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Minutes 2008-09-15 SPMINUTES SPECIAL MEETING OF THE CITY COUNCIL MONDAY, SEPTEMBER 15, 2008 SOUTH COUNTY REGIONAL CENTER, 800 W. BRANCH STREET ARROYO GRANDE, CALIFORNIA 1. CALL TO ORDER Mayor Ferrara called the meeting to order at 6:00 p.m. 2. ROLL CALL Mayor Tony Ferrara, Mayor Pro Tem Chuck Fellows, Council Member Joe Costello, Council Member Jim Guthrie, and Council Member Ed Arnold were present. Staff members present were City Manager Steve Adams, City Attorney Tim Carmel, Director of Administrative Services/City Clerk Kelly Wetmore, and Director of Building and Fire Mike Hubert. 3. FLAG SALUTE Mayor Ferrara led the Pledge of Allegiance. 4. REVIEW POTENTIAL IMPACTS OF THE PROPOSED EXCELARON HUASNA VALLEY OIL PROJECT a) Consideration of staff report, background summary, and analysis. Rob Strong, City of Arroyo Grande Community Development Director, presented the staff report on a San Luis Obispo County project proposal to establish four (4) production oil wells and transportation of crude oil to processing facilities outside of the County from a site 12 miles east of Arroyo Grande in the Huasna Valley; provided a background summary of the proposed project; and presented an overview of issues relating to exploration, testing, and production not addressed in the project description that could result in potential impacts to the City of Arroyo Grande. Mr. Strong also expressed City concerns relating to a number of issues, including but not limited to emergency response and access, timing, whether there was a fire protection plan; on-site storage of hazardous materials; and air quality. b) Update on status of County review process. John McKenzie, Environmental Specialist, County of San Luis Obispo Planning Department, gave a presentation on the proposed Excelaron/Mankins Conditional Use Permit application, which included an overview of the revised project description; a vicinity map; a revised haul route through the Porter Ranch; environmental issues relating to the City of Arroyo Grande (transportation, hazardous materials and wastes, and fire safety); other issues (aesthetics, agriculture, air quality, biological/cultural/geological resources, noise, water, wastewater); required monitoring of the project by the County and other identified primary agencies; and an overview of the remaining steps in the review process. Mr. McKenzie noted that there would be an additional public information meeting concerning the project on September 18, 2008 at 6:00 p.m. at the South County Regional Center and a public hearing for the County Planning Commission was tentatively scheduled for November 13, 2008 or December 11, 2008. Council Member Arnold asked what assurances the City has that trucks won't go though the City. Mr. McKenzie replied that, if approved, the County use permit would require on-site Special City Council Meeting Minutes September 15, 2008 Page 2 monitoring and because it is a discretionary permit, it can be revoked if the applicant fails to comply with the conditions. Mayor Pro Tem Fellows referred to all project traffic going back and forth through the Porter Ranch easement, and asked for clarification on other traffic, including employees and propane trucks. Mr. McKenzie replied that service delivery vehicles are not required to use the access road. Mayor Pro Tem Fellows asked about the current zoning of the property. Mr. McKenzie responded the property was zoned Agriculture. Mayor Pro Tem Fellows asked if the Use Permit were approved and the project was sold to another company, would the conditions still apply. Mr. McKenzie responded that the conditions run with the land and the permit. Mayor Pro Tem Fellows stated he had asked Ms. Florence, the applicant's representative, if the easement agreement was signed and he was assured it was. Mr. McKenzie stated he had not yet seen a copy yet; however, securing of an easement agreement would be a condition of approval of the permit. Council Member Guthrie asked for clarification about how the number of daily truck trips was calculated for these four wells. Mr. McKenzie explained that the total was calculated based on an average of 22 trips per day during construction, 8 tanker/haul truck trips per day, over a 20- year period. Mayor Ferrara asked if production would cease if there was potential route interruption on Highway 166 and if the same conditions would apply. Mr. McKenzie answered yes, there would be no other road to take. Mayor Pro Tem Fellows referred to staff's recommendation to request additional information from the applicant and the County and asked what kind of information that would be. Director Strong responded that the City would like to see more information regarding a fire protection plan, and until the City is able to review the proposed Mitigated Negative Declaration, there were unanswered questions regarding the number of employees, hours of operation, types of trips/equipment; fire response times; and air quality issues. Mayor Pro Tem Fellows commented that the County was requesting a response within 14 days, so this meeting was timely. Mayor Ferrara acknowledged that San Luis Obispo County Supervisors Jim Patterson and Katcho Achadjian were present. Katcho Achadjian, 4`h District Supervisor, thanked the Council and the City for its efforts. He commented the agencies always work together and acknowledged that he had invited City representatives to attend the first town hall meeting. He announced that he would be hosting another town hall meeting to hear concerns about the proposed project at 5:30 p.m. on Thursday, September 18, 2008 at the S. County Regional Center. Jim Patterson, 5`" District Supervisor and Chairman of the Board, acknowledged he was present to listen to the Council and public input. Special City Council Meeting Minutes September 15, 2008 Page 3 c) Public comment from representatives of the Huasna Valley Association. Ron Skinner, representing Huasna Valley Association, provided background information and public opinion regarding the Huasna Valley; spoke of the history of oil exploration and drilling in Huasna Valley; expressed concerns over the large amount of traffic for potentially low production of oil; that he believed it was Excelaron's intention to drill more than four (4) wells in order to make the venture commercially feasible; that hot water would be used instead of steam to extract oil; that there would be an extensive use of propane (and excessive energy); that they would like to see a fair analysis of the project and consideration of environmental impacts; that a comprehensive traffic survey should be done of Huasna Road to address traffic impacts; that tank trucks cannot traverse Huasna Road without crossing the centerline; that there were a number of violations of the mitigation measures during the 1980 project; that the proposed alternate route has potential serious problems (i.e., no turnout on Hwy 166, blind corner, and Porter Ranch dirt road is subject to seasonal conditions); that the soils are subject to liquefaction; that the Huasna Valley Bridge cannot support the heavy truck traffic; that Huasna Townsite Road is in poor condition; and that there are air, water, and noise pollution impacts to Huasna Valley residents. He asked for the City's support of these concerns; wants no harm to wildlife in Huasna Valley; that they are also concerned about pollution; other companies taking over the project; fires and use of propane; propane trucks traveling along school bus routes; lack of monitoring and enforcement; that the project is precedent setting for oil drilling in other local areas; that resources are leaving the County and not staying locally; the project would produce a lot of greenhouse gasses; and economic benefits of the project are low, particularly local benefits. He concluded by stating that the project should require an Environmental Impact Report; there should be alternatives identified; perhaps discussion of a pipeline; and that power be taken to the site instead of propane. He also encouraged a "no project" alternative. He further suggested that the County needs a comprehensive Energy Resources ManagemenUDevelopment Policy. Mayor Ferrara clarified that the Council would be taking action at this meeting; however, he stated that the City's authority stops at its boundaries. d) Public comment -Members of the public wishing to address the City Council on this item may do so when recognized by the Mayor. The following members of the public addressed the Council expressing opposition to the project due to concerns regarding the proposed project's potential negative impacts on real estate values; the area's culture; traffic; access routes; road conditions; energy resources; noise; existing water resources; and existing agricultural resources; as well as concerns that the private property access easement would be opened up to the public in the future; that additional wells could be added to the project in the future; lack of adequate fire department protection; and who would monitor and enforce the County's conditions of approval on the permit: Holly Ziegler; Richard Waller; Terry Simons; Peter Keith; Grant Dorman; Ardith Linsteadt; Stan Sharpe; Mona Tucker; Susan Flores; Tracy Del Rio; Betty Tolson; Trudy Jarratt; Les Dorman; Susan Pilj; Ron Skinner; Lyn Schultz; Mike McConville; and Barry Brown. Mayor Ferrara closed the public comment period and called for a break at 7:50 p.m. The Council reconvened at 8:00 p.m. Special City Council Meeting Minutes September 15, 2008 Page 4 Mr. McKenzie responded to additional questions raised by staff and the public as follows: • The applicant estimates it will take three months to drill the four wells; • No trip reduction measures have been proposed; there are three employees each working an eight hour shift over a 24-hour period; • Construction truck trips would be through the Porter Ranch road easement and not through the City; • The access road is a seasonal route; production would continue to fill the tanks/trucks, however, trucks would not travel during inclement weather events until the roads are clear; • Hazardous waste would be put in barrels and transported off-site via the Porter Ranch route; • There is no proposed rezoning of the property; the proposed activity is an allowed use in the Agricultural zone; • The proposed access road would not open to public use because it is private easement which would be renewed every three years and would be gated; • The applicant would pay for monitoring; the County would determine how much monitoring would be required, the associated cost, and would set up a trust fund to administer; frequency of monitoring would depend on project activity; • The applicant would be subject to the same review process for adding more wells in the future; • The State Division of Oil, Gas, & Geothermal Resources (DOGGR) has its own permitting process; however, the Land Use Permit is issued by the County and is specific for four wells and the number of associated issues; if conditions change, it would require an amendment to the Use Permit and the same process that is currently undervvay. e) Recommended Action: Direct staff to prepare a letter to the SLO County Board of Supervisors regarding the Excelaron project, consistent with Council direction, and authorize the Mayor to execute the letter on behalf of the City. Council Member Costello thanked County staff and the public for comments; clarified that the Council is looking only at potential impacts to the City; encouraged the public to continue attending County public meetings regarding the project; noted that there are a number of issues that need answers or clarification, including fire and emergency services. He noted that it did not appear the applicant is asking for City fire services, however, the City may have an obligation to respond in an emergency under the current aid agreement. As far as road use, he noted that the applicant would not use City streets, but questioned how long the City could expect that to last; he believed that the project would require daily monitoring of the roadways. He stated there may be some economic impacts to the City, but they are unclear. He concluded by noting that inclement weather may be a factor which could affect road conditions and stated that the City needs more assurances that the City would be protected. Council Member Arnold commented on impacts that directly affect the City; inquired whether empty trucks would come back through Porter Ranch; stated that the empty trucks and propane trucks should not go through the City and should go through the Porter Ranch access road; expressed concern about the fire station/response issue; expressed concern about setting a precedent for oil drilling in other local areas and that Countywide policies need to be in place on how to deal with these issues; expressed concern about impacts to Lopez; expressed concern about recurring violations of the permit and suggested that the City should have some enforcement authority over the truck traffic. He believed that a new Environmental Impact Report is needed to reflect today's conditions; expressed concern about water quality and quantity issues and the chemicals used to draw water from the wells; expressed concern about the potential for adding extra wells in the future; understood the jurisdictional issues; and expressed concern about issues of transfer to another company and issues of entitlements. He Special City Council Meeting Minutes September 15, 2008 Page 5 concluded by stating that he could not believe that oil operations are allowed on agricultural land. Council Member Guthrie agreed with the fire concerns and acknowledged that all fire departments would respond in some way if there was an oil fire; stated there should be adequate fire protection and compensation; noted that if the alternate access route works out, the City would not be affected; expressed concern with air quality issues and associated air pollution effects; stated that an Environmental Impact Report is appropriate for this project; stated this could be the first of a series of applications and if there are other operations proposed in the future, there is a need to have clear measures in place; commented that this is a marginal oil field and if there is a major mistake, it is not likely it would be fixed. He concluded by stating that the project should be clearly defined so that if there were any changes, there would be a full review. Mayor Pro Tem Fellows agreed that a new Environmental Impact Report is needed; commented there could be benefits to Excelaron, but only negative impacts to County and City residents; commented on the number of organizations that have been working to revitalize the Village, and that it would be a detriment to the Village merchants and residents if trucks come through the Village; does not see any significant benefits to national security or the economy if it's true that the amount of oil is minor and not high quality; expressed concern about impacts to existing water resources; expressed concern about the use of propane and the potential for fire; expressed concern about existing road conditions in the event of an emergency; and stated that if the permit is approved by the County, it should be limited to no more than four wells. He said if the operation continues, there should be a first class operation out there including water clean- up and recycled, a pipeline out to Highway 166 to eliminate truck traffic on substandard roads, and adequate, nearby fire suppression capabilities such as a CDF station. He concluded by stating he opposed the use permit. Mayor Ferrara stated that water quality and supply is an important regional issue and the City has an established pattern of assisting neighbors outside City limits; noted that the County may need to enter into Agreements that could impact water supply; noted that air quality impacts and concerns should be included in the scope of study; expressed concern about traffic impacts relating to routing and transportation of propane and other hazardous materials; spoke of the City's efforts to reduce truck traffic through the Village; stated that noise impacts to the Village are unacceptable; noted that County Planning must work with the regulations and policies in place, referred to appropriate uses in the Agricultural zone, and suggested the County needs to review industrial uses in agricultural zones; commented that once Highway 227 through the Village is relinquished from Caltrans, the City would have more authority over permits, traffic issues, and enforcement; acknowledged the fire response issues and public safety resources to be devoted to the site and wants to ensure reimbursements are accounted for; wants clarification concerning County versus State and Federal permitting processes as it relates to expanding the number of wells in the future; acknowledged the Energy Resources Development Plan and Energy Resources Policy effort currently underway and stated that the City would like to be part of the process to balance three key issues: quality of life, economic benefit, and tourism impacts. He concluded by suggesting that Lucia Mar Unified School District officials be included in this review process as it relates to project related traffic and buses. Action: Council Member Costello moved to direct staff to prepare a letter to the SLO County Board of Supervisors regarding the Excelaron project, consistent with comments and direction made by the Council, and authorize the Mayor to execute the letter. Mayor Pro Tem Fellows seconded, and the motion carried on the following roll-call vote: Special City Council Meefing Minufes September 15, 2008 Page 6 AYES: Costello, Fellows, Guthrie, Arnold, Ferrara NOES: None ABSENT: None 6. ADJOURNMENT Mayor Ferrara adjourned the Special Meeting at 8:40 Meeting on Tuesday, S tember 23, 2008 at 7:00 p.m. Tony err yor ATTEST: Kelly Wetm r ity Clerk (Approved at CC Mtg lo-ly-ZO°8 1 p. m. to the next Regular Ciry Council