AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: CARLO TOMAINO
CITY MANAGER
BY: GABINO LUNA
PUBLIC WORKS DIRECTOR
SUBJECT: PUBLIC HEARING - INTRODUCTION OF AN ORDINANCE GRANTING A PIPELINE FRANCHISE TO ZENITH ENERGY WEST COAST TERMINALS LIMITED LIABILITY COMPANY
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Summary:
Franchise agreements are agreements in which a local jurisdiction provides a utility with the right to serve customers within its jurisdiction. Zenith Energy West Coast Terminals, a Limited Liability Company (Zenith) is requesting the renewal of an existing pipeline franchise to operate its facilities within the City’s right-of-way. On April 14, 2026, the City Council adopted a resolution declaring its intent to grant a 15-year franchise to Zenith and set a public hearing for May 12, 2026. Staff reviewed Zenith’s emergency response plan, insurance coverage, and financial statements, and consulted with the City Attorney’s Office. Staff recommends that the City Council adopt the proposed ordinance to extend the franchise with Zenith.
Form of Notice: The City published the Notice in the Signal Tribune newspaper on April 17, 2026, and posted the notice in accordance with Signal Hill Municipal Code Section 1.08.010 at City Hall on or before April 17, 2026.
Strategic Plan Goal(s):
Goal No. 1: Financial Stability: Ensure the City’s long-term financial stability and resilience.
Goal No. 2: Community Safety: Maintain community safety by supporting public safety services and increasing emergency preparedness.
recommendation
Recommendation:
Introduce the following ordinance, entitled:
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, GRANTING A FRANCHISE TO ZENITH ENERGY WEST COAST TERMINALS LLC AND THE INTERESTS, RIGHTS, PRIVILEGES, AND DUTIES TO LAY AND USE PIPES AND APPURTENANCES FOR TRANSMITTING AND DISTRIBUTING OIL AND PETROLEUM PRODUCTS FOR ANY AND ALL LAWFUL PURPOSES UNDER AND ALONG THE PUBLIC STREETS, WAYS, ALLEYS, AND PLACES, AS THE SAME NOW OR MAY HEREAFTER EXIST, WITHIN THIS CITY
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Fiscal Impact:
The recommended action would have minimal fiscal impact. Renewal of the existing franchise would authorize the continued collection of annual franchise fees. In 2025, the City received $3,644.94 in franchise fees from Zenith under Ordinance No. 2004-02-1326 (Attachment A). The franchise fee is calculated based on the total amount and size of the pipeline. The City updates the franchise fee annually based on inflation, and the Finance Department utilizes current fees evaluated against change in the Consumer Price Index (CPI) to prepare annual invoices (current fees are shown in Table A below). In addition, Zenith submitted a deposit of $5,000 to the City for staff review costs and media publication costs associated with processing the pipeline franchise.
Background:
Franchises are legal agreements wherein a local jurisdiction provides a utility with a right to serve customers within its boundaries. A common type of franchise agreement is one between a city and a telecommunications provider for internet and cable services. Franchise agreements define the service period, grant the franchise holder certain rights to install infrastructure, and establish fees payable to the local municipality in exchange for the franchise rights. Franchise agreements also establish expectations between the local municipality and the franchisee that regulate its operations, including ongoing and emergency maintenance. Signal Hill has underground pipelines that transport crude oil to various destinations, and these pipelines are maintained and operated by companies specializing in transmission services.
Analysis:
In 2004, the City Council adopted Ordinance No. 2004-02-1326 (Attachment A), granting a franchise to Pacific Terminals LLC (Pacific) to operate pipelines within the City’s right-of-way. In 2009, Plains All American Pipeline, LP (PAAP) acquired Pacific and its pipeline system in Southern California and renamed Pacific to Plains West Coast Terminals LLC (PWCT). In 2019, the City engaged with PWCT in a franchise renewal process, but due to staff changes on both ends, the renewal was never completed. In 2020, Zenith Energy US, LP, acquired PWCT and its pipeline system from PAAP and renamed PWCT to Zenith Energy West Coast Terminals LLC. In 2025, Zenith reconnected with the City about renewing the now-expired franchise originally owned by Pacific.
On April 14, 2026, the City Council adopted a Resolution declaring its intent to grant a franchise to Zenith and set a public hearing for May 12, 2026. The linear pipeline covered under the current franchise is 3,853 feet of 16” pipeline, all of which is classified as “active” pipeline. According to the pipeline map, the proposed franchise does not change the total pipeline footage or classifications. For the City Council’s reference, staff has attached maps depicting the location of the pipelines as an exhibit to the proposed Ordinance (Attachment B). Staff reviewed the following documents in developing the proposed ordinance:
a. Emergency Response Plan that addresses how the franchise holder will respond in case of oil leak or unanticipated maintenance issue.
b. A complete inventory of the facilities, including descriptions and maps, showing pipeline location and depth (when available), the size (internal diameter) and lineal footage of each pipeline segment.
c. A certificate provided under penalty of perjury that the franchise holder has complied with all requirements of Part 195 (Transportation of Hazardous Liquids by Pipeline) of Title 49 of the United States Code of Federal Regulations.
d. Insurance coverage demonstrating the franchise holder carries sufficient liability insurance to cover the cost of injury, death, and property damage or destruction.
e. Signing authority and incorporation documents verifying the franchise holder operates a legitimate business.
Next Steps:
Upon introduction of the Ordinance (Attachment B), the City Clerk’s office would cause to be posted a summary of the Ordinance pursuant to Signal Hill Municipal Code Section at City Hall on or before May 15, 2026. A summary of the Ordinance would also be published in the Signal Hill Tribune newspaper per applicable government codes on May 15, 2026. Subject to City Council adoption of the Ordinance, the City Clerk would schedule the Second Reading of the proposed Ordinance for the May 26, 2026, City Council meeting. The Ordinance would become effective 30-days after the Second Reading.
Reviewed for Fiscal Impact:
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Siamlu Cox
Attachments:
A. Pacific Franchise Ordinance No. 2004-02-1326
B. Proposed Zenith Franchise Ordinance
C. Exhibit A - Zenith Map of Pipelines
D. Exhibit B - Schedule of Charges