08.f. Transfer of ConocoPhillips to Phillips 66MEMORANDUM
TO: CITY COUNCIL
FROM: TIMOTHY J. CARMEL, CITY ATTORNEY -r
SUBJECT: CONSIDERATION OF A RESOLUTION CONSENTING TO A
TRANSFER OF A PIPELINE FRANCHISE AGREEMENT FROM
CONOCOPHILLIPS PIPE LINE COMPANY TO PHILLIPS 66 PIPELINE
LLC
DATE: JULY 10,2012
RECOMMENDATION:
It is recommended the City Council adopt a Resolution consenting to a transfer of An
Agreement Granting to Unocal California Pipeline Company, a California Corporation, a
Franchise to Construct, Operate, and Maintain Pipelines for the Transportation of Oil
and Other Specified Materials in the City of Arroyo Grande, State of California (the
"Pipeline Franchise Agreement") from ConocoPhillips Pipe Line Company ("Conoco") to
Phillips 66 Pipeline LLC ("Phillips 66").
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
All City costs and expenses related to the review and processing of the proposed
transfer have been paid by Conoco through a payment of a twenty thousand dollar
($20,000) transfer fee. No financial impact is projected.
BACKGROUND:
On November 9, 1999 the City entered into the Pipeline Franchise Agreement granting
Conoco's predecessor a non-exclusive franchise to construct, maintain and operate a
pipeline to transport oil and other petroleum based materials. The Pipeline Franchise
Agreement requires the City's prior written consent before it may be transferred to any
other entity. On May 1, 2012, the City received a letter from Conoco requesting that the
City approve the transfer of the Pipeline Franchise Agreement from Conoco to Phillips
66.
ANALYSIS OF ISSUES:
Conoco has changed its name to Phillips 66 Pipeline LLC and has converted to a
limited liability company. Phillips 66 will be a subsidiary of ConocoPhillips Company.
City staff has carefully reviewed a large volume of relevant documents related to the
transfer and has determined that Phillips 66 has the necessary financial stability and
operational experience to satisfactorily operate the franchise pursuant to the terms and
conditions of the Pipeline Franchise Agreement and that the transfer is in the public
Agenda Item 8.f.
Page 1
CITY COUNCIL
CONSIDERATION OF A RESOLUTION CONSENTING TO A TRANSFER OF A
PIPELINE FRANCHISE AGREEMENT FROM CONOCOPHILLIPS PIPE LINE
COMPANY TO PHILLIPS 66 PIPELINE LLC
JULY 10,2012
PAGE 2
interest. Therefore, staff recommends that the Council adopt the attached Resolution
consenting to the transfer.
ALTERNATIVES:
-The following alternatives are provided for the Council's consideration: - Approve staffs recommendation;
- Do not approve staffs recommendation; and - Provide direction to staff.
ADVANTAGES:
'The City will be able to continue to receive its franchise fees under the Pipeline
Franchise Agreement.
DISADVANTAGES:
'There are no disadvantages identified.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted in front of City Hall on Thursday, July 5, 2012. The Agenda
and report were posted on the City's website on Friday, July 6, 2012. No public
comments were received.
Agenda Item 8.f.
Page 2
RESOLUTION NO.
A RESOLU'TION OF 'THE CITY COUNCIL OF THE CITY OF ARROYO
GRANDE CONSEN'TING TO THE TRANSFER OF A FRANCHISE TO
CONSTRUCT, OPERATE AND MAINTAIN PIPELINES FROM CONOCO
PHILLIPS PIPE LINE COMPANY TO PHILLIPS 66 PIPELINE LLC
WHEREAS, on November 9, 1999, the City of Arroyo Grande ("City") entered into "An
Agreement Granting to Unocal California Pipeline Company, a California Corporation, a
Franchise to Construct, Operate, and Maintain Pipe Lines for the Transportation of Oil,
and Other Specified Materials, in the City of Arroyo Grande, State of California" (the
"Pipeline Franchise Agreement"); and
WHEREAS, on July 26, 2005, the City consented to a transfer of the Pipeline Franchise
Agreement from Unocal California Pipeline Company to ConocoPhillips Pipe Line
Company ("ConocoPhillips"); and
WHEREAS, by letter dated May 1,2012, ConocoPhillips requested the City's consent to
transfer the Pipeline Franchise Agreement from ConocoPhillips to Phillips 66 Pipeline
LLC ("Phillips 66"); and
WHEREAS, upon a comprehensive review of the financial stability and operational
experience of Phillips 66, the City Council finds that Phillips 66 satisfies the transfer
requirements and criteria set forth in the Pipeline Franchise Agreement and that the
change in control of the franchise is in the best interests of the public.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Arroyo
Grande does hereby consent to the transfer and change in control of the Pipeline
Franchise Agreement from ConocoPhillips to Philips 66, subject to the following
requirements:
1. Phillips 66 shall agree in writing to be bound by all terms and conditions of the
Pipeline Franchise Agreement and shall comply with all City rules, regulations and
policies.
2. Phillips 66 shall pay to the City a transfer fee in the amount of twenty thousand
dollars ($20,000) to defer all costs and expenses incurred by the City in reviewing
the transaction, and in processing the necessary papework related to the transfer
and change in control of the franchise.
On motion of Council Member , seconded by Council Member
, and on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this day of
Agenda Item 8.f.
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RESOLUTION NO.
PAGE 2
TONY FERRARA, MAYOR
ATTEST:
KELLY WETMORE, ClTY CLERK
APPROVED AS TO CONTENT:
STEVEN ADAMS, ClTY MANAGER
APPROVED AS TO FORM:
TIMOTHY J. CARMEL, ClTY ATTORNEY
Agenda Item 8.f.
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