La Habra Heights Municipal Code Ch. 10.4 Pipeline Franchises

The purpose of this Chapter is to establish regulations governing pipeline franchises. This Chapter may be cited as the La Habra Heights Pipeline Franchise Ordinance.

Every pipeline franchise granted by the City is subject to the requirements of this Chapter provided, however, that if the agreement granting a franchise specifies provisions that augment, modify, or waive the requirements of this Chapter, then such provisions will control. A franchise granted under this Chapter also authorizes service connections required for the operation of pipes or pipelines, including power supply, conduits, cathodic protection devices, wires, cables and other appurtenances that are necessary or convenient for the exercise of the franchisee’s business.

This Section identifies specific requirements applicable to pipeline franchises. The provisions of this Chapter apply to every franchise to lay or construct pipes and pipelines, and to maintain, operate, renew, repair, change the size of, remove, or abandon in place pipes and pipelines in, under, along, or across streets or public or private property within the City. Pipes and pipelines may be authorized, together with manholes, valves and appurtenances, for the collection, transportation, or distribution of oil, gas, and other substances.

A. Pole Lines. Nothing in this Chapter or in any agreement granting a franchise may be
construed to permit the franchisee to install new poles or other facilities above ground.

B. Term. The agreement granting the franchise may establish the term of the franchise, but no
franchise may be for a term in excess of ten (10) years.

C. Acceptance of Franchise. Within thirty (30) days after the City Council’s adoption of an
agreement granting a franchise, the franchisee must file with the City Clerk its written
acceptance of that agreement.

D. Nonexclusive Franchise. The grant of a franchise does not preclude the City from granting
an identical or similar franchise to another person.

E. Change in Status. After being awarded a franchise, if a nonpublic utility franchisee
qualifies with the California Public Utilities Commission as a public utility, that franchisee
may not, unless otherwise authorized by State law, continue to operate under the franchise
unless it obtains the consent of the City Council. If the franchisee is the operator of a non-
public utility pipeline transmitting oil or products of oil, or other liquids or gases, that
consent may be granted only upon the franchisee’s compliance with the provisions of this
Code.

F. Maps. Within ninety (90) days after the date on which any facilities or appurtenances have
been laid, removed or abandoned under the franchise, the franchisee must file with the
Community Development Department a map or maps accurately showing the "as built"
location, depth, and size of those facilities or appurtenances.

G. Insurance. On or before commencement of any franchise operations, the franchisee must
provide satisfactory evidence of having obtained policies of comprehensive general
liability and workers’ compensation insurance from companies authorized to transact
business as insurers in the State of California. The following insurance requirements shall
apply:

1. The policy of comprehensive general liability insurance must be issued to the
franchisee and name the City, its officers, agents, and employees as additional
insured’s.

2. The insurance policy must indemnify the City against all liability for personal and
bodily injury, death, and damage to property arising from activities conducted
pursuant to the franchise and provide for the following:

a. Coverage for acts or omissions of the franchisee, its agents, servants and
employees, committed in the conduct of franchise operations;

b. A combined single-limit liability insurance coverage in the amount of ten
million ($10,000,000.00) dollars.

c. No cancellation or modification without thirty (30) days’ prior written notice to
the City.

3. The policy of workers’ compensation insurance must:

a. Be in a form and substance previously approved by the California Insurance
Commissioner.

b. Cover all employees of franchisee who will be employed or do work related to
the franchise operations.

c. Provide for benefits and payments as required by Division 4 of the California
Labor Code, including vocational rehabilitation and death benefits.

d. Be non-cancelable and non-modifiable without thirty (30) days’ prior written
notice to the Community Development Director.

4. Franchisee must file with the Community Development Director, prior to
commencement of any franchise operations, either certified copies of the required
insurance policies, or a certificate of insurance for each of the required policies,
executed by the insurer issuing the policy, and containing the following information
with respect to each policy:

a. The policy number.

b. The effective date of the policy, and its expiration date.

c. The name of the insured and of any additional insureds.

d. The type and limits of coverage provided by the policy.

e. A description of all endorsements that form a part of the policy.

5. No franchise operations may commence until franchisee has complied with the
provisions of this section. All franchise operations will be suspended during any period that franchisee fails to keep in effect the required insurance policies.

H. Faithful Performance Bond. On or before the effective date of the ordinance granting the
franchise, franchisee must file with the Community Development Director a corporate
surety bond, approved as to form by the City Attorney, in the penal sum of one hundred
thousand ($100,000.00) dollars or such larger sum as may hereafter be established by the
City Council. This bond must be issued by an admitted surety insurer approved by the
Director and the City Attorney, and provide that franchisee will perform each condition of
the franchise and that, upon any breach of condition of the bond, the whole amount of the
penal sum will be deemed to be liquidated damages and will be recoverable from the
principal and sureties on the bond. If this bond is not filed before the effective date of the
ordinance granting the franchise, the award of the franchise may be set aside and the
ordinance granting the franchise may be repealed. If these actions are taken by the City
Council, any money paid in consideration for the award of the franchise will be forfeited.
After it has been filed, if the bond becomes insufficient at any time during the term of the
franchise, the franchisee must obtain a new bond, in a form approved by the City Attorney,
within ten (10) days after written notice is given by the Director.

I. Alternate Security. In lieu of the bond required under Subsection H of this Section, the
franchisee may provide alternate security in such form as approved by the Director and the
City Attorney.

J. Forfeiture. The franchisee must comply with all conditions contained in the ordinance granting the franchise, including those conditions contained in this Chapter that are not augmented, modified or waived by that ordinance. Any failure by the franchisee to comply with any conditions of the franchise will constitute grounds for its suspension or forfeiture. Before any suspension or forfeiture of the franchise, the City must give to the franchisee not less than thirty (30) days’ written notice of any default. Within the noticed period, if the franchisee does not commence the work of compliance or, after commencing, does not prosecute the work with due diligence to completion, the City Council may hold a hearing. Notice of the hearing must be given to the franchisee by certified mail not less than five (5) days before the hearing. At that hearing the franchisee has the right to appear and be heard. The City Council may then determine whether the conditions are material to the operation of the franchise and whether the franchisee is in default of those conditions. The City Council may, in its discretion, declare the franchise suspended or forfeited.

K. Value of Franchise. If a franchise is awarded to a grantee that is a public utility, the
grantee, by accepting its terms and conditions, agrees that in any proceeding to adjust the
rates of the grantee, no greater value may be placed upon the franchise than the actual
amount paid for it by the grantee.

L. State Highway. If any street or portion of a street becomes a State highway, the State will
succeed to all rights reserved to the City by the franchise, except for the right to continue
to collect franchise payments and such other rights as by law may remain with the City.
This section applies to any street or portion of a street that becomes a State highway and in
which the franchisee maintains its facilities under the authorization of the franchise at the
time that street or portion of it becomes a State highway.

M. Eminent Domain. No franchise granted by the City affects the right of the City or any
successor in authority to acquire the property of the franchisee by purchase or
condemnation, and nothing contained in the franchise may be construed to contract away, modify, or abridge, either for a term or in perpetuity, the City’s right of eminent domain in
respect to any public or nonpublic utility.

N. Publication Costs. Within thirty (30) days after receiving an itemized statement, the franchisee must pay to the City all advertising and publication costs that are incurred in granting the franchise.

O. Assignment. The franchisee may not transfer or assign the franchise, or any part of it,
except with the consent of the City Council. A transfer or assignment may be made only
after filing with the City Council a copy of the executed instrument of transfer or
assignment and a written request for the consent of the City Council to that transfer or
assignment. If that executed instrument and written request are not filed with the City
Council within thirty (30) days prior to the effective date of the proposed transfer or
assignment, then the franchise is subject to forfeiture and the City Council may, without
notice, adopt an ordinance repealing the franchise. In consenting to the proposed transfer
or assignment, the City Council may impose any additional terms and conditions upon the
franchise, and upon the transferee or assignee, that the City Council deems to be in the
public interest. The franchisee has no right to transfer or assign the franchise, in whole or
in part, except in the manner specified by City Council terms and conditions. This section
applies to any assignment, whether by operation of law, by voluntary act of the franchisee,
or otherwise.

P. Prior Franchises. All facilities erected, constructed, laid, operated, or maintained by the
franchisee in the streets or other areas described in the agreement granting the franchise,
whether or not originally installed by the franchisee, and which are in existence prior to the
effective date of the agreement, are subject to all terms and conditions of the agreement
upon its effective date. This section does not apply to facilities that have been constructed,
laid, operated, or maintained under a prior right that did not involve the issuance of a
franchise.

Q. Delegation of Duties. Wherever in this ordinance a power is granted to or a duty is
imposed upon a public officer or employee, the power may be exercised or the duty may
be performed by a deputy of that officer or employee or by a person otherwise duly
authorized by statute or by ordinance.

R. Hold Harmless. The franchisee will indemnify, defend (with counsel acceptable to the
City), and hold harmless the City, its officers, agents, and employees, from and against all
damages and liability arising from the use, operation, or possession of the franchise, and
from the use, operation, and maintenance of all facilities erected, constructed, laid, operated
or maintained under the franchise. This indemnification also applies to pipelines that are to
be abandoned under the provisions of this Chapter.

S. Standards. All facilities erected, constructed, laid, operated, or maintained under the
provisions of the franchise must comply with all ordinances, rules and regulations now
existing or hereafter adopted by the City and consistent with the best practices in the
industry.

T. Conflicting Improvements. If the City or any other authorized public entity constructs or
maintains any storm drain, sewer structure, reclaimed or potable water line, or other facility
or improvement under or across any facility of the franchisee that is maintained in
accordance with the ordinance, the franchisee must provide, at no expense to the City or
other public entity, such support as is reasonably required for the support, maintenance and protection of that facility or improvement.

In connection with any work of improvement specified in this Chapter, if the franchisee, after reasonable notice, fails or refuses to relocate, permanently or temporarily, its facilities that are located in, on, upon, along, under, over, across, or above any street, or to pave, surface, grade, repave, resurface or re-grade a street as required under any provision of the franchise, then the City may cause that work to be done. The City must keep an itemized account of the entire cost of that work, and the franchisee must reimburse the City for that cost within thirty (30) days after its receipt of an itemized account of that cost. The franchisee is obligated to indemnify, defend, and hold harmless the City, its officers, agents, and employees, from any liability that arises or is claimed to arise, from the moving, cutting, or alteration of any of the franchisee’s facilities, or the turning on or off of water, oil, or other liquid, or of gas or electricity.

If any portion of a street is damaged as a result of defective facilities laid or constructed under the franchise, the franchisee must, at its sole expense, repair that damage and restore the street to the condition existing before the damage was incurred, all to the satisfaction of the City. If the franchisee, within ten (10) days after receipt of written notice from the City instructing it to repair the damage, fails to commence compliance with those instructions, or, after commencing compliance, fails to prosecute diligently the work to completion, then the City may immediately undertake whatever work is necessary to carry out those instructions. That work will be at the cost and expense of the franchisee. By the acceptance of the franchise, the franchisee agrees to pay that cost and expense upon demand. If the damage creates an immediate danger to the public health or safety requiring immediate repair, the City may repair that damage without notice, and the franchisee must pay the reasonable cost of that repair upon demand.

Prior to the issuance of an excavation permit for the construction or installation of a new pipeline for the transportation of a hazardous substance in a gaseous state, or for the transportation of hazardous liquid substances or highly volatile liquid substances, the following conditions must be satisfied, as applicable:

A. Approval must be first obtained from the Fire Chief for the installation of pipelines for the
transportation of a hazardous substance in a gaseous state. This approval will be based upon
a determination that no undue fire hazard will threaten life or property in any areas of the
City where the proposed pipeline will be located. In making this determination, the Fire
Chief must consider and report upon the following:

1. The type of substance in a gaseous state that is to be transported in the pipeline.

2. The density of population or structural development in the areas of the City where the
pipeline will be located.

3. The adequacy of water supplies for fire suppression purposes.

4. The availability of public fire protection facilities.

5. The number and location of shut-off valves in the pipeline.

B. With regard to pipelines for the transportation of hazardous liquid substances or highly
volatile substances, including hydrocarbon substances, the franchisee must, unless
preempted by paramount State or Federal law, submit to the Community Development
Director, copies of documents previously submitted to the State Fire Marshal that provides
evidence for the following:

1. That the new pipeline is designed to accommodate the passage of instrumented
inspection devices and that the operator has leak mitigation and emergency response
plans and equipment required by the State Fire Marshal, as provided for in the
California Government Code.

2. That the newly constructed pipeline will be tested in accordance with Subpart E
(commencing with Section 195.300) of Part 195 of Title 49 of the Code of Federal
Regulations, as provided for in the California Government Code.

3. That the franchisee will notify the State Fire Marshal and the City Fire Department at
least three (3) working days prior to conducting a hydrostatic test required by the
Elder California Pipeline Safety Act of 1981 (Government Code Section 51010 et
seq.), as provided for in the California Government Code.

4. That the franchisee will provide to the City Fire Department a map or suitable diagram showing the location of the pipeline, a description of all products to be transported within the pipeline, and a contingency plan for pipeline emergencies that includes, without limitation, any reasonable information that the State Fire Marshal may require, as provided for in the California Government Code. 5. That the franchisee will be available to meet with the City Fire Department at least once each calendar year to discuss and review contingency plans for pipeline emergencies, as provided for in the California Government Code. 6. That, with regard to any portion of the proposed pipeline that is within five hundred (500) feet of any rail line in the City, the franchisee will be in compliance with all applicable regulations adopted by the State Fire Marshal governing the construction, testing, operations, periodic inspection, and emergency operations of intrastate hazardous liquid pipelines, as provided for in the California Government Code. 7. That the franchisee will comply with all applicable regulations of the State Fire Marshal that establish procedures for maintaining, testing, and inspecting mainline valves and check valves on the intrastate hazardous liquid pipeline, as provided for in the California Government Code. 8. That the franchisee will be in compliance with all applicable guidelines and regulations of the State Fire Marshal relating to the spacing of valves on new pipelines so as to limit spillage as provided for in the California Government Code. 9. That the franchisee will immediately report to the City Fire Department, as well as the Office of Emergency Services, every rupture, explosion, or fire involving the pipeline, including the testing of such pipeline, as provided for in the California Government Code.

A franchisee may not install or operate any facilities in any public street, highway, road, alley or other public place without first obtaining the prior approval of the City Council. The City Council may approve the location of the facilities as requested by the franchisee in its application for a franchise, which approval may be adopted concurrently with the adoption of an agreement granting the franchise. The locations of additional facilities, if any, must be approved by subsequent approvals of the City Council.

Any damage caused directly or indirectly to any public property by the franchisee, while exercising any right, power, or privilege under a franchise, or while performing any duty under the provisions of this section, must be promptly reported by franchisee to the Community Development Director. At the direction of the Community Development Director, such damage shall be promptly repaired at the franchisee’s sole cost and expense to specifications reasonably established by the Community Development Director or by the authorized representative of any non-City public entity which owns or controls the property in issue.

If a legal action is instituted to enforce any terms and conditions of a franchise granted under Chapters 10.4 through 10.8, or to recover damages attributable to an alleged breach of the terms and conditions of that franchise, the prevailing party is entitled to recover from the losing party all reasonable costs and expenses incurred in that litigation and such amount as the court may determine to be reasonable attorney’s fees for the representation of the prevailing party in that action.