAY TO THE CITY ........................................................................................................................... 9 10.3 REMOVE OR RELOCATE ................................................................................................................. 9

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10.4 FILE WITH CITY COUNCIL ............................................................................................................ 9

SECTION 11 EMERGENCY RESPONSE .............................................................................................. 9

SECTION 12 DAMAGE TO PUBLIC PROPERTY ............................................................................ 11

SECTION 13 CONSENT FOR NEW FACILITIES ............................................................................. 11

SECTION 14 CONSTRUCTION AND REPAIRS................................................................................ 11

SECTION 15 MAPS ................................................................................................................................. 12

SECTION 16 PAVEMENT ..................................................................................................................... 12 SECTION 17 DAMAGE TO STREETS ................................................................................................ 12

SECTION 18 FAILURE TO COMPLY ................................................................................................. 12

SECTION 19 TERMINATION ............................................................................................................... 13

SECTION 20 CITY’S RIGHT TO SUE ................................................................................................. 13

SECTION 21 LETTER OF ACCEPTANCE ......................................................................................... 14

SECTION 22 PARENTAL GUARANTEE ............................................................................................ 14 SECTION 23 PERFORMANCE BOND ................................................................................................ 14

SECTION 24 PUBLICATION EXPENSES .......................................................................................... 14

SECTION 25 INSURANCE REQUIREMENTS ................................................................................... 15

25.1 MINIMUM SCOPE OF INSURANCE ............................................................................................... 15 25.2 ENDORSEMENTS .......................................................................................................................... 17 25.3 INSURANCE OBLIGATIONS OF GRANTEE .................................................................................... 18 25.4 NOTICE OF CANCELLATION ........................................................................................................ 19 25.5 SEVERABILITY OF INTERESTS/CROSS LIABILITY .......................................................................... 19 25.6 USE OF EXCESS INSURANCE ........................................................................................................ 19 25.7 AUTOMATIC INCREASE IN LIMITS TO ACCOUNT FOR INFLATION ............................................. 19 25.8 REASONABLE COOPERATION ..................................................................................................... 20 25.9 WAIVER OF SUBROGATION ......................................................................................................... 20 25.10 EVIDENCE OF INSURANCE ........................................................................................................... 20 25.11 DEDUCTIBLE OR SELF-INSURED RETENTION .............................................................................. 21 25.12 CONTRACTUAL LIABILITY ........................................................................................................... 21 25.13 FAILURE TO MAINTAIN COVERAGE............................................................................................ 21 25.14 ACCEPTABILITY OF INSURERS ..................................................................................................... 22 25.15 CLAIMS MADE POLICIES ............................................................................................................. 22 25.16 INSURANCE FOR SUBCONTRACTORS ........................................................................................... 22

SECTION 26 INDEMNIFICATION AND CERCLA ........................................................................... 23 SECTION 27 EXCLUSION OF PRIOR DRAFTS ............................................................................... 26

SECTION 28 ENTIRE AGREEMENT .................................................................................................. 26

SECTION 29 NOTICE ............................................................................................................................ 27

EXHIBIT A PIPELINE LOCATION AND MAP ............................................................................. A-1

EXHIBIT B CALCULATION OF FRANCHISE FEE ..................................................................... B-1

EXHIBIT C PARENTAL GUARANTEE .......................................................................................... C-1

La Habra Oil Pipeline Franchise Agreement

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FRANCHISE AGREEMENT FOR OIL PIPELINES

This PIPELINE FRANCHISE AGREEMENT (the "Agreement") effective this 15th day of December 2019, by and between the CITY OF LA HABRA ("City"), a California municipal corporation, and CRIMSON CALIFORNIA PIPELINE, L.P. (“Grantee”), for the operation and maintenance of certain pipelines and appurtenances for the transportation of oil (as defined herein), water or other hydrocarbon or like substances in the City.

R E C I T A L S .

WHEREAS, the City Council of the City of La Habra, California, intends to grant a pipeline franchise to Crimson California Pipeline, L.P. pursuant to provisions set forth in Article 1 of Chapter 2 of Division 3, commencing at Section 6201 of the California Public Utilities Code; and WHEREAS, the pipelines to be permitted through this franchise consist of existing pipelines and appurtenances to transmit, distribute, and/or monitor oil, water, and other like substances within certain streets traversing incorporated lands in the City of La Habra; and WHEREAS, said pipelines were originally authorized under pipeline franchise Ordinance No. 173 adopted April 7, 1953 and granted to Union Oil Company for a 50-year term. Unocal California Pipeline Company acquired approximately 16,877 linear feet of these pipelines on January 1, 1992. Effective December 15, 1999, the City awarded a new 20-year franchise agreement for these pipelines to Unocal California Pipeline Company pursuant to Ordinance No. 1564. In 2005, Unocal California Pipeline Company merged with ConocoPhillips Pipeline Company. On January 19, 2010 and pursuant to Ordinance No. 1711, the City authorized the transfer of this pipeline franchise from ConocoPhillips Pipeline Company to Crimson California Pipeline, L.P.; and WHEREAS, the pipeline franchise agreement awarded by Ordinance 1564 and currently held by Crimson California Pipeline, L.P. expires on December 15, 2019. The City desires to execute a new franchise agreement with Crimson California Pipeline, L.P., effective as of December 15, 2019. WHEREAS, the pipeline owned by Grantee in the City consists of approximately of 17,156.30 linear feet; and


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WHEREAS, pursuant to Resolution No. 5931 adopted on December 16, 2019, the City Council declared its intention to grant a franchise to Grantee, and set a public hearing date pursuant to La Habra Municipal Code Chapter 5.48 and the provisions of Article 1 of Chapter 2 of Division 3 of the California Public Utilities Code, commencing at § 6201, for certain purposes; and WHEREAS, pursuant to Resolution No. 5931, a public hearing was duly noticed and held on January 21, 2020, at 6:30 p.m. to consider objections to said franchise, and after due consideration of all public testimony and the franchise application, it is the City Council’s desire to grant said franchise; and WHEREAS, the City Council held first reading of Ordinance No. 1812 (“Ordinance”) at its meeting of January 21, 2020, and held second reading and adoption of Ordinance No. 1812 at its meeting of February 3, 2020, which grants a pipeline franchise to Grantee for the operation and maintenance of certain pipelines and appurtenances for the transportation of oil as defined herein, water or other hydrocarbon or like substances, in accordance with the terms and conditions specified in this Agreement; and WHEREAS, all legal prerequisites to the enactment of Ordinance No. 1812 and this Agreement have occurred; and NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein, the City Council of the City of La Habra does ordain as follows in all respects as set forth in the Recitals, and sections of this Agreement:

Section 1 CALIFORNIA ENVIRONMENTAL QUALITY ACT

The City Council hereby finds and determines that it can be seen with certainty that there is no possible effect on the environment as a result of the granting of the franchise contemplated herein and, accordingly, pursuant to the provisions of §15061(b)(3) of Division 6 of Title 14 of the California Code of Regulations, the adoption of this Agreement is not subject to the requirements of the California Environmental Quality Act of 1970, as amended.

Section 2 DEFINITIONS

Whenever any term used in this Agreement has been defined by the La Habra City Code, and/or Division 3 of the California Public Utilities Code, the definitions in the City Code and Public Utilities Code shall apply unless the term is otherwise defined in this Agreement.


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2.1 CITY

‘City’ shall mean the City of La Habra, a municipal corporation in the State of California, in its present incorporated form or in any later reorganized, consolidated or reincorporated form, and all the territory lying within the municipal boundaries of the City as it currently exists, or as such boundaries may be adjusted.

2.2 CITY ENGINEER

‘City Engineer’ shall mean the City Engineer of the City of La Habra.

2.3 CITY MANAGER

‘City Manager’ means the City Manager of the City of La Habra or his or her designee.

2.4 DIRECTOR

‘Director’ means the Director of Public Works or his or her designee.

2.5 EFFECTIVE DATE OF THIS AGREEMENT

‘Effective date of this Agreement’ shall mean December 15, 2019.

2.6 FRANCHISE

‘Franchise’ shall mean those rights, privileges and obligations arising from the Ordinance and grant of this Franchise to use a Pipeline and Pipeline System in those streets and public rights of way as set forth in this Agreement.

2.7 FRANCHISE FEE

‘Franchise Fee’ means the annual franchise fee paid by Grantee to City pursuant to Chapter 5.48 of the La Habra Municipal Code for the privilege to hold the rights granted by this Agreement.

2.8 GRANTEE

'Grantee’ shall mean Crimson California Pipeline, L.P. (“Crimson”), a California limited partnership and a pipeline corporation within the meaning of California Public Utilities Code § 228, to which the franchise is granted by the Ordinance as well as its lawful successors, assigns, transferees, agents and/or lessees.


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2.9 HAZARDOUS SUBSTANCE

‘Hazardous Substance’ means any of the following: (a) any substances defined, regulated or listed (directly or by reference) as ‘Hazardous Substances’, ‘hazardous materials’, ‘Hazardous Waste’, ‘toxic waste’, ‘pollutants’ or ‘toxic substances’ or similarly identified as hazardous to human health or the environment, in or pursuant to (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 USC §9601 et seq. (CERCLA); (ii) the Hazardous Materials Transportation Act, 49 USC §5101, et seq.; (iii) the Resource Conservation and Recovery Act, 42 USC §6901 et seq.; (iv) the Clean Water Act, 33 USC §1251 et seq.; (v) California Health and Safety Code §§25115-25117, 25249.8, 25281, 25316, 25501; (vi) the Clean Air Act, 42 USC §7901 et seq.; and (vii) California Water Code §13050; (b) any amendments, rules or regulations promulgated thereunder to such enumerated statutes or acts currently existing or hereafter enacted; and (c) any other hazardous or toxic substance, material, chemical, waste or pollutant identified as hazardous or toxic or regulated under any other applicable federal, state or local Environmental Laws currently existing or hereinafter enacted, including, without limitation, friable asbestos, polychlorinated biphenyl's ("PCBs"), petroleum, natural gas and synthetic fuel products, and by-products.

2.10 HAZARDOUS WASTE

‘Hazardous Waste’ means all substances defined as Hazardous Waste, Acutely Hazardous Waste, or extremely Hazardous Waste by the State of California in Health and Safety Code §25110.02, §25115, and §25117 or in the future amendments to or recodifications of such statutes or identified and listed as Hazardous Waste by the US Environmental Protection Agency (EPA), pursuant to the Federal Resource Conservation and Recovery Act (42 USC §6901 et seq.), all future amendments thereto, and all rules and regulations promulgated there under.

2.11 LAY AND USE

‘Lay and Use’ shall mean to lay, construct, erect, install, operate, maintain, use, repair, replace or remove.

2.12 OIL

‘Oil’ shall mean petroleum, gas, oil, gasoline, and other hydrocarbon substances.

2.13 PERSON

‘Person’ means any individual, firm, association, organization, partnership, corporation, business trust, or joint venture.


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2.14 PIPELINE

‘Pipeline’ shall mean the eight (8) inch or ten (10) inch diameter crude petroleum pipeline existing on the effective date of this Franchise, as more fully described in Exhibit “A”, located in the City of La Habra.

2.15 PIPES AND APPURTENANCES

‘Pipes and Appurtenances’ shall mean pipe, pipeline, main, service, trap, vent, vault, manhole, meter, gauge, regulator, valve, conduit, appliance, attachment, appurtenance and any other property located or to be located in or under the streets of the City, and used or useful in the transmission and distribution of petroleum, oil, gas, water, or other like substances, only as specifically granted in this Agreement.

2.16 STREETS

‘Streets’ shall mean the public streets, ways, alleys and places as the same may now or hereafter exist within said City and as more particularly described in Section 4, hereof.

2.17 USE

‘Use’ shall mean to operate, maintain, inspect, renew, repair, remove, replace and abandon, as provided for in this Franchise Agreement, an eight (8) inch or ten (10) inch diameter pipeline for collection, transportation or distribution of crude petroleum and its constituent products, including ancillary water, wastewater, mud, steam and other liquid substances normally and customarily used in the operation and maintenance of a crude petroleum pipeline, together with all traps, manholes, conduits, valves, appliances, attachments, equipment, cathodic protection devices, wires, cables and other appurtenances and service connections (collectively “Pipeline System”) necessary and appropriate for operation of the Pipeline and Pipeline System in, under, along and across certain public streets and public rights of way as described in this Franchise agreement.


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Section 3 GRANT OF FRANCHISE

The right, privilege and franchise, subject to each and all of the terms and conditions contained in this Agreement, and pursuant to the provisions of Article 1 of Chapter 2 of Division 3 of the Public Utilities Code of the State of California, shall be and the same hereby are granted to Grantee to install, operate, maintain, replace and repair pipelines for the transportation of oil as defined herein, water or other hydrocarbon or like substances, together with all scraper traps, manholes, flanges, conduits, culverts, valves, appliances, cathodic protection systems, and other appurtenances necessary or convenient for the maintenance and operation of the pipelines for the transportation of oil as defined herein, water, or other hydrocarbon or like substances in, under, along and across certain public streets, highways and alleys in the City more particularly described in Exhibit “A” attached hereto and incorporated herein. Drawings indicating the location of the pipeline are on file in the Office of the City Clerk and City Engineer.

Section 4 PIPELINE LOCATION

At the time of the effective date of this Agreement, Grantee is using for transportation of oil as defined herein, water or other hydrocarbon or like substances, in that certain 17,156.30 lineal feet portion of the franchised pipeline in, under, along and across certain public streets, highways and alleys in the City more particularly described in Exhibit “A” attached hereto and incorporated herein.

Section 5 TERM

The term of this Agreement shall be for twenty (20) years starting December 15, 2019 through December 15, 2039, unless (1) shortened by the same being voluntarily surrendered or abandoned by its possessor, or (2) the State of California or some municipal or public corporation thereto duly authorized by law shall purchase by voluntary agreement or shall condemn and take under the power of eminent domain, all property actually used and useful in the exercise of this franchise, and situated within the territorial limits of the state, municipal or public corporation purchasing or condemning such property, or (3) that this franchise is forfeited for non-compliance with its terms by the Grantee. Upon expiration of the twenty (20) year term, the City, at its sole option, may elect to renew this Agreement for an additional twenty (20) year term.

Section 6 FRANCHISE FEE

6.1 AMOUNT OF FEE

As consideration for the franchise hereby granted, the Grantee shall pay annually to the City in lawful money of the United States, within ninety (90) days after the end of each


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calendar year, a fee, based upon the franchised area specified in Section 4 of this Agreement as set forth in the California Public Utilities Code Section 6231.5, as the same may be amended from time to time, or any successor provision or provisions thereto. A sample calculation is provided as an attachment in Exhibit B.

6.2 COMPUTATION OF PAYMENTS

Such payments shall be computed from the date of acquisition and ownership of the pipeline by Grantee, to and including the date of either actual removal of the facilities or the effective date of a properly approved abandonment in place authorized by the City Engineer, and until the Grantee shall have fully complied with all the provisions of this Agreement and of all other applicable provisions of law or ordinance relative to such abandonment. All such payments shall be made to the City and shall be supported by the Grantee’s verified statement under penalty of perjury of the laws of the State of California concerning the computation thereof. In the event of installation or abandonment of facilities with the approval of the City as elsewhere in this Agreement provided, or in the event of removal of such facilities by the Grantee, the payments otherwise due to the City for occupancy of the streets by such facilities shall be prorated for the calendar year in which such installation, removal or abandonment occurs as of the end of the calendar month in which installed, removed or abandoned. With said statement, the Grantee shall pay to the City in lawful money of the United States, the aforesaid compensation. Any neglect, omission or refusal of said Grantee to file said verified statement or to pay said compensation at the time or in the manner hereinbefore provided, which neglect, omission or refusal shall continue for more than thirty (30) days following notice thereof to the Grantee by the City, shall be grounds for the declaration of the forfeiture of this franchise and of all rights of the Grantee hereunder. The City Manager shall have the power and authority to reasonably dispute any verified statement and to require additional proof with respect to any matters set forth in said verified statement.


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Section 7 PRIOR FRANCHISES

This Agreement is granted in lieu of all other franchises owned by the Grantee relating to the use and/or maintenance of the pipes and appurtenances, or any portion thereof, specified herein for transmitting and distributing oil, petroleum, gas, water or other like substances within the limits of the City, as said limits now or may hereafter exist, and the acceptance of the franchise hereby granted shall operate as an abandonment of all such franchises within the limits of City, as such limits now or may hereafter exist, in lieu of which this Agreement is granted.

Section 8 ACCEPTANCE OF FRANCHISE

The franchise granted hereunder shall not become effective until written acceptance thereof shall have been filed by the Grantee with the City Clerk of the City. When so filed, such acceptance shall constitute a continuing agreement of the Grantee that if and when the City shall thereafter annex or consolidate with additional territory, any and all franchise rights and privileges owned by the Grantee therein shall likewise be deemed to be added to the franchise and the lineal footage of added pipeline shall be assessed at the same rate of compensation as is provided for in the base franchise agreement.

Section 9 EMINENT DOMAIN

The franchise granted hereunder shall not in any way or to any extent impair or affect the right of the City to acquire the property of the Grantee hereof either by purchase or through the exercise of the rights of eminent domain, and nothing herein contained shall be construed to contract away or to modify or to abridge, either for a term or in perpetuity, the City’s right of eminent domain in respect to the Grantee or any public utility, nor shall this franchise ever be given any value before any court or other public authority in any proceeding of any character in excess of the cost of the Grantee of the necessary publication and other sum paid by it to the City therefore at the time of acquisition thereof.

Section 10 OPERATIONS AND MAINTENANCE

The Grantee shall:

10.1 CONSTRUCT, INSTALL, OPERATE AND MAINTAIN

Construct, install, operate and maintain all pipes and appurtenances in accordance and in conformity with all and any of the ordinances, rules and regulations heretofore, or hereafter adopted by the City Council of the City in the exercise of its police powers and not in conflict with the paramount authority of the United States of America, the State of


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California and, as to state highways, subject to the provisions of general laws relating to the location and maintenance of such facilities;

10.2 PAY TO THE CITY

Grantee shall repair all damage to public property resulting from Grantee’s operations under this franchise but, in the event, Grantee fails to make such repairs within a reasonable time after receipt of written notice from the City, the City may make any and all repairs to the damaged public property and Grantee shall pay to the City, on demand, for all of its actual costs incurred to public property made necessary by any operations of the Grantee under this franchise, including, but not limited to, any reasonable overhead expenses attributed to such repairs in the sum no greater than thirty percent (30%) of actual cost of such repair. All public property damaged by Grantee as a result of its operations under this franchise shall be repaired and restored to the condition existing prior to said damage.

10.3 REMOVE OR RELOCATE

Remove or relocate, at the request of City and without expense to the City, any pipes and appurtenances installed, used and/or maintained under this franchise if and when such removal or relocation is made necessary by any change of grade, alignment or width of any public street, way, alley or place, including the construction of any subway or viaduct by the City; provided, however, that Grantee shall not be required to bear the expense of any removal or relocation made at the request of the City on behalf or for the benefit of any developer or other third party.

10.4 FILE WITH CITY COUNCIL

File with the City Council of the City at least thirty (30) days prior to any sale, transfer, assignment or lease of this franchise, or any part thereof, or any of the rights or privileges granted thereby, written evidence of the same, certified thereto by the Grantee or its duly authorized officers.

Section 11 EMERGENCY RESPONSE

Grantee shall, at all times during the term of this Agreement, maintain on a twenty-four (24) hour-a-day basis, adequate emergency equipment and properly trained emergency crew within a radius of forty (40) miles from any of the pipes or appurtenances installed or maintained pursuant to this franchise for the purpose of shutting off the pressure and the flow of the contents of such pipes and appurtenances in the event of an emergency resulting from an earthquake, act of war, civil disturbance,


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flood or other cause. Grantee shall furnish to City and maintain at least two (2) twenty- four (24) hour emergency telephone numbers and contact names for City’s use.


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Section 12 DAMAGE TO PUBLIC PROPERTY

If any portion of any street or publicly owned land or facility shall be damaged by reason of breaks or leaks in any pipe or appurtenance constructed and/or maintained under this franchise, the Grantee shall, at its own expense, immediately following written or oral notification thereof, repair any such damage and put such land or facilities in as good condition as it was in before such break or leak, to the satisfaction of the City Engineer unless such break or leak is caused by the City or its employees, agents, contractors, representatives and/or authorized subcontractors.

Section 13 CONSENT FOR NEW FACILITIES

Pipes and appurtenances may be installed, operated and/or maintained under this franchise only in and under the streets set forth in Section 4 hereof. Any additional pipes and appurtenances may be installed, operated and/or maintained only with the consent, pursuant to an ordinance, of the City, which shall not be unreasonably withheld.

Section 14 CONSTRUCTION AND REPAIRS

The City Engineer shall have the power to give the Grantee such directions for the location, repair or maintenance of any pipes and appurtenances as may be reasonably necessary in the opinion of the City Engineer to avoid sewers, pipes, conduits or other structures in or under the streets. Prior to the commencement of any work to construct any pipe or appurtenances, the Grantee shall file with the City Engineer the plans showing the location thereof, which shall be subject to the approval of said City Engineer and such construction shall be subject to the inspection of said City Engineer and done to his or her satisfaction and in compliance with any and all Federal, State and/or City rules, regulations, ordinances, standards and/or specifications. All street coverings or openings of traps, vaults, and manholes shall at all times be kept flush with the surface of the streets; provided, however, that vents for underground traps, vaults and manholes may extend above the surface of the streets when said vents are located in parkways, between the curb and the property line subject to the prior approval of the City Engineer, which shall not be unreasonably withheld.

Upon completion of the construction of any pipelines constructed pursuant to said franchise, the Grantee shall render a statement to the City, showing in detail the permit or permits issued and the total length of pipeline, the construction of which was authorized under such permit or permits, and the total length of pipeline actually laid.


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Section 15 MAPS

Within ninety (90) days following the date on which any pipelines or additional pipelines have been laid or constructed under this Agreement, the Grantee shall file a map or maps in such form as may be required by the City Engineer showing the accurate location and size of all its facilities then in place, and shall, upon installation of any additional facilities or upon removal, change or abandonment of all or any portion thereof, file a revised map or maps showing the location and size of all such additional and/or abandoned facilities as of that date. If cathodic protection is to be used for facilities installed or maintained pursuant to this franchise, a description of the protective devices shall be furnished to the City Engineer, which shall show the location and types of anodes, including a description of methods to be used as a protection against corrosion and electrolytic leakage.

Section 16 PAVEMENT

Where it is necessary to lay, repair, or replace any underground pipes in or under any portion of a paved or macadamized street, the same, where practicable and economically reasonable, shall be done by a tunnel or bore, so as not to disturb the foundation of such paved or macadamized street. In the event that the same cannot be done, such work shall be done under a permit to be granted by the City Engineer upon application therefore and subject to any and all City rules, regulations, ordinances, standards and/or specifications.

Section 17 DAMAGE TO STREETS

If any portion of any street shall be damaged by reason of defect in any of the pipes and appurtenances maintained or constructed under this Agreement, or by reason of any other cause arising from the operation or existence of any pipes or appurtenances constructed or maintained under this franchise unless Grantee’s pipes or appurtenances are damaged by the City or its employees agents, contractors, representatives and/or authorized subcontractors, Grantee shall, at its own cost and expense, immediately repair such damage and restore such street or portion of street, to as good a condition as existed before such defect or other cause of damage occurred, such work to be done under the direction of the City Engineer, and in accordance with any and all rules, regulations, ordinances, standards and/or specifications of the City.

Section 18 FAILURE TO COMPLY

Except as may be specifically provided for elsewhere in this Agreement, if Grantee shall fail, neglect or refuse to comply with any of the provisions or conditions hereof, and shall not, within thirty (30) days after receipt of written demand for compliance, begin


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the work of compliance, or after such beginning, shall not prosecute the same with due diligence to completion, then the City may declare this Agreement forfeited and commence and/or complete any such work. Grantee shall be liable to the City for any and all reasonable costs and reasonable expenses incurred by City in connection with any such work.

Section 19 TERMINATION

Upon revocation or termination of this Agreement, in the event of non-compliance by Grantee with terms of this franchise, or the permanent discontinuance of use of the pipelines and appurtenances or any portion thereof, Grantee shall, within twenty (20) days thereafter, make written application to the City Engineer for authority to either (1) abandon all, or a portion, of such pipes and appurtenances in place, or (2) remove all, or a portion, of such pipes and appurtenances. Such application shall describe the location of the pipes and appurtenances desired to be abandoned or removed, and the relative physical condition of such pipes and appurtenances. The City Engineer shall determine whether such abandonment or removal may be effected without detriment to the public interest and under what conditions and terms the proposed abandonment or removal may be safely effected and shall then notify the Grantee of such requirements. Grantee shall, within one hundred eighty (180) days thereafter, either remove all or such portions of such pipes and appurtenances or abandon in place all or a portion of such pipes and appurtenances, as directed by the City Engineer.

If any pipes and appurtenances, which are to be abandoned in place subject to prescribed conditions, are not abandoned in accordance with all such conditions, the City Engineer may make additional orders including, if desirable, an order that Grantee remove all such pipes and appurtenances in accordance with applicable requirements. In the event Grantee fails to remove any pipes and appurtenances in accordance with such applicable requirements within the time prescribed by the City Engineer, then City may remove such pipes and appurtenances and Grantee shall thereafter pay to City the actual cost thereof, including, but not limited to, any reasonable overhead expenses attributed to such removal in the sum no greater than thirty percent (30%) of actual costs of such repair. Any decision of the City Engineer with respect to conditions, interpretations of plans, specifications, rules, regulations, and/or standards shall be final.

Section 20 CITY’S RIGHT TO SUE

The City may sue in its own name for the forfeiture of this Agreement in the event of noncompliance by the Grantee with any of the conditions thereof. In the event of any such suit or other legal proceeding, the prevailing party shall be entitled to reasonable attorneys’ fees.


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Section 21 LETTER OF ACCEPTANCE

Not later than thirty (30) days after the effective date of this Agreement, or any subsequent transfer of the franchise or any portion thereof, the Grantee shall file with the City Clerk of the City a written acceptance of the franchise hereby granted and an agreement to comply with the terms and conditions hereof.

Section 22 PARENTAL GUARANTEE

On or before the effective date of the ordinance granting the franchise, Grantee shall file and thereafter at all times during the life of the franchise keep on file with the La Habra City Clerk a parental guaranty from Crimson Pipeline, LLC. A copy of the form parental guaranty is attached hereto and incorporated herein as Exhibit “B”.

Section 23 PERFORMANCE BOND

The Grantee shall, within thirty (30) days after the effective date of this Agreement, or any subsequent transfer of the franchise or any portion thereof, file with the City Clerk of the City a corporate surety bond in the penal sum of One Hundred Thousand Dollars ($100,000.00). Further, Grantee shall well and truly observe, fulfill and perform each and every term, condition and requirement of this franchise. In the event of any breach of any condition of the aforesaid bond, actual damages up to the whole amount of the penal sum therein named shall be recoverable from the principal and sureties upon the bond.

Section 24 PUBLICATION EXPENSES

The Grantee shall reimburse the City for all reasonable publication expenses incurred by City in connection with the granting of this Agreement. Such payment shall be made within thirty (30) days after the City furnishes Grantee with a written statement of the expenses.


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Section 25 INSURANCE REQUIREMENTS

The City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, whether the insurance applies separately to the project/location, the passage of time (including inflation), or other special circumstances. If the existing policies do not meet the Insurance Requirements set forth herein including such additional modification as required by the City, Grantee agrees to amend, supplement or endorse the policies to do so.

Without limiting the indemnity provisions of the Agreement, the Grantee shall procure and maintain for the duration of the Franchise, and for a period of five years thereafter as set forth below, insurance against claims for injuries to persons or damages to property that may arise from or in connection with the operation, use, maintenance or any other privilege exercised under the Franchise:

25.1 MINIMUM SCOPE OF INSURANCE

(a) Commercial General Liability (CGL) which affords coverage at least as broad as Insurance Services Office “occurrence” form CG 00 01, including products and completed operations, property damage, bodily injury, and personal & advertising injury with limits no less than $10,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be at twice the required occurrence limit or such other amount as required by the City. The CGL policy shall be written in such a manner that claims expenses, including but not limited to defense fees, defense costs, supplemental expenses, and attorneys’ fees do not diminish policy limits. Excess or Umbrella Liability Insurance at least as broad as specified above for the CGL coverage. Such policy or policies shall include as insureds those covered by the underlying CGL policy, including additional insureds.

Grantee shall procure and submit to City evidence of CGL insurance for a period of at least five (5) years from the date of termination under this Agreement.

(b) Automobile Liability Insurance with coverage at least as broad as

Insurance Services Office Form CA 0001 covering all owned, non-owned and hired automobiles with limit no less than $10,000,000 each accident for bodily injury and property damage.


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(c) Aircraft Liability Insurance. If using aircraft in connection with the use, maintenance, inspection or operation of pipes and appurtenances, Grantee shall maintain and provide evidence of aircraft liability insurance on an occurrence basis, including products and completed operations, contractual liability, property damage and bodily injury (including death) and medical expenses with no less than $50,000,000 combined single limit applicable to all owned, non-owned and hired aircraft.

(d) Aviation Liability Insurance. If using unmanned aerial vehicles, unmanned aerial systems or drones in connection with the use, maintenance, inspection or operation of pipes and appurtenances, Grantee shall maintain and provide evidence of aviation liability insurance on an occurrence basis, including products and completed operations, contractual liability, property damage, bodily injury (including death), medical expenses, and personal injury liability (including invasion of privacy) with limits no less than $2,000,000 combined single limit applicable to all owned, non-owned and hired unmanned aerial vehicles, unmanned aerial systems or drones.

(e) Workers’ Compensation as required by the State of California with statutory limits, and Employer’s Liability Insurance with a limit of not less than $1,000,000 per accident for bodily injury or disease.

(f) Site Pollution Legal Liability and/or Professional Liability covering all risk of liability related to environmental pollution and damages in connection with Grantee’s ongoing and completed operations to include, without limitation, onsite and offsite coverage for bodily injury (including death and mental anguish), property damage, first-party remediation expenses, emergency response expenses, evacuation expenses, non-owned disposal site liability, defense costs, cleanup costs, and pollution conditions that arise from or in connection with the use, maintenance and operation, of the Pipes and Appurtenances and any transportation (including loading and unloading) by or on behalf of the Grantee, of any waste or waste materials off or away from the project site. Coverage shall be provided for both sudden and accidental and gradual and continuous pollution events with limits no less than $25,000,000 each loss and $35,000,000 in the aggregate. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be at twice the required occurrence


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limit or such other amount as required by the City. The policy shall not exclude any hazardous materials for which there is an exposure.

Claims Made Policies

If the Pollution Legal Liability and/or Asbestos Legal Liability and/or Errors & Omissions policy provides “claims made” coverage:

(a) The Retroactive Date must be shown, and must be before the date of this contract or the start of work.

(b) The insurance must be maintained and evidence of insurance must be provided for at least 5 years after completion of contract work.

(c) If the policy is cancelled or not renewed, and not replaced with another “claims made” policy form with a Retroactive Date prior to the effective contract date, the Grantee must purchase “extended reporting” coverage for a minimum of 5 years after completion of contract work.

(d) A copy of the claims reporting requirements must be submitted to the City of La Habra for review.

If the Grantee maintains broader coverage and/or higher limits than the minimums shown above, the City requires and shall be entitled to the broader coverage and/or higher limits maintained by the Grantee.

25.2 ENDORSEMENTS

Insurance policies shall not be in compliance if they include any limiting provision or endorsement that has not been submitted to the City for approval. The insurance policies shall contain or be endorsed to contain, the following provisions:

(a) Commercial General Liability & Site Pollution Liability (1) Additional Insured: The City, its elected officials, officers, employees,

volunteers, boards, agents and representatives (“City Additional Insureds”) shall be additional insureds with regard to liability and defense of suits or claims arising out of the work, ongoing and completed operations performed by or on behalf of the Grantee including materials, parts or equipment furnished in connection with such work or operations. Additional Insured Endorsements shall not:

i. Be limited to “Ongoing Operations”


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ii. Exclude “Contractual Liability” iii. Restrict coverage to the “Sole” liability of Grantee iv. Exclude “Third-Party-Over Actions” v. Contain any other exclusion contrary to the Agreement

Additional Insured Endorsements shall be at least as broad as ISO Form(s) CG 20 10 11 85; or CG 20 10 and CG 20 37.

(2) Primary Insurance: This insurance shall be primary and any other insurance available to the City Additional Insureds, whether primary, excess, umbrella or contingent insurance, including deductible, or self-insurance available to the insureds added by endorsement shall be in excess of and shall not contribute with this insurance. Coverage shall be at least as broad as ISO CG 20 01 04 13.

(b) Auto Liability/Aircraft Liability

(1) Additional Insured: The City Additional Insureds (the City, its elected officials, officers, employees, volunteers, boards, agents and representatives) shall be additional insureds with regard to liability and defense of suits or claims arising out of any auto and aircraft liability, including any liability resulting from the conduct of the City Additional Insureds.

(2) Primary Insurance: This insurance shall be primary and any other insurance available to the City Additional Insureds, whether primary, excess, umbrella or contingent insurance, including deductible, or self-insurance available to the insureds added by endorsement shall be in excess of and shall not contribute with this insurance.

(1) Waiver of Subrogation: A waiver of subrogation stating that the insurer waives all

rights of subrogation against the indemnified parties.

25.3 INSURANCE OBLIGATIONS OF GRANTEE

The insurance obligations under this Agreement shall be: (1) all of the insurance coverage and/or limits carried by or available to the Grantee; or (2) the minimum insurance coverage requirements and/or limits shown in this Agreement; whichever is greater. Any insurance proceeds in excess of or broader than the minimum required coverage and/or minimum required limits, which are applicable to a given loss, shall be available to


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the City. No representation is made that the minimum Insurance requirements of this Agreement are sufficient to cover the obligations of the Grantee under this Agreement.

25.4 NOTICE OF CANCELLATION

Required insurance policies shall not be cancelled, amended, or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium.

25.5 SEVERABILITY OF INTERESTS/CROSS LIABILITY

The policies shall provide for a severability of interests and shall provide that an act or omission or knowledge possessed by any insured shall not reduce or avoid coverage available to the City Additional Insureds. The policies shall not prohibit cross-liability or suits between the City Additional Insureds and any other insured.

25.6 USE OF EXCESS INSURANCE

Excess liability insurance or umbrella insurance may be utilized to meet the limits of one or more types of insurance required under this Agreement. Any excess liability insurance or umbrella insurance utilized shall either “follow the form” of the underlying insurance or shall provide coverage at least as broad as the underlying insurance.

25.7 AUTOMATIC INCREASE IN LIMITS TO ACCOUNT FOR INFLATION

In addition the City’s right to modify the requirements in Section 25, including, without limitation, the right to modify the limits of insurance based on the nature of the risk, prior experience, insurer, coverage, whether the insurance applies separately to the project/location, the passage of time, or other special circumstances, the minimum amount of each limit of insurance shall be increased (but not decreased), commencing on the fifth anniversary of the Effective date of this Agreement and each fifth anniversary thereafter, in the same percentage as the percentage increase in the consumer price index (all urban consumer index) for the Los Angeles/Anaheim/Riverside areas (1982-84=100) for the period beginning on the Effective date of this Agreement and ending on the month prior to each adjustment date.


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25.8 REASONABLE COOPERATION

Grantee shall provide the City with information and reasonable cooperation, both in connection with: (1) demonstrating and evaluating the coverage required in this Section 25, including, without limitation, in providing policy related documentation, making timely policy corrections, and providing coverage and financial data as may be required for the City to evaluate the sufficiency of coverage including deductible and retention amounts and policy limits, and (2) presenting and prosecuting any insurance claim, including gathering and documenting loss details, timely communicating with the insurers, and timely providing the city with coverage correspondence and specific details in connection with any claim.

25.9 WAIVER OF SUBROGATION

Grantee waives all rights of subrogation against the City Additional Insureds and the indemnified parties, and all policies shall contain or be endorsed to contain a waiver of subrogation. Required insurance coverages shall not prohibit Grantee from waiving the right of subrogation prior to a loss. This provision applies regardless of whether the City has received a waiver of subrogation endorsement from the insurer.

25.10 EVIDENCE OF INSURANCE

All policies, endorsements, certificates, and/or binders shall be subject to approval by the City as to form and content. These requirements are subject to amendment or waiver only if so approved in writing by the City. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf. Prior to commencing any work or operations under this Agreement, the Grantee shall provide the City with certificates of insurance evidencing that the insurance requirements set forth above have been met. At least thirty (30) days prior to the expiration of any such policy, evidence of insurance showing that such insurance coverage has been renewed or extended shall be filed with the City. If such coverage is cancelled or reduced, Grantee shall, within ten (10) days after receipt of written notice of such cancellation or reduction of coverage, file with the City evidence of insurance showing that the required insurance has been reinstated or has been provided through another insurance company or companies. Certificates required under this Section 25 shall not contain any language stating, in effect, that it is


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provided for information purposes only or that the certificate issuer need only endeavor to provide notice. Grantee’s failure to provide any information required by this Agreement, including without limitation, either a certificate of insurance or a certificate of insurance evidencing all of the insurance requirements set forth herein have been met, shall not constitute a waiver by the City of any of the requirements set forth in this Agreement.

25.11 DEDUCTIBLE OR SELF-INSURED RETENTION

Any deductible or self-insured retention in excess of $25,000 for Pollution Legal Liability/Professional Liability insurance, $5,000 for Commercial General Liability insurance, $5,000 for Automobile Liability insurance, $5,000 for Aviation Liability insurance, and $0 for Workers’ Compensation insurance must be approved in writing by the City and shall protect the City Additional Insureds and the indemnified parties (including such parties identified in Section 26) in the same manner and to the same extent as they would have been protected had the policy or policies not contained a deductible or self-insured retention. In the absence of such approval(s), no deductible or self-insured retention shall exceed the foregoing amounts. The City may require the Grantee to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the Grantee or the City. In the event of any claim, loss or damage, Grantee shall timely pay any policy deductible or retention.

25.12 CONTRACTUAL LIABILITY

The coverage provided shall apply to the obligations assumed by the Grantee under the indemnity provisions of this Agreement.

25.13 FAILURE TO MAINTAIN COVERAGE

Grantee’s failure to obtain and maintain the insurance required in this Agreement is a material breach of this Agreement. If Grantee fails at any time required under the terms of this Agreement to obtain, maintain or furnish proof of required insurance, in a form acceptable to the City, or, if the City is notified of the change, cancellation or lapse of such insurance, or if Grantee fails to provide proof that expiring policies have been renewed or extended, the City, in addition to all other remedies available to it, may, at its option, obtain such insurance coverage and bill Grantee for the premium cost (which shall be paid by Grantee within ten (10) days), or terminate this Agreement.


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25.14 ACCEPTABILITY OF INSURERS

Each such policy shall be from a company or companies with a current A.M. Best’s rating of no less than A:VIII and authorized to do business in the State of California, or otherwise allowed to place insurance through surplus line brokers under applicable provisions of the California Insurance Code or any federal law. Any other rating must be approved in writing by the City.

25.15 CLAIMS MADE POLICIES

If coverage is written on a claims-made basis, the retroactive date (and any prior event date, if any) on such insurance and all subsequent insurance shall coincide or precede the effective date of the initial Grantee’s contract with the City and continuous coverage shall be maintained or an extended reporting period shall be exercised for a period of at least five (5) years from termination or expiration of this Contract.

25.16 INSURANCE FOR SUBCONTRACTORS

Grantee shall be responsible for ensuring that all subcontractors and consultants purchase insurance of the kinds consistent with the type of work being performed by such subcontractor/consultant, and in amounts sufficient to cover the risks typically associated with such work, which shall include, at a minimum, commercial general liability, workers’ compensation, automobile liability (if automobiles are utilized), and professional liability (if such subcontractor or consultant is performing professional services). All liability policies shall name the City Additional Insureds as additional insureds for ongoing and completed work, and shall provide primary and non-contributory coverage. All policies, including workers’ compensation, shall include a waiver of subrogation. Grantee shall remain fully liable for, and Grantee’s insurance coverage shall extend to, liability for loss or damage resulting from any acts, errors or omissions of any subcontractors.


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Section 26 INDEMNIFICATION AND CERCLA

(1) Grantee shall defend, indemnify, hold free and harmless the City, its officers, officials, employees, agents and volunteers from and against any and all damages to property or injuries to or death of any person or persons, and shall defend, indemnify, save and hold harmless City, its officers, officials, employees, agents and volunteers from any and all claims, demands, suits, actions or proceedings of any kind or nature, including, but not by way of limitation, all civil claims, workers’ compensation claims, and all other claims resulting from or arising out of the acts, errors or omissions of Grantee, its employees and/or authorized subcontractors, whether intentional or negligent, in connection with Grantee’s operations of this Agreement. The defense obligation provided for hereunder shall apply without any advance showing of negligence or wrongdoing by Grantee. Grantee shall be liable to City for all damages proximately resulting from the failure of Grantee to well and faithfully observe and perform each and every provision of this franchise and each and every provision of Article 1 of Chapter 2 of Division 3 of the Public Utilities Code of the State of California, including, but not limited to, any amounts for attorneys’ fees, expert witnesses and court costs assessed by a court of competent jurisdiction.

(2) Grantee hereby specifically waives any rights Grantee may have against City with regard to the condition of the area(s) encompassed within this franchise including, but not limited to, soils, toxic or hazardous materials, fill material, compaction, geologic constraints, and faults.

(3) Grantee further agrees to defend, indemnify and hold harmless City, and its elected officers, officials, agents and employees from and against any and all claims, losses, liabilities, damages, demands, actions, judgments, causes of action, assessments, penalties, costs and expenses (including without limitation, the reasonable fees and disbursements of legal counsel, expert witnesses and accountants) which might arise or be asserted against City as a result of a claimed violation by Grantee whether intentional or negligent, of any and all present and future federal, state and local laws (whether under common law, statue, rule, regulation or otherwise) associated with Grantee’s activities or operations under this franchise in connection with the following:

(a) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) [42 USCS 9601 et seq.]; the Resource Conservation and Recovery Act of 1976 (“RCRA”) [42 USCS 6901 et seq.]; the Clean Water Act, also known as the Federal Water Pollution Control Act (“FWPCA”) [33 USCS 1251 et seq.]; the Toxic Substances Control Act (“TSCA”) [15 USCS 2601 et seq.] the Hazardous Materials Transportation Act (“HTMA”) [49


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USCS 5101 et seq.]; the Insecticide, Fungicide, Rodenticide Act (7 USCS 136 et seq.]; the Superfund Amendments and Reauthorization Act [42 USCS 6901 et seq.]; the Clean Air Act [42 USCS 7401 et seq.]; the Safe Drinking Water Act [42 USCS 300f et seq.]; the Solid Waste Disposal Act [42 USCS 6901 et seq.]; the Surface Mining Control and Reclamation Act [30 USCS 1201 et seq.]; the Emergency Planning and Community Right to Know Act [42 USCS 11001 et seq.]; the Occupational Safety and Health Act [29 USCS 655 and 657]; the California Underground Storage of Hazardous Substances Act [H & SC 25280 et seq.]; the California Hazardous Substances Account Act [H & SC 25300 et seq.]; the California Hazardous Waste Control Act [H & SC 25100 et seq.] the Porter-Cologne Water Quality Act [Wat C 13000 et seq.] together with any amendments of or regulations promulgated under the statutes cited above and any other federal, state, or local law, statute, ordinance, or regulation now in effect that pertains to occupational health or industrial hygiene, and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to the Hazardous Substances and/or Hazardous Materials on, under or about the area(s) encompassed within this franchise, or the regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water, or land use; “Hazardous Substances” and “Hazardous Materials” as used in this franchise ordinance shall mean the same as those terms are defined within those statutes, laws, ordinances or regulations referenced in this Agreement;

(b) Those substances listed in the United States Department of Transportation (DOT) Table [49 CFR 172.101], or by the Environmental Protection Agency (EPA), or any successor agency, as hazardous substances [40 CFR Part 302];

(c) Other substances, materials, and wastes that are regulated or classified as hazardous or toxic under federal, state, or local laws or regulations; and

(d) Any material, waste, or substance that is

(i) a petroleum or refined petroleum product, (ii) asbestos, (iii) polychlorinated biphenyl (iv) designated as a hazardous substance pursuant to 33 USCS

1321 or listed pursuant to 33 USCS 1317, (v) a flammable explosive, or (vi) a radioactive material.


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This environmental indemnity shall survive the expiration or termination of this Agreement whether caused by Grantee or its predecessor in interest nor shall it require an advance showing of negligence or wrongdoing by Grantee.

Grantee shall not be liable to City for any damages proximately resulting from or arising out of acts, errors, or omissions of City, its employees, agents, contractors, representatives, and/or authorized subcontractors, including intentional or grossly negligent acts or omissions, in connection with operations of this Agreement.

EXCEPT WITH RESPECT TO CLAIMS OF THIRD PARTIES IN NO EVENT SHALL ANY PARTY HERETO BE LIABLE TO ANY OTHER PARTY HERETO FOR ANY SPECIAL, PUNITIVE, CONSEQUENTIAL, INCIDENTAL OR EXEMPLARY DAMAGES (IN TORT, CONTRACT OR OTHERWISE) OF SUCH PARTY UNDER OR IN RESPECT OF THIS AGREEMENT OR FOR ANY FAILURE OF PERFORMANCE RELATED HERETO HOWSOEVER CAUSED, WHETHER OR NOT ARISING FROM SUCH PARTY’S SOLE, JOINT OR CONCURRENT NEGLIGENCE, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR BAD FAITH.

(4) Without waiving the foregoing indemnity, at its option and upon failure of Grantee to promptly perform necessary Remedial Work, the City may provide written notice to Grantee identifying the Remedial Work, which has not been performed by Grantee, commence such work itself, and require the Grantee to pay, pursuant to the foregoing indemnity, all costs thereby incurred. Grantee further agrees:

(a) To allow the City access to Grantee’s environmental and other relevant records associated with the subject Remedial Work within the City;

(b) To grant to the City other rights necessary for the following purposes: The performance of all Remedial Work, investigation, sampling, well installation, groundwater monitoring, and the installation, operation, maintenance and modification of any Remedial Work that the City may be required to perform, or which the City or its consultants deem appropriate to satisfy the obligations and to comply with Applicable Law, or which relate to any legal or administrative proceedings to which the City may become a party.

The grant of such rights is not intended to and shall not be construed to impose any obligation on the City to exercise the rights granted herein or otherwise investigate, monitor or clean up any Environmental Condition at any Facility.


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“These Indemnification provisions are independent of and shall not in any way be limited by the Insurance Requirements of this Agreement. City approval of the Insurance contracts required by this Agreement does not in any way relieve the Grantee from liability under this section.”

Section 27 EXCLUSION OF PRIOR DRAFTS

Prior drafts and prior correspondence regarding this Agreement shall not be used by either party, as evidence of the intent of the parties or otherwise be admissible in evidence in interpreting this Agreement.

Section 28 ENTIRE AGREEMENT

The parties agree that this franchise 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 Agreement. Any waiver or amendment of any requirements and/or provisions of this Agreement must be in writing and signed by an officer or authorized representative of the waiving party in order to be effective and enforceable; no purported oral waiver or amendment of any requirements and/or provisions of this Agreement shall be effective or enforceable; and no waiver or amendment of any requirements and/or provisions of this Agreement based on course of conduct, course of dealing, or course of performance shall be effective or enforceable.


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Section 29 NOTICE

All notices required to be given under the terms of this Agreement may be served as follows:

To the City, by serving the City Manager or the City Clerk personally, or by addressing a written notice to: City Manager of the City of La Habra 110 E. La Habra Blvd. La Habra, California 90631 To the Grantee, by addressing written notices to Grantee addressed to: Crimson California Pipeline, L.P., a California limited partnership Attn.: Land Department 3760 Kilroy Airport Way, Suite 300 Long Beach, CA 90806 with a required copy addressed to: Crimson Pipeline, LLC, a California limited liability company Attn.: Land Department 3760 Kilroy Airport Way, Suite 300 Long Beach, CA 90806


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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the dates hereinafter respectively set forth. CITY OF LA HABRA GRANTEE By:_____________________________ By:_____________________________

Tom Beamish, Mayor Signature _____________________________ Printed Name _____________________________ Title _____________________________ Date ATTEST: __________________________________ Laurie J. Swindell, CMC City Clerk APPROVED AS TO FORM: __________________________________ Richard D. Jones, City Attorney


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ACKNOWLEDGMENT

State of California County of Orange ) ss On before me, Laurie J. Swindell, Notary Public (Insert name and title of the officer) personally appeared Tom Beamish---------------------------------------------------------------------------- , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. Witness my hand and official seal. Signature (Seal)

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document, to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.


A-1

EXHIBIT A Pipeline Location and Map

Description of Pipeline Location

Beginning in La Habra Boulevard (formerly Central Avenue) at the East City limits a boundary between the City of La Habra and the City of Brea; thence Westerly along La Habra Boulevard a distance of approximately 3,998.57 feet of 8-inch pipeline to the intersection of La Habra Boulevard and Harbor Boulevard; thence continuing Westerly along La Habra Boulevard a distance of approximately 2,529.19 feet of 8-inch pipeline to the intersection of La Habra Boulevard and Cypress Street; thence continuing Westerly along La Habra Boulevard a distance of 2,788.90 feet of 10-inch pipeline to the intersection of La Habra Boulevard and Walnut Street; thence continuing Westerly along La Habra Boulevard a distance of approximately 2,603.88 feet of 8-inch pipeline to the intersection of La Habra Boulevard and Idaho Street; thence continuing Westerly along La Habra Boulevard a distance of approximately 2,676.55 feet of 8-inch pipeline the intersection of La Habra Boulevard and Beach Boulevard; thence continuing Westerly along La Habra Boulevard a distance of approximately 2,559.21 feet of 8-inch pipeline to a point in La Habra Boulevard; said point being on the West City limits of the City of La Habra the boundary between the City of La Habra and the City of Whittier.

Overall total of 10” pipeline = 2,788.90 linear feet Overall total of 8” pipeline = 14,367.40 linear feet Overall total of both 8” and 10” pipelines = 17,156.30 feet


A-1

Map of La Habra Boulevard Pipeline Franchise – Crimson Pipeline, LP – Ordinance # 1812


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EXHIBIT B CALCULATION OF FRANCHISE FEE

The length of pipe expressed in feet located within the city, rounded to the nearest foot, shall be multiplied by the applicable CPUC (California Public Utilities Code) base rate (see table 2 below). Under the CPUC the base rate is adjusted based on CPI (Consumer Price Index) series ID CUURA421SA0 (see table 1 below): Table 1:

Series Id:

Series Title:Area:Item:Base Period:Years:

Year Jun Sep Annual

1989 128.7 130.1 128.31990 135.0 137.7 135.91991 140.8 142.6 141.41992 146.2 147.4 146.51993 149.7 150.2 150.31994 151.3 152.7 152.31995 154.8 154.6 154.61996 156.7 158.2 157.51997 159.4 160.5 160.01998 162.2 162.6 162.31999 165.4 167.2 166.12000 171.0 173.3 171.62001 178.9 178.8 177.32002 181.9 183.4 182.22003 186.3 188.2 187.02004 193.7 194.5 193.22005 200.7 205.8 201.82006 211.1 212.9 210.42007 217.273 217.697 217.3382008 229.033 227.449 225.0082009 223.906 225.226 223.2192010 225.877 226.048 225.8942011 232.328 233.022 231.9282012 236.025 238.104 236.6482013 239.223 239.611 239.2072014 243.528 243.623 242.4342015 245.459 245.431 244.6322016 249.789 250.145 249.2462017 255.275 257.890 256.2102018 265.522 268.032 265.9622019 274.380 276.054

Los Angeles-Long Beach-Anaheim, CAAll items1982-84=1001989 to 2019

CPI for All Urban Consumers (CPI-U)Original Data Value

CUURS49ASA0Not Seasonally Adjusted

All items in Los Angeles-Long Beach-Anaheim, CA, all


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Table 2:

Pipe size (internal diameter in

inches)

Base rate per lineal foot

1 $0.088 2 $0.088 3 $0.088 4 $0.088 6 0.132 8 0.176 10 0.220 12 0.264 14 0.308 16 0.352 18 0.396 20 0.440 22 0.484 24 0.528 26 0.572 28 0.616 30 0.660

Formula for Fee Calculation: The applicable base rate shall be multiplied by the Consumer Price Index for the area, as published by the United States Department of Labor, Office of Information for the month of September immediately preceding the month in which payment is due and payable, and divided by the Consumer Price Index for June 30, 1989. ** City of La Habra Oil Pipeline Franchise Fees are due each year by April 1. ** • CPI Adjustment = Prior Year September CPI / Original Year (June 30, 1989) CPI (table 1) • Payment Amount = Linear Feet of Pipe x CPUC Base Rate (from table 2) x CPI Adjustment Calculation for Franchise Fee - Due April 1, 2020 for 14,367.40 linear feet of 8” pipe and 2,788.90 linear feet of 10” pipe equating to 17,156.30 linear feet of total pipe: CPI Adjustment = 276.054 / 128.7 = 2.145 (answer rounded to nearest thousandth decimal) Payment Amount = 14,367.40 x $0.176 x 2.145 = $5,423.98

2,788.90 x $0.220 x 2.145 = $1,316.08 TOTAL = $6,740.06


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EXHIBIT C PARENTAL GUARANTEE

For valuable consideration, the receipt of which is hereby acknowledged. Crimson

Pipeline, LLC (Guarantor) unconditionally guarantees to the City of La Habra (Beneficiary) the

prompt payment when due by Crimson California Pipeline, L.P. (Grantee) of all payments due.

Beneficiary under that certain Pipeline Franchise Agreement dated December 15, 2019 by and

between the City of La Habra and Crimson California Pipeline, L.P. (Franchise Agreement).

The rights afforded the Beneficiary under this Parental Guaranty (Guaranty) are personal

and not transferable by the Beneficiary.

This Guaranty shall be construed under and governed by the laws of the State of California.

Guarantor represents and warrants that this Guaranty is a legal, valid, and binding

obligation of the Guarantor enforceable against the Guarantor in accordance with its terms except

as limited by bankruptcy or other laws of general application.

Guarantor agrees that any amendments, modifications, alterations or changes made in the

Franchise Agreement covered by this Guaranty, or the giving by the Beneficiary of any extension

of time for the performance of any of the Franchise Agreement terms, if any, or the giving of any

other forbearance on the part of the Beneficiary to the Grantee shall not in any way release the

Guarantor or its successors or assigns from any liability arising hereunder and notice to the

Guarantor of any such amendments, modifications, alterations, or changes is hereby waived.

Upon failure by the Grantee to make payment due under the Franchise Agreement,

Beneficiary shall make demand of payment upon the Guarantor. Such demand shall be in writing

and shall state the amount the Grantee has failed to pay, and an explanation of why such payment

is due, with a specific statement that the Beneficiary is calling upon the Guarantor to pay under

this Guaranty.

The Guarantor reserves to itself all rights, setoffs, counterclaims, and other defenses to

which the Grantee may have to payment of any obligation, other than (a) defenses arising from the


C-2

bankruptcy or insolvency of the Grantee, and (b) any other defenses expressly waived in writing

by the Grantee or otherwise waived in this Guaranty.

This Guaranty is a continuing guaranty and subject to earlier termination pursuant to the

Franchise Agreement shall remain in full force and effect through the term of the Franchise

Agreement until revoked by Guarantor on not less than 10 days prior written notice. This Guaranty

shall automatically terminate except as to obligations already accrued when (a) the Franchise

Agreement terminates or when the Franchise Agreement has been assigned from Grantee to a party

and as part of the assignment, Grantee has been released from its obligations under the Franchise

Agreement by the Beneficiary, or (b) Guarantor sells, assigns, or conveys a majority of its interest

in the Grantee to an unaffiliated third party.

It is expressly understood and agreed that the Beneficiary shall have recourse under this

Guaranty solely against the Guarantor and its assets.

IN WITNESS WHEREOF _______________________ has executed this Guaranty as

of this ___ day of ____________, 2020. Crimson Pipeline, LLC

By __________________________

Name: Larry W. Alexander__________

Title President

N:\Agenda packet - Current\Completed\V1 PW Crimson Franchise Att 3 Legal.docx

LEGAL NOTICE OF PUBLIC HEARING

Notice is hereby given that the City Council of the City of La Habra will hold a duly noticed public hearing on Tuesday, January 21, 2020, at 6:30 p.m. in the City Council Chamber, 100 East La Habra Boulevard, La Habra, California to consider the following item:

Consider an ordinance granting a pipeline franchise for a period of 20 years to Crimson Pipeline, LC to operate and maintain certain pipelines for the transportation of petroleum, oil, gas, gasoline, water, and other like substances in the City of La Habra with a term ending December 15, 2039, and at the City’s sole option, a renewal option of 20 additional years, during which time the franchise will pay to the City fees calculated in accordance with California Public Utilities Code Section 6231.5 which are estimated to be $6,652.09 per annum subject to consumer price index increases. Failure of payment will result in forfeiture of the franchise.

The proposed ordinance is on file in the Office of the City Clerk, located at 110 East La Habra Boulevard, La Habra, California, for review.

All interested persons are invited to attend the above public hearing and be heard at the time and place specified above. Please call 562-383-4030 for information.

LA HABRA CITY COUNCIL Laurie Swindell, CMC, City Clerk

Publish: December 31, 2019

Lauries

Attachment 3

city council agenda report

Documents