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HomeMy WebLinkAbout10/6/2026 Item 6g, Floyd, Kacsinta and Symens - Staff Agenda CorrespondenceCity of San Luis Obispo, Council Memorandum City of San Luis Obispo Council Agenda Correspondence DATE: October 6, 2026 TO: Mayor and Council FROM: Christine Dietrick, City Attorney Prepared By: Sadie Symens, Deputy City Attorney Madeline Kacsinta, Assistant Director of Public Works VIA: Whitney McDonald, City Manager SUBJECT: ITEM #6g - ADOPT A RESOLUTION OF INTENTION TO APPROVE A RENEWED FRANCHISE AGREEMENT WITH PHILLIPS 66 PIPELINE, LLC FOR EXISTING PIPELINES LOCATED WITHIN THE CITY RIGHT- OF-WAY AND SET A PUBLIC HEARING FOR NOVEMBER 17, 2026 Staff received the following questions, regarding the recommendation to adopt a Resolution of Intent to approve a renewed Franchise Agreement with Philips 66. The questions are below with staff’s response shown in italics: 1. Could the City prevent the future construction of additional oil pipelines by eliminating Articles 4 and 5, or would a new ordinance or other action be required? The City does not need to eliminate Articles 4 and 5 or adopt a separate ordinance to prevent future pipeline expansion. Article 1A of the proposed franchise specifically states that there shall be “no expansion of the existing infrastructure or operations within the City without the express prior written consent of the City Council.” This means Phillips 66 cannot construct an additional pipeline within the City without first obtaining approval from the City Council. Articles 4 and 5 establish the requirements and process that would apply if Council were to approve the construction of a new pipeline. These provisions do not give Phillips 66 an independent right to construct new pipelines. Therefore, if Council does not want additional oil pipelines constructed in the City, Council can simply decline to approve a future request for expansion. Council could also choose to renew the franchise on the express condition that no future pipelines will be constructed and modify the proposed Agreement accordingly. If Phillips 66 rejects this revision and an agreement cannot be reached, City staff could pursue decommissioning of the existing lines under the terms of the former franchise agreement (which survived expiration). As discussed above, however, expressly prohibiting expansion within the Agreement is not necessary, but the Council has considerable discretion to do so since it may deny the franchise altogether (California Resources Production Corp v. City of Antioch (2024) 107 Cal.App.5th 481, holding that a city has discretion to deny a requested franchise and need not make findings to do so under Public Utilities Code 6231 et seq.). ITEM #6g - ADOPT A RESOLUTION OF INTENTION TO RENEW FRANCHISE AGREEMENT Page 2 In sum, as the proposed franchise agreement is currently drafted, additional Council action would not be needed to prevent new pipelines; on the contrary, Phillips 66 would have to obtain Council approval (in Council’s sole discretion) in order to expand. 2. What is Phillips 66’s responsibility if an unknown, old or discontinued pipeline is discovered, such as the situation referenced during construction of the LOVR overpass? The franchise provides the City with authority to address abandoned and permanently discontinued pipelines. Under Article 10 of the proposed agreement, the City may require Phillips 66 to relocate any facilities (abandoned or otherwise) for public purposes. Article 11 also expressly reserves to the City “the right to require removal of Grantee’s facilities abandoned in place at any time following the expiration, revocation, or termination of this franchise.” During the term of the franchise, the City can require removal of pipelines that have been permanently discontinued (see Article 11(G)(3).) The specific circumstances of a situation like the LOVR overpass can depend on where the pipeline is located and who owns the underlying property or right-of-way. For example, if a pipeline is located within City right-of-way, the franchise would squarely govern the City's ability to require relocation for a public project. If, as with the Prado Road overpass, the facility is located on property owned by another public agency, additional property rights or agreements may also be involved. In those circumstances, the City would determine the appropriate relocation or removal requirements based on the location of the facility, the applicable property rights, and the provisions of the franchise.