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HomeMy WebLinkAboutAngus Petroleum Corporation - 2009-12-21Council/Agency Meeting Held: Deferred/Continued to: .Ap ve ❑Conditionally Approved ❑Denied i lerk' S nature Council Meeting Date: 12/21/2009 Department ID Number: FD 09-011 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City SUBMITTED BY: Fred A. Wilson, City Adminj PREPARED BY: SUBJECT Duane Olson, Fire Chi Members 162 Request for Approval of Reimbursement Agreement for Oil Production Site Safety Review Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: The City Council is requested to approve the attached reimbursement agreement for an oil production site safety review of the Angus Petroleum Corporation's facility in Huntington Beach. This review is needed to ensure that reactivation of the site proceeds in a safe manner and in accordance with all required statues and regulations. Funding Source: On July 20, 2009 the City Council approved an appropriation of $25,000 for oil production site safety reviews. This funding was placed in the Fire Department Fire Prevention business unit account (10065201.69365). Under the terms of the attached agreement, Angus Petroleum Corporation will be required to reimburse the City for all costs submitted for the site review. Recommended Action: Motion to: Approve the attached reimbursement agreement with Angus Petroleum Corporation for an oil production site safety review. Authorize Mayor and City C1 erk to execute. Alternative Action(s): Do not approve the agreement and direct staff on how to proceed regarding oil production site safety review procedures. REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 12/21/2009 DEPARTMENT ID NUMBER: FD 09-011 Analysis: Periodically the city receives requests for reactivation of oil production facilities. Some of these locations have not been in operation for several years. Before the proposed work can proceed, it is often necessary that a site safety review and inspection be performed. This review and site safety inspection provides assurances that oil production facilities operate in a safe manner. Under the terms of the attached agreement, fee for service charged would be fully reimbursable by the requesting party, Angus Petroleum Corporation. Their Huntington Beach facility has not been in operation for several years and a safety inspection is necessary. This review is required to ensure that the facility is compliant with the City of Huntington Beach Fire Code, applicable city requirements, and other regulatory requirements from agencies such as the California Department of Oil, Gas and Geothermal Resources, California Department of Occupational Safety and Health, Orange County Sanitation District, California Regional Water Quality Control Board, South Coast Air Quality Management District, Department of Toxic Substance Control, County of Orange Health Care Agency, etc. Providing life safety and protection of the environment are paramount responsibilities of the fire department. Performing the proposed site safety review and inspection will provide assurances that this oil production facility operates in a safe manner. Strategic Plan Goal: Maintain and Enhance Public Safety. Environmental Status: The need for site safety reviews and inspection derives from the City of Huntington Beach Fire Code, applicable city requirements and other regulatory requirements, as referenced above. Attachment(s): -2- 12/4/2009 10:40 AM REIMBURSEMENT - PLANNING - AGREEMENT BETWEEN THE CITY OF HUNTINGTON BEACH AND ANGUS PETROLEUM CORPORATION THIS AGREEMENT ("Agreement") is made and entered into this �,/ S7 day of 0 E C Cc� E/� , 2009, by and between the City of Huntington Beach, a municipal corporation of the State of California, hereinafter referred to as "CITY," and ANGUS PETROLEUM CORPORATION, a Delaware Corporation, hereinafter referred to as "ANGUS." WHEREAS, ANGUS has applied for a Permit to Activate Oil Well for the Angus Petroleum Facility ("Facility") located on two parcels commonly referred to as 1901 California Street and 1801 Delaware Street in Huntington Beach (collectively, the "Site"); and Due to the length of time that has passed since ANGUS has conducted production activities at the Site, the City has determined that a Safety Review is required to ensure that the Facility complies with all applicable Huntington Beach Municipal and Fire Code requirements, as well as Huntington Beach Use Permit 88-25; and ANGUS desires to have CITY commit sufficient resources to enable the review to be completed in an expeditious manner; and ANGUS and City wish to provide for the deposit by the ANGUS to provide for the payment of the costs for a third -party consultant to perform the Safety Review on behalf of the City. All activities included in the Safety Review are described in the attached Exhibit NOW, THEREFORE, in consideration of the promises and agreements hereinafter made and exchanged, the parties agree as follows: Page 1 of 6 09-2122.001/37903 1. DEPOSIT AND ANGUS CONTRIBUTION Within thirty days of execution of this Agreement, ANGUS will deposit with the City the amount of Ten Thousand Dollars ($10,000) (the "Deposit") for the completion of a Safety Review as described in Exhibit "A" attached hereto and incorporated herein by this reference. If additional funds are needed for costs relating to the Safety Review, the City shall notify ANGUS either by telephone or in writing prior to incurring such costs. The City shall make written demand upon ANGUS for such funds, and ANGUS shall comply with each demand within fifteen (15) business days thereafter. The Deposit, together with any subsequent deposits made by ANGUS pursuant to the terms of this Agreement (collectively, the "Deposits"), are to be used to pay for the costs fee of a third -party consultant to perform a Safety Review of the Site. In no event is ANGUS required to deposit a cumulative total of more than Fifteen Thousand Dollars ($15,000). The City may draw upon the Deposits from time to time to pay the third -party consultant's fee. If ANGUS fails to make any deposit of funds within the time required herein, the City may suspend all review of the Facility until ANGUS advances the amounts demanded. The City shall provide ANGUS with a written summary of expenditures made from the Deposits, and the unexpended balance thereof, within ten (10) business days of receipt by the City of a written request therefor submitted by ANGUS, provided that the City shall not be required to provide a summary of expenditures more frequently than one time during each calendar month. The cost of providing any such summary shall be charged to the Deposits. The City shall, within ten (10) business days after completion of the Safety Review has been completed, return the then unexpended and unencumbered portion of the Deposits to the ANGUS, without interest. Page 2 of 6 09-2122.001/37903 2. RESPONSIBILITY FOR COSTS The parties acknowledge and agree that notwithstanding anything in this agreement, that ANGUS and/or its successors -in -interest are responsible for any all costs associated with repair, remediation, or replacement work identified by the Safety Review. 3. ASSIGNMENT This Agreement or any right or duty hereunder may not be assigned by either the City or ANGUS; provided, however, that ANGUS shall be entitled to assign its rights and duties under this Agreement in connection with any sale, conveyance or transfer of its interest in the Site. 4. NOTICE Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when (a) personally delivered, (b) if given by electronic communication, whether by telex, telegram or telecopier upon the sender's receipt of an appropriate answer back or other written acknowledgment, of successful transmission, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any other means, upon delivery at the address specified in this Section addressed as follows: ANGUS: Angus Petroleum Corporation 1901 California Street Huntington Beach, CA 92648 District: City of Huntington Beach Attn: Fire Chief 2000 Main Street Huntington Beach, CA 92648 Page 3 of 6 09-2122.001/37903 Each party can change its address for delivery of notice by delivering written notice of such change of address to the other party within twenty (20) days of such change. 5. ATTORNEYS' FEES In the event of the bringing of any action or suit by either party against the other arising out of this Agreement, each party shall bear its own attorneys' fees. 6. SEVERABILITY If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. 7. BINDING ON SUCCESSORS AND ASSIGNS This Agreement shall be binding upon and inure to the benefit of the heirs, successors -in -interest and assigns of the parties hereto. 8. AMENDMENTS This Agreement may be amended or modified only in writing signed by both parties. 9. GOVERNING LAW This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California. 10. USAGE OF WORDS As used herein, the singular of any word includes the plural, and terms in the masculine gender shall include the feminine. 11. NO THIRD PARTY BENEFICIARIES Except as may be specifically provided herein to the contrary, no third party shall be the express or implied beneficiary of this Agreement or any of its provisions, no such third party may bring action at law or in equity with respect thereto. Page 4 of 6 09-2122.001/37903 12. VENUE AND FORM Any action at law or in equity arising under this Agreement brought by any party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of Orange, State of California, and the parties waive all provisions of law providing for the filing, removal or change of venue to any other Court. 13. COUNTERPARTS This Agreement may be executed in counterparts, all of which shall be deemed an original. 14. ENTIRE AGREEMENT This Agreement contains the entire agreement between the parties with respect to the matters provided for herein. There are no oral or written representations, understandings, undertakings or agreements which are not expressly referred to or contained herein, and any such representations, understandings, undertakings or agreements are superseded by this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Deposit Agreement to be executed by and through their authorized officers eD "-Z.1t'_CZn Page 5 of 6 09-2122.001/37903 ANGUS PETROLEUM CORPORATION, a Delaware Cornoration, AND By: rf-� La s P z 'Sr P print me _.._., ....... . ITS: (circle one) Secretary/Chief Financial Officer/Asst. Secretary - Treasurer APPROVED: Administrator CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California 4— City Attorney INITIATED AND APPROVED: Fire Page 6 of 6 09-2122.001/37903 EXHIBIT "A" The Site Safety Review ("Review") shall include site visits with the appropriate departmental and site management personnel. An opening conference will be conducted at the beginning of the site audit to describe the purpose of the audit, schedule interviews with appropriate site personnel, and gather all required documentation, including. I. • Process flow diagrams. • Piping and Instrument Diagrams (P&ID). • Information on materials of construction. • Information on safe operating limits. • Material safety data sheets (MSDS) for process chemicals. • Maximum intended inventories for all storage and process tanks. • Safety system functions for critical equipment such as fire detection and suppression systems, emergency shutdown systems, and firefighting equipment. • Design codes and standards employed for critical equipment. • Electrical classification maps. • Equipment vendor information. • Relief system and design and design basis. II. A mechanical integrity review, including the inspection, maintenance, and testing of critical equipment such as storage and pressure vessels, piping system including valves, emergency shutdown systems, level/pressure/flow transmitters and switches, corrosion control equipment, gas/flame detectors, and pumps. The review will also include a survey of any maintenance procedures and inspection reports, and employee training on the skills needed to perform the maintenance procedures. III. A process Hazard Analysis (PHA). A PHA is a systematic procedure for identifying, evaluating, and controlling potential events that could significantly affect the safety of personnel and operations. The review will include an evaluation of the completeness and accuracy of any PHA information. IV. Management of Change (MOC) and Pre -startup Safety Review (PSSR). Review whether any significant changes to the process or equipment have been properly evaluated for impact on the health and safety of the employees and public, and whether the impact of the change has been communicated to affected employees. 09-2122.001 /37903 1 Once the changes have been made, a Pre -startup Safety Reviews (PSSR) should be performed to ensure that all critical actions have been completed to ensure that the startup of the new or changed process will proceed safely. V. Compliance Audits. Review any available compliance audits perform in-house or by other parties to evaluate whether any audit action items have been completed. VI. Operating Procedures. Review the accuracy and completeness of any process operating procedures, including emergency shutdown procedures. VII. Operator Training. Review any training programs for operators of process equipment. VIII. Emergency Planning and Response. Review the adequacy and maintenance of emergency response equipment available onsite, the completeness and accuracy of any emergency response plans, and the training of emergency responders. As part of this review, SCS will review the Spill Prevention, Control and Countermeasures Plan (SPCC) and Contingency plans. Design capacities for containment structures (berms, dikes, etc.) will be reviewed along with established procedures for responding to releases. IX. Incident Investigations. Review any incident investigations of previous incidents to determine if action items from the investigations have been completed and implemented. X. Hot Work Permits. Review the hot work procedure for the facility (if hot work such as welding, brazing, or buffing is performed at the facility). XI. Risk Management Plan. Determine if the facility has assessed the risk to the nearby public for any likely or "worst -case" scenarios of accidental releases, fires, and explosions. XII. Personal health and safety programs in the following areas (where applicable): • Confined space • Personal Protective Equipment (PPE), including respiratory protection. • Lockout/tagout. • Fire extinguishers. • Fall protection. • Walking and work surfaces including stairways, fixed ladders, and platforms. • Portable ladder and scaffold safety. • Hearing conservation. • Machine guarding. • Chemical hazards. XIII. Review waste management practices for the facility. SCS will review waste disposal records and manifests together with data and reports for release investigations that may have been conducted or are underway. XIV. Examination of selected process safety and personal health and safety program information such as the following: written PSM program manual, equipment and instrument inspection records, training material and records, P&IDs and other process 09-2122.001/37903 2 Nrl safety information, contractor logs, completed hot work permits, previous incident investigation reports, operating procedures, relief system design details, last two compliance audits, initial and re -validation Process Hazard Analysis, completed Management Of Change (MOC) and Pre -Startup Safety Review (PSSR) for major changes, training records and materials, and written health and safety programs. XV. Interviews and discussions with key facility staff involved in PSM and RMP activities; XVI. Use of audit checklists based on the requirements of the California Code of Regulations, Title 5 and 29 CFR 1910 standards. XVII. Physical inspections of facility. ADDITIONAL NOTES: Efforts of the compliance audit will be directed toward sampling major facets of the PSM and health and safety programs performance during period of review, and to uncover any major problem deficiencies. Special emphasis will be placed on reviewing at least 10 percent of all operating and maintenance procedures to insure that the procedures have been properly developed and contain all the required information. Reporting is an essential part of this project, and it will occur on several levels, the first of which is a closing conference preliminary report. At the end of the site audit, a closing conference will be held with all site personnel (or as requested by the client) to discuss the results of the audit findings. A written preliminary report, which summarizes the audit findings for each PSM element, will be discussed during the closing conference. The intention of the closing conference report is to discuss any exceptions to the best practices and any applicable regulatory standard, and to provide management awareness of the areas of concern. A second, more detailed report will focus on exceptions to the regulatory requirements of the California Occupational Safety and Health Division standards. Where an exemption to a regulatory requirement is identified, specific references to the regulatory requirements will be provided in a Recommendation Form, which will be attached to the final report. The final report will include a brief discussion of the audit findings by each topic area. Included are any recommendations listed on the Recommendation Form for each major topic. The report will also include possible remediation action plans to correct the deficiencies found in the audits, with the required resources needed to address the deficiencies. A preliminary draft of the report will be submitted for comments and revisions to all interested parties at the Huntington Beach Fire Department and officials for the Angus facility before a final report is prepared. This final task is an action task that includes meetings to discuss the audit report and findings. 09-2122.001/37903 3 DOUGLAS L. MAHAFFEY MAHAFFEY & ASSOCIATES A PROFESSIONAL- LAW CORPORATION SUITE 320 4 SAN JOAQUIN PLAZA NEWPORT BEACH, CALIFORNIA 92660 (949) 833-1400 FACSIMILE: (949) 263-8736 November 19, 2009 Transmitted via .Land Delivery Jennifer McGrath, Esq. CITY ATTORNEY CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, CA 92648 RE: ANGUS PETROLEUM CORPORATION, a Delaware Corporation Dear Ms. McGrath: OUR FILE NO. 711.03 Enclosed please find Angus Petroleum Corporation's check in the sum of Five Thousand Eight Hundred Sixty Dollars ($S, 860.00) as contained in your email of November 18, 2009. Angus continues to endeavor in a spirit of cooperation and good faith to comply with any and all requirements that the Fire Department has that are consistent with the now vested Conditional Use Permit. Angus is very pleased that, unlike issues currently with the DOGGR, we are working in business cooperative manner with the City. The DOGGR. has on the other hand, inexplicably taken (temporary) positions which directly contradict the holdings in Termo a Luther (2008) 169 Cal App4th 394, 399 which confirm that Angus has established a fundamental vested right under the various governmental permits that it obtained to continue to operate and extract oil from the Huntington Beach facility. As pointed out to the Superior Court in recent Writ Proceedings, the case of Trans -Oceanic Oil Corporation a City of Santa Barbara (1948) 35 Cal.App.2d 776, 797 confirms that once a governmental permit has become vested, it is irrevocable. The court in Trans -Oceanic Oil Corp. v. City of Santa Barbara, supra, stated the rule this way, "[A] permit having issued, the power of a municipality to revoke it is limited. If the permittee does nothing beyond obtaining the permit or fails to comply with reasonable terms or conditions expressed in the permit granted, the proper authorities may revoke it. If a permittee has acquired a vested property right under a permit, the permit cannot be revoked." [Id. at 783-784, emphasis added] They further stated, "[T]he owner of a property right to drill for and extract oil in a proven field acquired under a permit, may not constitutionally be deprived thereof without payment of just compensation except upon a showing that its exercise constitutes a nuisance." [Id. at 7891 As further elaborated on in that decision, governmental agencies have the right to enforce the conditions of permits, as "expressed in the permit granted" and the conditions contained in Angus' Conditional Use Permit would obviously be inclusive in that general statement of law. If Angus violates an expressed condition, and after reasonable notice and opportunity to have procedural protected due process, it ceases to cure the violation, then, obviously, the agency has a right to then seek revocation of the permit for non-compliance, of the expressed condition. Their decision, however, is subject to an independent standard of review by the Superior Court, who reviews the entire record, and all other related evidence, de novo. Termo, supra, at 406. Angus is not aware of any non-compliance of any expressed conditions its original Conditional Use Permit that would provide grounds for revocation. It is not a facility whose wells can be called idle, and its temporary cessation of production is not relevant to its CUP. After a careful review of all 55+ conditions, Angus is confident it has meticulously complied. Notwithstanding, Angus will continue to work in good faith to address these recent requests and comply with the Fire Department's safety concerns in order to work harmoniously with the City. If, however, a request becomes unreasonable and it appears that it is not consistent with the original expressed conditions of the Conditional Use Permit, but appears to be a modification or added condition, Angus would, of course, reserve its right to seek a procedurally appropriate review of that modification and/or addition to determine if in fact it is consistent with the fundamental vested rights as established by the Termo Opinion. Hopefully, there will not arise such an occasion and, as stated in the introduction, there will be an ongoing cooperative effort in good faith to meet the goals of both Angus and the City of Huntington Beach. Very truly yours, MA FF & .ASSOCIATES, PLC DOUGLAS L. MMAHAFFEY DLM:sm Enclosure (As indicated) INITIATING DEPARTMENT: Fire SUBJECT: Request for Approval of Reimbursement Agreement for Oil Production Site Safety Review COUNCIL MEETING DATE: December 21, 2009 RCNATT, H4 TAT, Ordinance (w/exhibits & legislative draft if applicable) Attached El Not Applicable 0 Resolution (w/exhibits & legislative draft if applicable) Attached F-1 Not Applicable N Tract Map, Location Map and/or other Exhibits Attached El Not Applicable Contract/Agreement (w/exhibits if applicable) Attached (Signed in full by the City Attorney) Not Applicable E] Subleases, Third Party Agreements, etc. Attached F-1 (Approved as to form by City Attorney) Not Applicable N Certificates of Insurance (Approved by the City Attorney) Attached ❑ Not Applicable Fiscal Impact Statement (Unbudgeted, over $5,000) Attached El Not Applicable Bonds (if applicable) Attached ❑ Not Applicable Staff Report (If applicable) Attached ❑ Not Applicable Commission, Board or Committee Report (if applicable) Attached F-1 Not Applicable N Findings/Conditions for Approval and/or Denial Attached El Not Aeplicable E M, 'WTS -7 AUT RE EWED\ j E �' T- R D- , VR Administrative Staff Deputy City Administrator (initial) "\'O" s City Administrator (initial) (Ti City Clerk I (Below Space For�-j y -lOf ,O:n RCA Author: Olson/Reardon/Justen City ®f Huntington Beach 2000 Main Street ® Huntington Beach, CA 92648 OFFICE OF THE CITY CLERK JOAN L. FLYNN CITY CLERK December 22, 2009 Angus Petroleum Corporation 1901 California Street Huntington Beach, CA 92648 To Whom It May Concern. - Enclosed for your records a copy of the Reimbursement — Planning — Agreement between the City of Huntington Beach and Angus Petroleum Corporation. Sincerely, JF:pe Enclosure Ufollowup:agrmtltr Sister Cities: Anjo, Japan • Waitakere, New Zealand ( Telephone: 714-536-5227 )