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City Council OKs Renewal of Oil Pipeline Agreement

Phil Brock For Council 2014

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By Jonathan Friedman
Associate Editor

July 16, 2014 -- Crude petroleum will continue to flow through Santa Monica via an underground 10-inch pipeline for at least another 10 years. The City Council last week approved a new franchise agreement with Crimson California Pipeline for the oil carrier that has been in operation since 1941.

There was no public comment and only one council member spoke about the item before the unanimous vote was taken. This is not surprising because, as Councilmember Kevin McKeown said, the pipeline is mostly regulated by the California Public Utilities Commission.

“If we were being asked tonight to authorize putting in this pipeline, I’d feel very differently, but … we really don’t have a lot of leeway,” said McKeown prior to making a motion to approve the agreement.

Public Works Director Martin Pastucha noted in the staff report that the council rejecting an agreement with Crimson would not necessarily put an end to the company’s operation in Santa Monica.

“Should a franchise be rejected, Crimson, operating as a regulated common carrier pipeline utility, may have eminent domain and other rights under state law that may allow it to continue to operate the pipeline,” Pastucha wrote.

A proposal for a 20-year agreement was before the council in March, but concerns were raised by council members and neighborhood activists that this was too long of a period to wait until the City would get another chance to review the safety and other features of the pipeline. So the council asked for the lifetime of the agreement to be cut in half.

Crimson will pay the City $103,000 to cover a franchise fee and administrative costs. Also, the company must pay any costs related to an oil spill or release and maintain insurance coverage of at least $45 million.

The approximately 85-mile-long pipeline stretches from Ventura County to an oil refinery in South Los Angeles.

Crimson has separate agreements with each of the governments of the areas through which the pipeline passes. The 3.9-mile Santa Monica portion stretches along portions of Cloverfield Boulevard as well as 23rd and 26th streets.

When the pipeline was installed shortly before the United State’s entry into World War II, the City went into a 40-year agreement with then-operator Shell, according to Pastucha’s staff report.

The agreement was not extended when it was up for renewal in 1981, but continued operating while the City and Shell fought in federal court over the franchise fee, according to an article published in the Los Angeles Times in 1989.

A 20-year agreement was approved in August 1989. Shell sold its rights for the pipeline and the franchise agreement to Crimson in 2005.

Although the agreement expired in 2009, Crimson continued to operate the pipeline in accordance with the regulations set in 1989, according to Pastucha’s report.

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