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20130618 Late CorrespondenceBloomberg Businessweek News From Bloomberg Plains All American Begins Cleaning Up Alberta Condensate Spill By Rebecca Penty ?.!LJHR~!?t:f9!i http://www.businessweek:~ws/20134)6~15/plains-all-american-begins-cleaning-up-alberta-condensate-spill Plains All American Pipeline LP (PAA) began cleaning up a spill of condensate from its Kemp natural gas liquids pipeline system in Alberta. The company is recovering some of the product, which hasn't entered any flowing water bodies, according to the Energy Resources Conservation Board regulator. Plains reported the spill yesterday, Cara Tobin, a spokeswoman for the regulator, said in a telephone interview today. The size and cause of the spill isn't yet known, the company said in a statement today. "It was discovered by an electronic detection system" on the pipeline, Tobin said. She also was unable to provide an estimate of the spill's size or its cause. "They were able to shut everything down right away." The spill on the 6-inch pipeline was about 90 kilometers (56 miles) northwest of Manning, in northern Alberta, the company said. The system carries condensate and other natural gas liquids. Cleanup of gas liquids such as propane and butane can include burning the light hydrocarbons, digging up contaminated soil or letting the fuels evaporate, Tobin said. The pipeline is 79 kilometers long and begins and ends in Alberta. Spokesmen for Plains All American's Canadian unit declined to immediately comment. To contact the reporter on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net To contact the editor responsible for this story: Sylvia Wier at swier@bloomberg.net ©2013 Bloomberg L.P. All Rights Reserved. Made in NYC YAHOO! FINANCE Update: Plains Midstream Canada Responds to Release in Northern Alberta (7:00 p.m. MST) M MAR K E T Press Release: Plains Midstream Canada -49 minutes ago ~WIRED CALGARY, ALBERTA--(Marketwired -J~ 15, 2013)_ -Plains Midstream Canada (Plains) continues to respond to a release on its six-inch, 79 kilometre K~ffippijjJliri@~:Wtem approximately 90 kilometres north west of Manning, Alberta. The pipeline system remains shut in and more than 40 workers are on site conducting containment and clean-up activities, supported by senior staff from Plains' Calgary office. The area affected by the condensate release measures approximately 100 meters by 150 metres (about three and a half acres) and a perimeter has been established around the affected area. The volume of condensate released remains under evaluation. Preliminary estimates suggest approximately 150 mg (950 barrels) were released. The cause of the pipeline release is being investigated. Emergency response personnel including spill response, containment and safety specialists, environmental consultants, wildlife technicians, and waste management experts, and air monitors are responding on site. Safety is paramount at the clean-up response, and Plains is monitoring air quality closely to ensure the safety of responding personnel. Plains is working to minimize environmental impacts of the release. Work crews focused on containment are mitigating the extent of the release footprint and continue to remove the released condensate from the surface. Plains is working to protect wildlife by patrolling the perimeter, establishing visual and audio deterrents, as well as installing wildlife fencing. "We regret this incident and are working around the clock to limit the impact of the release," says Stephen Bart, Vice President, Crude Oil Operations, Plains Midstream Canada. "Industry-leading technical experts and regulatory bodies are engaged onsite in our response efforts and to ensure an effective clean-up." Plains continues to work closely with various regulatory agencies and area stakeholders. More information will be provided as it is available. Plains Midstream Canada is wholly owned subsidiary of Plains All American Pipeline. • 3 Best Dividend Stocks? www.insideinvestingdaily.com/Dividends Industry Insider Reveals Dividend Stocks Paying Huge Dividends-Report • Top Dividend Stocks WealthyRetirement.com/lncome Six time-tested dividend stocks for income and growth. Free report. • Hold These Stocks Forever www.GlobalDividends.com The 3 best stocks for a lifetime of rich cash dividends. OFF the Ads FF E&P News Home Recent Headlines Most Popular News Categories News Topics Regional News Search Articles Downstream News FINANCE & INVESTING Finance Headlines Commodity Prices NEWS SERVICES Image Library Conversion Calculator RSS Feeds Mobile News Get free industry updates via email. ::J Daily News Weekly News ""l Equipment UpdatesJ@I\ Weekly Job R~~_!iii!\:: '' · ==1 Monthly Eve~fo~ide .. your email here SUBSCRIBE =yacv Recruiting for Oil ft Gas, Engineering, .ft Petrothemicals professionals advertisement Alberta Government Charges Plains Midstream Over Oil Spill by Dow Jones Newswires I Ben Dummett I Sunday, April 28, 2013 TORONTO -The Alberta government has filed charges against Plains Midstream Canada ULC, a unit of U.S. energy pipeline operator Plains All American Pipeline L.P., for an oil spill in 2011 in northern Alberta, according to a notice on the western Canadian province's web site. The oil spill, which happened in a fairly isolated stretch of boreal forest in northern Alberta, leaked about 28,000 barrels from Plains Midstream's Rainbow pipeline system, making it one of the province's largest in 36 years. The pipeline runs from northern Alberta to Edmonton, the provincial capital. Plains Midstream fac~,~J%2~A~ft,Iim?::#H~~fa~2::fl}:~if:9!1r!OOtal Protection and Enhanee-merWAJ;t; ~99Qt9ih9 tt) tf)e provincial notice. They include one cl'iiligliU'blqMfl~Ml:i'~~:Gf lf~oi!tance that causes or could cause an "adverse effect" on the envir.o.11111~n.t; another charge alleging failure "to take all reasonable;miiiYr~iJo repair, remedy and confine ~~Ji~tf~!:it§o.Uh~~"b~tanri~,..~~-'Soon as the company "kl')~~9L9YSbiJ9''lj~V~b~~~;,:;~-'.~ware of the release;" and a third chargeH'tWiifcliiltig t&,;™i&:,,!!:@"~AD:29!"ITT~~Hres to remediate,. m~n9g~.J~ffiQ)(e' or otherwise dispose of the substance.''.''.'iRM8H'~MMMer as to prevent an adverse effect or further adverse effect," according to the government notice. A representative for Plains Midstream couldn't be reached. But the company on its web site said that its efforts to clean up the spill are working. "In the 22 months since the release, ongoing inspections have confirmed that remediation activities are complete (and) third-party remediation and reclamation experts inspect the site and assess the monitoring results to confirm the absence of contamination," the company said on the web site. Copyright (c) 2013 Dow Jones & Company, Inc. WHAT DO YOU THINK? Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed. RELATED COMPANIES Company: Plains All American Pipeline '·j'• POST A COMMENT -Alberta Government Charges Plains Midstream Over Oil Spill (Apr 29) -Plains All American To Build New Oil Pipeline in Texas (Apr 15) -Magellan to Buy Pipelines from Plains All American (Feb 22) MORE FROM THIS AUTHOR Dow Jones Newswires Oil Jumos to Four-Month High as Cancer ... (Jun 14) Argentina's YPF Seeks to Participate i... 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(6/6) '/) /u RESOLUT~ON ~/l?j '"-;p~~· .. ·~ ci[~ SEP 1 4 2010 <J/ ~/_Ll ~~" WHEREAS, any official position of the City of Los Angeles with respect to legislation, rules, regulations or policies proposed to or pending before a local, state, or federal government body or agency must have first been adopted in the form of a Resolution by the City Council with the concurrence of the Mayor; and WHEREAS, the recent tragedy in San Bruno, California where a natural gas line explosion killed at least 7 people, and wiped out over 30 homes has highlighted the potential dangers of both underground and above-ground storage of explosive materials; and WHEREAS, the 20 acre private facility, located on North Gaffey Street in San Pedro, contains two large above-ground storage tanks that each can accommodate 12 million gallons of butane produced by nearby refineries; and WHEREAS, nearby residents are extremely concerned that a similar disaster will occur at the San Pedro facility; and WHEREAS, the San Pedro facility is governed by several agencies, including the National Fire Protection Association and OSHA; and WHEREAS, the federal government should institute requirements for above-ground hazarddtisfflateNaistot·agi,acfacilities similar to those that it requires for oil refineries, such as requirements thctton;;;;site emergency and fire personnel be stationed at the refinery at all tillll3~; and WHEREAS, it is imperativeJb9tnew regulations be put in place to assure safety of nearby.f@9i9~U\§ 9f9§gvetgr6Unt'fstofa@e tan!sf?£i!i1i§§.gJyifn the potential safety risRs,fHCIGdfrig focafing these operations away from Pesklential areas; .. t NOW, THEREFORE, BE IT RESOLVED, with the concurrence of the Mayor that by the adoption of this ResolutiQJJ:~Jh~ Cttyqf bQ§ Angeles, hereby includes in its 2009-2010 Federal Legislative Program SUPPORTforfederal legislation and/qrJ@gulations that would provide addftioriafreqtlffeffiehfs f6r above-..grotlhd sforage facilities of hazardous materials, including regulations that increase the buffer requirement for facilities located near residential zones, as well as requiring on-site emergency response/fire personnel. RECEIVED FROM /~;;, , • j-1 fl ANDMAOEAPARTOFZJ@t 0H~~ PRESENTEo,sY: , uif:..~. Cr ~T>1./\. __ ~ COUNCIL MEETING OF I ( Jtx'NICE HAHN f OFFICE HE CITY CLERK \ .. ______ ,;z . ~· th • . AL MOR EALE, CITY CLERK · Councilwoman, 15 District '/)~~a~DEDBY~~ ( . l,_~_,.,. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX Mr. Tony Puckett Rancho LPG Holdings, LLC 2110 North Gaffey Street San Pedro, California 90731 75 Hawthorne Street San Francisco, CA 94105 MAR 14 2013 CERTIFIED MAIL NO.: RETURN RECEIPT REQUESTED In Reply Refer to: Rancho San Pedro Terminal, San Pedro, CA RE: Notification of Potential Enforcement Action for Violation of Section 112(r)(7) of the Clean Air Act Dear Mr. Puckett: On April 14, 2010, and January 11, 2011, the U.S. Environmental Protection Agency ("EPA") conducted inspections at the San Pedro Terminal ('the Facility') owned by Plains LPG Services and operated by Rancho LPG Holdings, LLC (the "Companies") at 2110 North Gaffey Street, in San Pedro, California. The purpose of the inspections and subsequent information requests were to evaluate the Companies' compliance with the requirements under Section 112(r) of the Clean Air Act ("CAA''). Based upon the information obtained during our investigation, EPA is prepared to initiate a civil administrative action against the Companies to ensure compliance with federal law and assess a penalty pursuant to Section 113 of the CAA, 42 U.S.C. § 7413. The anticipated allegation includes violation of Section 112(r)(7) of the CAA, 42 U.S.C. § 7412(r)(7), and its implementing regulations. Specifically, the anticipated allegations against the Companies include: 1. The Companies failed to identify and assess its rail storage area as a process for inclusion in its Risk Management Plan ("RMP"). The rail storage area should have been included as a covered process where a regulated substance was present above a threshold quantity when it submitted an RMP. As a result, the Companies failed to conduct a hazard assessment of that process, in violation of Section 112(r)(7) of the CAA, 42 U.S.C. § 7412(r), and 40 C.F.R. § 68.12(a) and (b). 2. The Companies failed to adequately evaluate potential seismic stresses on the support structure for the emergency flare in accordance with design codes. As a consequence, the Companies violated Section 112(r)(7) of the CAA, 42 U.S.C. § 7412(r), and 40 C.F.R. § 68.65(a) and(d)(2-3), which requires that the owner or operator ensure that complete process safety information is compiled on the technology of the process and that the equipment complies with recognized and generally accepted good engineering practices. 3. The Companies did not appropriately address the consequences of a loss of the city water system for fire suppression in the event of an earthquake. This omission is a violation of Section 112(r)(7) of the CAA, 42 U.S.C. § 7412(r), and 40 C.F.R. § 68.67(c)(4), which requires that the owner or operator address the consequences of the failure of engineering and administrative controls in the process hazard analysis. 4. The Companies failed to internally inspect Tank 1 according to a timetable set forth in API Standard 653, in violation of Section 112(rX7) of the CAA, 42 U.S.C. § 7412(r), and 40 C.F.R. § 68.73(d)(2), which require that the owner or operator ensure that inspection and testing procedures follow recognized and generally accepted good engineering practices. 5. The Facility's emergency response plan identified the facility as a responding facility for which employees will take response action in the event of a release, per 40 C.F.R. 68.90(a). However, the Facility's emergency response plan developed under paragraph (aXI) of that part was not coordinated with the community emergency response plan developed under 42 U.S.C. 11003. In addition, the Facility Manager and employees stated to EPA that they are not emergency responders for the Facility, but are only authorized to take life safety and evacuation actions. The Companies failed to develOp and implement an emergency response program for the purpose of protecting public health and the environment, including at a minimum, procedures for informing the public and emergency response agencies in the event of a release. The Facility failed to clearly indicate to their own employees whether they would be emergency responders or would evacuate. This is in violation of Section l 12(r)(7) of the CAA, 42 U.S.C. § 7412(r), and 40 C.F.R. § 68.95(a)(l)(i), which requires an owner or operator to develop and implement an emergency response program including a plan that shall be maintained at the stationary source and contain procedures for informing the public and local emergency response agencies about accidental releases. 6. The Companies failed to ensure that the drain pipe located in the base of the containment basin and the valve located near Gaffey Street were included in the mechanical integrity program. This is in violation of Section 112(r)(7) of the CAA, 42 U.S.C. § 7412(r), and 40 C.F.R. § 68. 73( d), which requires inspection and testing procedures to follow recognized and generally accepted good engineering practices. 2 Before filing a Determination of Violation, Compliance Order and Notice of Right to Request a Hearing ("Complaint"), EPA is extending to the Companies an opportunity to advise EPA of any other information that the Companies believes should be considered before the .filing of such a Complaint. Relevant information may include any evidence of reliance on compliance assistance, additional compliance tasks performed subsequent to the inspection, or :financial factors bearing on the ability to pay a civil penalty. Your response to this letter must be made by a letter, signed by a person or persons duly authorized to represent the Companies. Please send any such response by certified mail, return receipt requested, addressed to: Ms. Mary Wesling (SFD-9-3) Environmental Scientist U.S. EPA Region IX 75 Hawthorne St. San Francisco, CA 94105 Please provide such information by no later than April 15, 2013. EPA anticipates filing a Complaint in this matter on or about·May 15, 2013, unless the Companies first advise EPA, with supporting information, of substantial reasons not to proceed as planned. Any penalty proposed for violation of the CAA will be calculated pursuant to EPA's "Final Combined Enforcement Policy for the Clean Air Act Section 112(r)(l ), the General Duty Clause, and Clean Air Act Section 112(r)(7) and 40 C.F.R. Part 68, Chemical Accident Prevention Provisions," dated June 20, 2012, a copy of which is enclosed (the "Penalty Policy"). Civil penalties may be mitigated, under the EPA "Supplemental Environmental Projects Policy ,"1 which describes the terms under which a commitment to perform an environmental project may mitigate, in part, a civil penalty. Even if the Companies are unaware of any mitigating or exculpatory factors, EPA is extending to the Companies the opportunity to commence settlement discussions concerning the above described violations. Additionally, to fully consider application of the Penalty Policy, EPA i~ additionally requesting responses to specific questions set forth below. EPA makes this request for information pursuant to 42 U.S.C. § 7414(a). Failure to comply with the information request in this letter may result in enforcement action being taken in accordance with Section 113 of the Act, 42 U.S.C. § 7413. This may include civil and administrative penalties of up to $37,500 per day of noncompliance, pursuant to section 113(b)(2) and 113(d) of the Act, 42 U.S.C. §§ 7413(b)(2) and 7413(d). Instructions regarding the requests also are set forth below. Ill 1http://www.epa.gov/compliance/resourceslpolicies/civillseps/fnlsup-hennn-mem.pdf. and htt,p://cfuub.epa.gov/compliancelresources/policies/civil/seps/. 3 If there are any questions, please contact Mary Westing of my staff at (415) 972-3080 or Wesling.Mary@epa.gov. Please direct any questions or inquiries from legal counsel to Andrew Helmlinger, EPA Counsel, at (415) 972-3904 or Helmlinger.Andrew@epa.gov. Thank you for your prompt attention to this matter. Enclosures: Sincerely, "" .. .., /'°' ,,.. l')/I . ~):@.tar? Daniel A Meer, Assistant Director Superfund Division Final CAA §112(r) Combined Enforcement Policy cc Cw/enclosures): T. Puckett, Plains LPG Services, LLC, Houston, TX M. Wesling, U.S. EPA Region IX A. Helmlinger, U.S. EPA Region IX 4 ENCLOSURE INSTRUCTIONS 1. Please provide a separate response to each request, and identify each response by the number . of the request to which it corresponds. For each document produced, identify the request to which it is responsive. 2. Knowledge or information that has not been memorialized in any document, but is nonetheless responsive to a request, must be provided in a narrative form. 3. The scope of this Information Request includes all information and documents obtained or independently developed by the Companies, their attorneys, consultants or any of their agents, consultants, or employees. 4. The Companies may not withhold any information from EPA on the grounds that it is confidential business information. EPA has promulgated regulations, under 40 C.F .R. Part 2, Subpart B, to protect confidential business information that it receives. The Companies may assert a business confidentiality claim (in the manner specified in 40 C.F.R. § 2.203(b)) for all or part of the information requested by EPA. However, business information is entitled to confidential treatment only if it satisfies the criteria set forth in 40 C.F .R. § 2.208. EPA will disclose business information entitled to confidential treatment only as authorized by 40 C.F .R. Part 2, Subpart B. If no claim of confidentiality accompanies the information at the time EPA receives it, EPA niay make it available to the public without further nonce. 5. Notice is hereby given, pursuant to 40 C.F.R. § 2.310(h), that EPA may disclose confidential information provided by the Companies to EPA's authorized representatives, including its contractor, Science Applications International Corporation ("SAIC"). Confidential information may be disclosed to EPA' s authorized representatives for the following reasons: to assist with document handling, inventory and indexing; to assist with document review and analysis for verification of completeness; and to provide expert technical review of the contents of the response. Pursuant to 40 C.F .R. § 2.31 O(h), the Companies may submit, along with its response to this Information Request, any comments regarding EPA's disclosure of confidential information to its authorized representatives. 6. If information or documents not known or available to the Companies at the time of any response to this Information Request later become known or available to it, it must supplement its response to EPA. Moreover, should the Companies find at any time after the submission of any response that any portion of the submitted information is false or misrepresents the truth, the Companies must notify EPA as soon as possible and provide EPA with a corrected response. 7. If information responsive to a request is not in the Companies' possession, custody, or control, identify the persons or entities from whom such information may be obtained. For each individual or entity that possesses responsive information, please provide the following: name, last known or current address, telephone number, and affiliation with the Companies or the Facility. 5 8. If you believe that there are grounds for withholding information or documents that are responsive to this request, e.g., attorney-client privilege, you must identify the information or documents and state the basis for withholding. INFORMATION REQUEST 1. Provide cost information for the development and implementation of the Facility's RMP. Disaggregate the RMP development costs by capital and one-time non-depreciable expenses. Regarding implementation costs, provide actual or estimated incremental (above the Facility's previously existing level-of-effort) annually recurring costs (e.g. Operation & Maintenance). 2. Provide a statement and supporting documentation indicating the Companies' present net worth. 6 Main Page From Tank Safety Storage Tank Safety Your Council District (http://lalSth.com/) Internet Encyclopedia Encyclopedia Entries Will Be Regularly Updated Background Basic facts about liquid bulk storage tanks • Background • Description of Facility •FAQs • History • Regulatory Environment • Risk Analysis • About District (http://www.lal Stb.c• /15th-la-district-infot • ContactUs (http://lalSth.com /contact-us.html/) • LA15tb.com (http://la15tb.com/) Council District 15 has historically been a hub of industrial activity due to the inclusion of The Port of Los Angeles and numerous refineries. The port is a large hub of commerce, and subsequently serves as a portal for the export and import of items and materials. Liquid bulk storage tanks and liquefied petroleum gas tanks are used for the purpose of storing some of these materials so that they can be be exported, refined, or transported to other facilities throughout the country[ I]. Much of these materials are related to petroleum and oil. There are also refineries in the Harbor Area that use these storage tanks as an essential part of their operations as they store butane, a major byproduct of the oil to gasoline refining process. Here is a brief list (as of 2007) of other refineries/storage facilities in the State of California (https://docs.google.com/folder /d/OBxy-stsBT _ OlNXJHOWZEWnRMNmM/edit?usp=sharing&docld=OBxy-stsBT _ OlaFNoSGdUaTlqRmM) , their storage capacity and the dates they began operation, as well as a list of refineries operating in and around Council District 15[Z]. Refineries and Storage Facilities in and around Council District 15 1. BP West Coast Contents • 1 Background • 1.1 Basic facts about liquid bulk storage tanks • 1.1.1 Refineries and Storage Facilities in and around Council District 15 • 1.1.2 Why are these tanks here? Why are they needed? • 1.2 Rancho LPG -description of facility • 1.3 Rancho LPG History • 1.3.11972 • 1.3.2 1973 • 1.3.3 1974 • 1.3.4 1977 • 1.3.5 1978 • 1.3.6 1989 • 1.3.7 1993 • 1.3.8 2004 • 1.3.9 2007 • 1.3.10 2008 ---.. --_, • 1.3.11 2010 • 1.3.12 2011 • 1.3.13 2011 • 1.3.14 2012 • 1.4 Number of liquid bulk storage tanks in Harbor Area and dates built • 1.5 Neighboring land uses: residential, commercial, parks • 2 Regulatory Environment & Enforcement • 2.1 Federal • 2.2 State • 2.3 Regional • 2.4 Local • 3 Risk Analysis • 3 .1 Propane and Butane -What is it? • 3 .2 Risk Assessments • 3.2.1 Cornerston,e Technologies' Assessment • 3.2.1.1 Scenario 1: Vapor Cloud Explosion • 3 .2.1.2 Scenario 2: Vapor Cloud Explosion #2 -Small Leak • 3.2.1.3 Scenario 3: Alternative Release -Pool Fire • 3.2.1.4 Scenario 4: Alternative Release -Pool Fire #2 • 3.2.1.5 Scenario 5: Vapor Cloud Explosion • 3.2.1.6 Scenario 6: Vapor Cloud Explosion #2 • 3.2.1.7 Scenario 7: BLEVE (Boiling liquid expanding vapor explosion) • 3.2.1.8 Scenario 8: BLEVE #2 • 3.2.2 Quest Consultants' Assessment • 3.2.3 Crowl/Michigan Tech Assessment • 4 City Reports and Motions • 5 Economic Impacts • 5.1 Why are the tanks in CD15 and what is their potential economic benefit to the region? • 6 Frequently Asked Questions • 6.1 Does the City of Los Angeles own any of the Rancho LPG property? ~ -- • 6.2 Does the Rancho LPG facility lie on a fault? • 6.3 Can the facility be relocated? • 6.4 How often is the facility subject to inspection? • 6.5 Did Petrolane/AmeriGas/Rancho obtain building permits and conduct an EIR? • 7 References Products LLC, Carson Refmery • Production capacity of 240,000 barrels of refined petroleum products per day 2. ExxonMobile Refining and Supply Company, Torrance Refinery • Production capacity of 149,500 barrels ofrefined petroleum products per day 3. ConocoPhillips, Wilmington Refinery • Production capacity of 139 ,000 barrels of refined petroleum products per day 4. Tesoro Refining and Marketing Company, Wilmington Refinery • Production capacity of 103,800 barrels ofrefined petroleum products per day 5. Valero Wilmington Refinery • Production capacity of 78,000 barrels of refined petroleum products per day • Note: Data on this table represents total crude oil capacity not gasoline, distillate production, diesel fuel production or production of other products. Production potential varies depending on time of year and status of the refinery. A rule of thumb is that roughly 50 percent of total capacity is gasoline production (about 1.0 million barrels of gasoline -42 million gallons -is produced per day). [J] 6. Kinder Morgan Liquid Terminals[4] are located on Berths 118-120, occupying 12.4 acres. • Materials: Crude oil, finished petroleum products, gasoline blending components, refinery feedstocks • 18 storage tanks with a maximum capacity of 570,000 barrels 7. ConocoPhillips vessel unloading facility is located on Berths 148-151, occupying 13 .5 acres. • Materials: Partly or fully refined petroleum products • 26 storage tanks with a total capacity of 800,000 barrels 8. NuStar Energy facility located at Berth 163, occupying 5.8 acres • Materials: Marine oil • 19 storage tanks with total capacity of 600,000 barrels 9. Valero facility located at Berth 164, occupying 10.5 acres • Materials: Fuels and lubricants • 17 storage tanks with total capacity of 947,000 barrels 10. Shell facility located at Berths 167-169, occupying 9.1 acres • Materials: Fuels and lubricants • 10 storage tanks with total capacity of 485,000 barrels 11. Vopak Terminal[SJ located at Berths 187-191, occupying 34.7 acres. • Materials: Petroleum products, chemicals, biofuels • 66 storage tanks with total capacity of 700,000 barrels and an additional 22 storage tanks with 1, 700,000 barrels capacity at inland site. 12. ExxonMobil 'facility located at Berths 238-240C, occupying 31.4 acres. • Materials: Fuels and lubricants • 26 storage tanks with total capacity of 2,313,000 barrels. Why are these tanks here? Why are they needed? These tanks are located here because of the necessity of storing the excess butane produced by the oil to gasoline refining process. The refineries that utilize the Rancho LPG butane tanks have stated that they simply do not have a large enough footprint at their facilities and would have to reduce gasoline production if they did not have the ability to store butane that they could not bum off, blend into fuel, or sell/store elsewhere[6J_ A high volume of chemical and petroleum products, among other materials, enter and leave the Port and require storage facilities. The tanks play an important role in the global energy and chemical products supply chain, as the materials are later transported across the country to other facilities. There are several refineries in the Harbor Area, and they rely on the presence and access of these facilities as part of their operations. Other storage tanks located in the 15th District support additional activities related to the port and other industry. Rancho LPG -description of facility • The Rancho LPG facility is located on Gaffey Street and encompasses approximately 20 acres of land and was previously owned and operated by AmeriGas up until 2008, and Petrolane prior to Amerigas' purchase of the facility in 1993. (Cornerstone Technologies, Inc., Quantitative Risk Analysis for Amerigas Butane Storage Facilities." Page 2. September 2010.) The facility primarily stores butane, as well as smaller amounts of propane. • The facility includes two 12.6 million gallon refrigerated tanks, five 60,000 horizontal-storage tanks, transportation vehicles, and pipeline and rail shipping capabilities. The facility provides access for vehicles and rail lines as alternative means of shipping or receiving butane and other LPGs. Prior to 2004, the facility was connected to a berth in the Port of Los Angeles through a 16" pipeline buried 10 feet below the ground, which had been used to load ships with butane for export. (Cornerstone, Page 2) (Rancho LPG page) • While most of the storage, transport, and rail car delivery is located farthest from Gaffey Street, the two largest butane storage tanks are located closest to the western boundary of the facility, which is closest to the nearest residential and commercial areas. (Cornerstone, Page 3) Rancho LPG History 1972 • The property underlying the current facility was purchased by Petrolane and later developed into a liquid bulk tank facility pursuant to an environmental impact report (EIR) under the California Environmental Quality Act (CEQA). [7][8] 1973 Original Petrolane EIR 1973 (https://docs.google.com/a/lacity.org/file/d/OBxy-stsBT _ OIVWRpcGlzVlRFNmc/edit) EIR 2 (https://docs.google.com/a/lacity.org/file/d/OBxy-stsBT _ OldEUtVGdRSEtSLUU/edit) EIR 3 (https://docs.google.com/a/lacity.org/file/d/OBxy-stsBT_ OleE12TFczVOZOOEO/edit) EIR4 (https://docs.google.com/a/lacity.org/file/d/OBxy-stsBT_01NlpqQVdDYOVOWW8/edit) EIR 5 (https://docs.google.com/a/lacity.org/:file/d/OBxy-stsBT _ OIWUNnSzE2QUtialU/edit) EIR 6 (https://docs.google.com/a/lacity.org/:file/d/OBxy-stsBT _ OlOXpTNTJRdUVwTmc/edit) EIR COMMENT LETTERS 1973 (https://docs.google.com/folder/d/OBxy-stsBT _ OJNXJHOWZEWnRMNmM /edit?usp=sharing&docid=OBxy-stsBT _ OJNXQxUHNUZXNBXzA) 1974 • On July 1, 1974, the Port of Los Angeles entered into Revocable Permit No. 1212 for the construction and operation of a railroad spur track. • On May 27, 1974, the Port of Los Angeles entered into Revocable Permit No. 264 for subsurface pipelines. This would allow for the transportation of its products to Berth 120, where it would then be exported by ship. 1977 CPUC REPORT (https://docs.google.com/a/lacity.org/file/d/OBxy-stsBT _ OlV zJq YIBPMG55bHM/edit) 1978 • A public and private nuisance lawsuit was filed against Petro lane. In Brown v. Petrolane. (court decision issued in 1980), it was ruled that the facility and its functions did not constitute a nuisance[9]. 1989 • Petrolane was transformed into a facility with the primary purpose of storing and exporting butane, which it currently remains, because of an increase in demand for butane as a result of the Federal Clean Air Act Amendment of 1990. (In My Backyard paper, pg 3) 1993 • AmeriGas purchased and acquired the facility from Petrolane. 2004 • Motion introduced by then-CD 15 Councilwoman Janice Hahn, which asked the Harbor Department to work with any other applicable city departments or agencies along with representatives of Amerigas and the refinery industry, to explore the feasibility, identify funding and present recommendations to the Commerce, Energy and Natural Resources Committee within 90 days on relocating the Amerigas Terminal on North Gaffey Street to a site better suited for its operations in the Port of Los Angeles, including, but not limited to, Pier 400. The motion also asked that the Amerigas underground pipeline right-of-way lease an berth assignment be allowed to remain on a 30-day revocable permit until the recommendations are presented and adopted by the Board of Harbor Commissioners, the Commerce, Energy and Natural Resources Committee and the City Council and a permanent relocation is achieved[lO] • Permit No. 264 expired and subsequent calls were handled on an individual basis under a month-to-month holdover. • The last vessel call at Berth 120 for AmeriGas occurred in September. 2007 CA REFINERY ALMANAC 2007 (https:/ /docs.google.com/a/lacity.org/file/d/OBxy-stsBT _ OlaFN oSGdUaTlqRmM/edit) 2008 • Rancho LPG purchased the liquid bulk tank facility from AmeriGas. 2010 • Permit No. 263 was fully terminated despite attempts by AmeriGas and Rancho LPG to have it renewed, subsequently removing the month-to-month holdover for the pipeline. Also, as per the terms of the permit, Rancho LPG was ordered to restore the Berth 120 property. Consequently, transportation of the Rancho LPG materials had to be shifted to truck and rail movement. [l l] 2011 • Revocable Permit No. 1212 for a rail spur, was replaced by Revocable Permit 10-05 which updated various permit provisions. CITY ATTORNEY LETTER 2011 (https://docs.google.com/folder/d/OBxy-stsBT _ OINXJHOWZEWnRMNmM /edit?usp=sharing&docid=OBxy-stsBT _ 01NXh5eHoOa3dtUFU) 2011 • Rancho LPG completed restoration of the Berth 120 property.[121 2012 • June 2012: Board of Harbor Commissioners rejected a proposal to revoke Rail Permit 10-05. [1] (http://www.dailybulletin.com/california/ci_ 20806964/harbor-commission-rejects-proposal-rancho-lpg-rail-line) • Residents concerned about the Rancho tanks produce a video that illustrates their concemes about the facility. STILLS FROM SPHUVIDEO 2012 (https://docs.google.com/folder/d/OBxy-stsBT_OlNXJHOWZEWnRMNmM /edit?usp=sharing&docid=OBxy-stsBT _ OlcFVUNUtBNmSicOO) [l3] • Councilman Joe Buscaino hosts a meeting of the Public Safety Committee in Council District 15, and directs the Chief Legislative Analysis's office to draft a report to discuss the safety of the Rancho LPG facility and advise the committee on who is responsible for safety oversight at all LBS/LPG facilities in Los Angeles and offer any recommendations to enhance public safety. [2] (http://cityclerk.lacity.org/lacityclerkconnect /index.c:fi:n?fa=ccfi.viewrecord&cfuumber= 11-1813-S 1) [3] (http://clkrep.lacity.org/onlinedocs/2011/11-1813- s l _ rpt_ps_ 7-24-20l2.pdf) Councilman Joe Buscaino introduces a series of motions to get answers to commonly asked questions about the Rancho facility: -r .1.- 1. Liquid Bulk Storage Facilities I Harbor Area I Special Meeting I Permitting and Safety Requirements [l4J • This motion called for a special meeting of the Public Safety Committee to be held in CD15, which was held on June 27, 2012, and resulted in the most recent City report (by CLA) concerning the oversight of the Rancho facility [15] [16] [17] 2. Liquid Bulk Storage (LBS) I Liquid Petroleum Gas (LPG) Facilities I Rancho LPG Facility I Compliance Regulations of Similar Facilities [l 8] • This motion calls for the CLA be instructed to report on existing City, County, State, and Federal laws and regulations concerning the oversight of LPG and LBS facilities, and report on the regulations that operators of said facilities must follow to remain in compliance and stay in operation. • It further asks that the CLA report on any suggestions, based on their findings, of ways to improve City laws and oversight standards, as well as any recommended change to County, State, and Federal laws and regulations that the City would consider lobbying to that respective level of government. 3. Parcel Purchase I Rancho LPG Facility I Cost of Property Acquisition [l 9J • This motion asks for CAO to report on what it would cost the City to acquire the Rancho property. • This item has been discussed in priorreports by CAO, as of2006 the land was worth an estimated $15-20 million, not including the cost to clean up the land and what it would cost to relocate or reimburse Rancho for their materials and equipment. [20J 4. Liquid Bulk Storage (LBS) I Liquid Petroleum Gas (LPG) Facilities I Rancho LPG Facility I Zoning Designation [2 IJ • This motion asks Planning Department to discuss what effect, if any, a change in the zoning at Rancho would have on their operations. • In a 2005-era report, the Planning Department reported that a change to a non-residential would not affect Rancho's ability to operate as they would be grandfathered in. A change to a residential zone would result in litigation, that the City would likely lose give there isn't an established track record of Rancho being a nuisance facility based on their lack of serious violations. [221 [231 5. Liquid Bulk Storage Facilities I Rancho LPG Facility I Seismic Activities I Safety Issues and Potential Threats [241 • This motion calls for the Department of Building and Safety be instructed to report on the safety issues raised by San Pedro residents regarding seismic activities at the Rancho LPG facility and report on the potential for seismic events to cause a threat to public safety. This motion additionally calls for Department of Building and Safety perform a similar seismic report for other Liquid Bulk Storage facilities located within the limits of the City of Los Angeles. • There have been past reports the seismic sensitivity of the Rancho LPG site, such as a report from the United States Geological Survey and California Geological Survey on Alquist-Priolo Fault Zone and Seismic Hazards Information. The report determines that the site does not sit on or near faults that could be classified as an Alquist-Priolo zone/fault. [251 6. Liquid Bulk Storage (LBS) I Liquid Petroleum Gas (LPG) Facilities I Rancho LPG Facility I Insurance Requirements I Operators Liability Coverage[261 • This motion asks that the City Attorney be instructed to report on existing City, County, State, and Federal laws and regulations concerning insurance requirements of LPG and LBS facilities, and report on the required liability coverage that operators of said facilities must carry to remain in compliance and stay in operation. • It also asks for a report on any suggestions, based on their findings, of ways to improve City laws on liability coverage requirements for LBS/LPG facilities, as well as any recommended change to County, State, and Federal laws and regulations that the City would consider lobbying to that respective level of government. 7. Port of Los Angeles I Parcel Purchase I Rancho LPG Facility [271 • This motion asks for POLA to report on the feasibility of annexing the Rancho property. Prior reports from POLA attorneys indicate that they would find it difficult to seize the land without having a port-specific purpose for the land under the Tidelands Trust, and that any project would face scrutiny and a harsh EIR process as it would be industrial use/container space. [281 Number of liquid bulk storage tanks in Harbor Area and dates built Neighboring land uses: residential, commercial, parks • The nearest commercial land receptor is approximately 0. 13 miles (around 675 feet) away • The nearest residential area is approximately 0.24 miles (around 1,290 feet) away. (Cornerstone pg. 2) Regulatory Environment & Enforcement Federal I. Environmental Protection Agency 2. Department of Homeland Security 3. Defense Logistics Agency 4. Department ?fTransportation State 1. California EPA 2. Department of Toxic Substance Control 3. CALOSHA 4. California Air Resources Board Regional 1. South Coast AQMD 2. LA County Fire Department Local 1. LAFD -LAFD is the Lead safety and inspection agency for the City of Los Angeles £291 2. Planning Department 3. Building and Safety Department 4. Port of Los Angeles 5. Emergency Management Department 6. Bureau of Sanitation 7. LAPD Risk Analysis Propane and Butane -What is it? • Butane, a byproduct of the oil to gasoline refining process, is used in winter months to blend back into gasoline, and is often cheaper than the butane-less summer blends. This helps offset the reduction in gasoline supplies as refineries switch from reducing gasoline production in favor of heating oil. Normal butane is mainly used for gasoline ---... -"J blending, as a fuel gas, either alone or in a mixture with propane. Isobutane is primarily used by refineries to enhance the octane content of motor gasoline. Butane is also used as lighter fuel for a common lighter or butane torch and is sold bottled as a fuel for cooking and camping. [30]The refineries have made it clear in prior reports to City departments that they depend on Rancho to store butane that they simply do not have the room for; one refinery states that its operations produce 3 millions galleons of gasoline per day, roughly 15% of the fuel used by the Southern California market the removal of the facility could potentially cause them to reduce gasoline production and cause prices to spike in the region_[3 I] • Propane, also a byproduct of the gasoline refining process, is often used for barbecue fuel and other uses, such as[32]: • the primary fuel for hot air balloons • used in semiconductor (computer chip) manufacturing • used in theme parks and in the movie industry as an inexpensive high-energy fuel for explosions and other special effects • as a propellant for Paintball and Airsoft guns, relying on the expansion of the gas to frre the projectile • as a propellant for household air :freshener sprays Risk Assessments • There have been two risk assessments completed so far. In September 20 I 0, a risk assessment was conducted by Cornerstone Technologies (https:/ I docs.google.com/folder/d/OBxy-stsBT _ OINXJHOWZEWnRMNmM /edit?usp=sharing&docld=OBxy-stsBT _ OldjhhcORYSWh6M2s) after being contacted by the Northwest San Pedro Neighborhood Council. • In October 2010, Quest Consultants (https://docs.google.com/folder/d/OBxy-stsBT_OlNXJHOWZEWnRMNmM /edit?usp=sharing&docld=OBxy-stsBT _ 01WkJLajg2UWZ6UzA) was contacted by Rancho LPG. They released a risk assessment in response to Cornerstone Technologies' assessments. • Quest Consultants also refuted Cornerstone's findings, stating that an oversimplistic model was used to analyze scenarios, that they neglected to include site-specific safety features that greatly reduced risk, and making physically impossible or inapplicable assumptions. • In April 2011, the City Attorney's office contacted the EPA's Risk Management Plan Enforcement Unit, who then contacted Michigan Technological University's Department of Chemical Engineering to conduct an independent review of the assessments. • The independent review found Cornerstone Technologies' :findings to be flawed, and found Quest Consultants' assessment to be far superior. Quest Services (https://docs.google.com/folder/d/OBxy-stsBT _ OlNXffiOWZEWnRMNmM/edit?usp=sharing& docld=OBxy-stsBT _ OlbTJ2azR5cjYxN3M) Quest Qualifications (https:/ /docs.google.com/folder/d/OBxy- stsBT _ OlNXffiOWZEWnRMNmM/edit?usp=sharing&docld=OBxy-stsBT _ OldEszSzdmdkRV cTA) Quest Initial Study (https://docs.google.com/folder/d/OBxy-stsBT_OlNXJHOWZEWnRMNmM/edit?usp=sharing&docld=OBxy- stsBT_ OlMVBCXOl UcEkweUE) • Rancho must submit a Risk Management Plan (RMP) to LAFD, who LAFD reviews all submitted RMPs for completeness, technical accuracy, and the appropriate level of detail. LAFD inspects every stationary source of Regulated Substances registered with the government at least once every three years to determine compliance with the regulations. [33] Cornerstone Technologies' Assessment Scenario 1: Vapor Cloud Explosion • A puncture area of 9 inches, releasing 7, 790 pounds per minute. • Resulting in an impact distance ofless than 0.1 miles 1. Quest Consultants states the results are incorrect due in part to a lack of knowledge regarding the behavior of ---~ -· -.,, liquid butane, and in part due to the use of an ineffective/incompatible analysis modeP41. 2. Michigan Tech states this is physically impossible because refrigerated butane will not instantly vaporize, as the scenario assumes Scenario 2: Vapor Cloud Explosion #2 -Small Leak • A small leak from improper maintenance or construction releasing 1,000 pounds per minute • Resulting in an explosion radius ofless than 0.1 miles 1. Quest Consultants states the results are incorrect due in part to a lack of knowledge regarding the behavior of liquid butane, and in part due to the use of an ineffective/incompatible analysis model. 2. Michigan Tech states this is physically impossible because refrigerated butane will not instantly vaporize, as the scenario assumes Scenario 3: Alternative Release -Pool Fire • 500 pounds of liquid butane or less released per minute due to bad construction or maintenance. Some would turn to vapor. Rele~se duration of 360 minutes • The vapor would be ignited and lead back to liquid release point, resulting in large frre. • Impact radius of 0.4 miles 1. Quest Consultants stated the results are flawed and physically impossible because it assumes the liquid would flow unobstructed and unconfined over a flat surface. It neglects to consider the impoundment basin that is present that would serve to reduce the surface area of the pool. 2. Michigan Tech states that it is important to consider the impoundment basin, which Cornerstone did not do, as the area of the pool and the vaporization rate would be much lower. Scenario 4: Alternative Release -Pool Fire #2 • 7790 pounds of liquid butane released per minute for a duration of360 minutes. • Impact radius of 1. 7 miles 1. Quest Consultants stated the results are flawed and physically impossible because it assumes the liquid would flow unobstructed and unconfmed over a flat surface. It neglects to consider the impoundment basin that is present that would serve to reduce the surface area of the pool. 2. Michigan Tech states that it is important to consider the impoundment basin, which Cornerstone did not do, as the area of the pool and the vaporization rate would be much lower. Scenario 5: Vapor Cloud Explosion • A catastrophic earthquake occurs that causes complete failure of one of the tanks and instant release of all 63 million pounds of the butane in vapor form • It disperses its maximum distance before reaching an ignition source • Impact radius of 3.2 miles 1. Quest Consultants states that that the results are invalid as it is physically impossible for 12.6 million gallons of butane to instantaneously vaporize. 2. Michigan Tech concurs with Quest Consultants, adding that if a tank were to completely fail, liquid butane would flow into the.impoundment area and a boiling pool would result, resulting in a small amount of vapor release. They also add that it is highly unlikely that the vapor would disperse to a precisely flammable mixture and then ignite at that exact instant. Scenario 6: Vapor Cloud Explosion #2 • A catastrophic earthquake causes complete failure of both tanks, resulting in instant release of all 126.5 million pounds of butane in vapor form • It disperses its maximum distance before reaching an ignition source • Impact radius of 4.0 miles 1. Quest Consultants states that that the results are invalid as it is physically impossible for 25 million gallons of butane to instantaneously vaporize. 2. Michigan Tech concurs with Quest Consultants, adding that if a tank were to completely fail, liquid butane would flow into the impoundment area and a boiling pool would result, resulting in a small amount of vapor release. They also add that it is highly unlikely that the vapor would disperse to a precisely flammable mixture and then ignite at that exact instant. Scenario 7: BLEVE (Boiling liquid expanding vapor explosion) • Sudden drop in pressure inside a container causing violent boiling of liquid, which rapidly releases large amounts of vapor and results in a large rapid expansion similar to an explosion • 1 tank gone due to an earthquake • Impact radius of 5.2 miles 1. Quest Consultants state the results are incorrect and physically impossible, pointing out a lack of understanding ofBLEVE's. They state the definition is actually a "release of a large mass of pressurized liquid to the atmosphere,,. 2. Michigan Tech concurs with Quest Consultants. Scenario 8: BLEVE #2 • Both tanks rupturing • Impact radius of 6.8 miles 1. Quest Consultants state the results are incorrect and physically impossible, pointing out a lack of understanding of BLEVE's. They state the de:finition is actually a "release of a large mass of pressurized liquid to the atmosphere". 2. Michigan Tech concurs with Quest Consultants. Quest Consultants' Assessment • The tanks have two methods of detection for leaks and ruptures for both tanks. When activated, an Emergency Shut-Down (ESD) valve closes. It is reasonable to believe that a leak would be detected and the valve would be closed within seconds. • Quest Consultants assumes a full 14-inch rupture between the ESD valves and transfer pumps • 7 scenarios are provided in which the ESD valve takes a certain time to close 1. ESD valve would close five minutes after the 14-inch line rupture occurs. 2. ESD valve would close 10 minutes after the 14-inch line rupture occurs. 3. ESD valve would close 15 minutes after the 14-inch line rupture occurs. 4. SD valve would close 30 minutes after the 14-inch line rupture occurs. 5. ESD valve would close 60 minutes after the 14-inch line rupture occurs. 6. ESD valve would close 120 minutes after the 14-inch line rupture occurs. 7. ESD valve would not close after the 14-inch line rupture occurs and the insulated tank is allowed to completely drain to the impoundment basin. • Upon rupture, the cooled liquid butane would be diverted to the impoundment basin. The result would be an initial short-lived high vaporization rate, followed by a rapid decline of vaporization. • Any release duration below 15 minutes (Scenarios 1-3) would not be sufficient for vapor to overflow the basin. • A release duration exceeding 30 minutes, along with a stable atmosphere, and low winds, could result in a flammable cloud that can extend up to 600 feet westwards. • If it encounters an ignition source, it can ignite and burn back to the source of the vapors (the impoundment basin), resulting in a flash frre. Those within the cloud can be injured or killed • Another possibility is a vapor cloud explosion with overpressure waves. Strength of the blast wave depends on reactivity of flammable gases involved, the presence of buildings of walls that partially confine the vapor cloud, and spatial density of obstructions within the flammable cloud • Predicted blast wave strength is capable of causing broken windows and possible injury, but not enough to cause a fatality • Another possibility is a pool fire following ignition of the flammable vapors once the impoundment basin floor is covered with butane. • Can cause up to 2nd-degree burns on persons nearby. • Michigan Tech believes these are realistic assessments produced using sound methodology and knowledge. Crowl/Michigan Tech Assessment Crowl Credentials (https://docs.google.com/folder/d/OBxy-stsBT _ OlNXJHOWZEWnRMNmM/edit?usp=sharing& docid=OBxy-stsBT _ OlaOhRb VFYbkJK.QW c) Crowl Report (https://docs.google.com/folder/d/OBxy- stsBT _ OlNXJHOWZEWnRMNmM/edit?usp=sharing&docid=OBxy-stsBT _ OlenhMRld6MV9yYVE) City Reports and Motions Liquid Bulk Storage Facilities I Harbor Area I Special Meeting I Permitting and Safety Requirements (http://cityclerk.lacity.org/lacityclerkconnect/index.cfin?fa=ccfi. viewrecord&cfnumber= 11-1813-S) Economic Impacts Why are the tanks in CD15 and what is their potential economic benefit to the region? Butane, a byproduct of the oil to gasoline refining process, is used in winter months to blend back into gasoline, and is often cheaper than the butane-less summer blends. This helps offset the reduction in gasoline supplies as refineries switch from reducing gasoline production in favor of heating oil. The refineries have made it clear in prior reports to City departments that they depend on Rancho to store butane that they simply do not have the room for; that they are responsible for 15% of the fuel used by the Southern California market the removal of the facility could potentially cause them to reduce gasoline production and cause prices to spike in the region. Frequently Asked Questions Does the City of Los Angeles own any of the Rancho LPG property? • The City does not own or lease any of the propertyP5l Does the Rancho LPG facility lie on a fault? • No, but is within proximity to the Palos Verdes Hills fault zone. [361 However, there has not been demonstrated fault activity within the last 10,000 yearsr37l and subsequently does not meet the threshold for Alquist-Priolo Act regulatory action through the CA Geological Survey (https://docs.google.com/folder/d/OBxy- stsBT _ OlNXJHOWZEWnRMNmM/edit?usp=sharing& docid=OBxy-stsBT _ OIVTNOX2tjdXQ50W c) [381. ---.. --J Can the facility be relocated? • Research was undertaken 2004 and 2005 in conjunction with and between Rancho LPG, the Port of Los Angeles, and the City of Los Angeles to study the feasibility ofrelocating the facility and its functions. The following determinations were made: 1. fusufficient space exists anywhere at the Ports of Long Beach or Los Angeles for the facility[39J • Harbor Department staff assessed potential sites within the Port, specifically Pier 400. It was determined that there was insufficient available acreage in a contiguous parcel to meet the minimum requirements for a storage facility operation. The only available site on Pier 400 that is currently unencumbered with an entitlement is a 15-acre irregularly shaped parcel on the southern edge of Pier 400. Due to its irregular shape and the limited opportunity to provide rail access to the site, this does not meet the minimum requirements for Rancho's operations. 2. A zoning change would be difficult to implement for a number of reasons, including the fact that Rancho has been operating in compliance with zoning requirements and applicable permits and therefore could be "grandfathered" into any re-zoning of the area. Accordingly, forced relocation of the AmeriGas facility could require condemnation and designation cifthe future use of the land for a public purpose.[40] • Rezoning to non-residential use would still allow them to legally operate as they did prior to the a proposed zone change. • Rezoning for residential use would require a very lengthy (minimum 2 year) environmental review and litigation process, which would cost millions and strong likelihood that the City would lose in court based on Rancho's record lacking major safety and code violations. 3. Prior reports from POLA attorneys indicate that they would find it difficult to seize the land without having a port-specific purpose for the land under the Tidelands Trust, and that any project would face scrutiny and a harsh EIR process as it would be industrial use/container space.[41 1 4. The City Attorney determined that the City of Los Angeles did not have the authority or legal basis to compel the relocation of Rancho from its site.[421 5. The costs to relocate the facility are not feasible for the City given the costs associated with such a move and the legal realities of initiating a condemnation of the property and/or eminent domain seizure of the land. [43J • Condemnation, re-zoning and/or relocation of the Rancho facility (two storage tanks, LPG product office, lost revenues, etc) could require payment of fair market value of the land, a "goodwill" payment for any lost revenues, relocation costs, cost of construction of new pipelines, among other costs. An outright seizure of the property is not possible under the 5th Amendment to the United States Constitution, which would require "just compensation" for the property, and as previously stated the amount would be outside of any fee the City could afford to pay assuming it won a condemnation or eminent domain procedure in court. [44J[45J How often is the facility subject to inspection? • The Los Angeles Fire Department and the Los Angeles Department of Building and Safety are required by state law to perform state and City inspections at least once every one to three years, and as LAFD is acting as both a state and City inspection agency they are inspecting Rancho LPG once a year, not including unplanned surprise inspections. LAFD is responsible for monitoring compliance with City, state, and federal regulations, reviewing all Risk Management Plans, and for training and preparation for any potential emergency at this installation. LAFD is responsible for safety inspections at Rancho and 49 similar facilities in Los Angeles.[461(471 Did Petrolane/AmeriGas/Rancho obtain building permits and conduct an EIR? • The environmental impacts of the Rancho Facility, pipelines, rail line and marine terminal were assessed in an Environmental Impact Report certified as compliant with the California Environmental Quality Act by the City prior to approval of the Rancho Facility project (for Rancho's predecessor Petrolane) in 1973_[4 SJ[49J -·-.. -.,., References 1. j http://petroleum-refining.blogspot.com/2012/05/intertek-bulk-liquid-storage-tenninals.html 2. j http://energyalmanac.ca.gov/petroleum!refineries.html 3. j http://energyalmanac.ca.gov/petroleum!refineries.html 4. j http://www.kindennorgan.com/business/products _pipelines/terminals_ W _la_ harbor.cfm 5. j http://www.vopak.com/north-america/vopak-tenninal-los-angeles-cbm.html 6. j http://www.google.com/url?q=http%3A%2F %2F clkrep.lacity.org%2F onlinedocs%2F2004%2F04-1645 _ rpt_ cao _ 3-13-06.pdf&sa=D&sntz= 1 & usg=AFQjCNH:xinOSXtgei66TlcBhEXpf4v3hug 7. j https://docs.google.com/folder/d/OBxy-stsBT _ OINXJHOWZEWnRMNmM/edit?usp=sharing&docld=OBxy- stsBT OINXh5eHoOa3dtUFU 8. j https://docs.google.com/folder/d/OBxy-stsBT _ OINXJHOWZEWnRMNmM/edit?usp=sharing&docid=OBxy- stsBT _ OIVWRpcGlzVlRFNmc 9. j http://law.justia.com/cases/califomia/calapp3d/102/720.html 10. j http://www.google.com/url?q=http%3A %2F%2Fclkrep.lacity.org%2Fonlinedocs%2F2004%2F04-1645 _ mot.pdf& sa=D&sntz=l &usg=AFQjCNH05FYTW 4JePudQBe_JDjOC39pMFw 11. j https://docs.google.com/folder/d/OBxy-stsBT _ OlNXJHOWZEWnRMNmM/edit?usp=sharing&docld=OBxy- stsBT _ OldjhhcORYSWh6M2s 12. j https://docs.google.com/folder/d/OBxy-stsBT _ OINXJHOWZEWnRMNmM/edit?usp=sharing&docld=OBxy- stsBT _ OldElpV3phaGVDVHc 13. j http://www.pedrocalendar.com/index2 14. j http://www.google.com/url?q=http%3A%2F %2Fcityclerk.lacity.orgo/o2Flacityclerkconnect°/o2Findex.cfm%3Ffa%3Dccfi. viewrecord%26cfuumber%3D 11-1813- S l &sa=D&sntz= l&usg=AFQjCNEWOaMpfE5RjTtyMnphOsuDKef59A 15. j http://www.google.com/url?q=http%3A%2F%2Fclkrep.lacity.org%2Fonlinedocs%2F2011%2Fll-1813- s 1 _ rpt_ cla _ 2-19-13.pdf&sa=D&sntz=1 &usg=AFQjCNFG38ns8w39ktrgjnxAB07azlplUw 16. j http://www.google.com/url?q=http%3A %2F%2Fclkrep.lacity.org%2F onlinedocs%2F2011%2Fl1-1813- s l _ rpt_ps _ 7-24-2012.pdf&sa=D&sntz= l &usg=AFQjCNHyYL8mwSMMvK15jCt5D 1AaLICtag 17. j http://www.google.com/url?q=http%3A%2F %2F clkrep.lacity.org%2Fonlinedocs%2F2011o/o2F11-1813 _misc_ 2-23-11.pdf&sa=D&sntz= 1 & usg=AFQjCNFEDei16f7svYlxfu-dhshovrpfQA 18. j http://www.google.com/url?q=http%3A%2F %2F cityclerk.lacity.org%2Flacityclerkconnect%2Findex.cfm%3Ffa%3Dcc:fi. viewrecord%26cfuumber%3D 1l-l813- S6&sa=D&sntz= 1&usg=AFQjCNHvDJO1Mn3df3tyQN _ Sv5rFwQzhOQ 19. j http://www.google.com/url?q=http%3A%2F %2F cityclerk.lacity.org%2Flacityclerkconnect%2Findex.cfm%3Ffa%3Dcc:fi.viewrecord%26cfuumber%3D 11-l 813- S5&sa=D&sntz= 1 &usg=AFQjCNGh WRORjXhmb7FfCSjut81jnPtY zg 20. j http://www.google.com/url?q=http%3A%2F %2F clkrep.lacity.org%2F onlinedocs%2F2004%2F04-1645 _ rpt_ cao _ 3-13-06.pdf&sa=D&sntz= 1 & usg=AFQjCNHxinOSXtgei66TlcBhEXpf4v3hug 21. j http://www.google.com/url?q=http%3A%2F %2F cityclerk.lacity.org%2Flacityclerkconnect%2Findex.cfm%3Ffa%3Dcc:fi.viewrecord%26cfuumber%3D 11-l 813- S3&sa=D&sntz= 1 &usg=AFQjCNF9b4ZAvkSRRa _ SNtTrwMRQWl 7U8Q 22. j http://clkrep.lacity.org/onlinedocs/2004/04-1645_rpt_plan_l1-15-06.pdf 23. j http://law.justia.com/cases/california/calapp3d/102/720.html 24. j http://www.google.com/url?q=http%3A%2F %2Fcityclerk.lacity.org%2Flacityclerkconnect%2Findex.cfm%3Ffa%3Dcc:fi.viewrecord%26cfuumber%3D 11-l 8 l 3- S2&sa=D&sntz= 1&usg=AFQjCNGaRG3_2W8QXghsNSJiM5gtH14eCQ 25. j https://docs.google.com/a/lacity.org/file/d/OBxy-stsBT _ OlVTNOX2tjdXQ50W c/edit 26. j http://www.google.com/url?q=http%3A%2F %2F cityclerk.lacity.org%2Flacityclerkconnect%2Findex.cfm%3Ffa%3Dccfi. viewrecord%26cfuumber%3D 11-1813- S7 &sa=D&sntz= l&usg=AFQjCNGBTHCK9Gr7 _ zJGfA8GX5v.krjL _ ZQ 27. t http://www.google.com/url?q=http%3A%2F %2F cityclerk.lacity.org%2Flacityclerkconnect%2Findex.cfin%3Ffa%3Dccfi. viewrecord%26cfuumber°/o3D 11-18 l 3- S4&sa=D&sntz= 1 &usg=AFQjCNF11Nn-V39Y62v5vPVZSAE2VocUXw 28. t http://www.google.com/url?q=http%3A%2F %2F clkrep.lacity.org%2F onlinedocs%2F2004%2F04-1645 _ rpt_pola _ 6-10-05.pdf&sa=D&sntz=1 & usg=AFQjCNGwOfOC _iK.LNySVUW9xSiTBJNsOhA 29. t http://clkrep.lacity.org/onlinedocs/2011/l l-1813-sl _ rpt_ cla_ 2-19-13.pdf 30. t http://en.wikipedia.org/wiki/Butane 31. t http://www.google.com/url?q=http%3A%2F %2Fclkrep.lacity.org%2F onlinedocs%2F2004%2F04-1645 _ rpt_ cao _ 3-13-06.pdf&sa=D&sntz= 1 & usg=AFQjCNHxinOSXtgei66TlcBhEXpf4v3hug 32. t http://en.wikipedia.org/wiki/Propane 33. t http://clkrep.lacity.org/onlinedocs/2011/l l-1813-sl_rpt_cla _2-19-13.pdf 34. t http://www.portoflosangeles.org/pdf/rancho _facility_ attachments.pdf pg 50 35. t http://clkrep.lacity.org/onlinedocs/2004/04-1645_rpt_cao_3-13-06.pdf 36. t https://docs.google.com/folder/d/OBxy-stsBT _ OINXJHOWZEWnRMNmM/edit?usp=sharing&docld=OBxy- stsBT _ OIVTNOX2tjdXQ50W c 37. t http://geohazards.usgs.gov/cfusion/qfault/qf_web_disp.cfin?qfault_or=320&ims_cf_cd=cf&disp_cd=C 38. t http://www.conservation.ca.gov/cgs/rghm/ap/Pages/main.aspx 39. t http://clkrep.lacity.org/onlinedocs/2004/04-1645_rpt_pola_6-10-05.pdf 40. j http://www.google.com/url?q=http%3A%2F %2F clkrep.lacity.org%2F onlinedocs%2F2004%2F04-l 645_rpt_plan_11-15-06.pdf&sa=D&sntz= 1 & usg=AFQjCNHpgS4m5ZOeUK.yOz _ RxlQTHthprPQ 41. t http://clkrep.lacity.org/onlinedocs/2004/04-1645 _ rpt_ cao _3-13-06.pdf 42. j http://clkrep.lacity.org/onlinedocs/2004/04-1645_rpt_cao_3-13-06.pdf 43. t http://clkrep.lacity.org/onlinedocs/2004/04-1645 _ rpt_ cao_ 3-13-06.pdf 44. j http://www.oyez.org/cases/1851-1900/l 896/1896_129 45. t http://en.wikipedia.org/wiki/Fifth _Amendment_ to_ the_ United_ States_ Constitution#Eminent_ domain 46. t http://www.google.com/url?q=http%3A %2F%2F clkrep.lacity.org%2F onlinedocs%2F2011%2F11-1813- s 1 _ rpt_ cla _ 2-19-13.pdf&sa=D&sntz=1&usg=AFQjCNFG38ns8w39ktrgjnxAB07 azlplUw 4 7. t https://docs.google.com/folder/d/OBxy-stsBT _ OlNXJHOWZEWnRMNmM/edit?usp=sharing&docld=OBxy- stsBT OINXh5eHoOa3dtUFU 48. j https://docs.google.com/a/lacity.org/file/d/OBxy-stsBT _ 01NXh5eHoOa3dtUFU/edit 49. t https://docs.google.com/a/lacity.org/file/d/OBxy-stsBT_OlVWRpcGlzVlRFNmc/edit Retrieved from "http://lal5th.com/wiki/index.php?title=Main _Page&oldid= 164" • This page was last modified on 27 February 2013, at 14:01. A Close Look At Plains All American Pipeline I Investing.com http://www.investing.com/analysis/a-close-look-at-plains-all-american. I nf 7 A Close Look At Plains All American Pipeline By Robert Kientz I Stock Markets I Feb 05, 2013 06:56PM GMT I Add a Comment In a previous series of energy-related articles, I discussed how the resurgence of natural gas would give us a solid alternative to oil for transportation energy needs. In addition, natural gas will also provide us with additional supplies of petrochemicals to offset the world's insatiable demand for them and their end products, which includes just about everything you might currently purchase at Wal mart. The gas shale boom has come along just in time to offset declining cheap oil supplies and offer the U.S., in particular, the enviable position of net energy exporter of the future. Those who have excess energy tend to have stronger and more resilient long-term economies. In addition to boosting our prospects of economic stability based upon a solid foundation of domestic energy supplies, the boom in natural gas and oil production in the United States provides investors with many potential choices for stock appreciation and dividend plays. In this series, I will present some companies across the natural gas sector that may profit investors handsomely for several years. I'll begin by discussing a midstream energy company, Plains All American Pipeline, LP (PAA), and will weigh benefit versus risk. Foundation Plains is a vertically integrated oil and gas midstream company providing facilities, supplies and logistics, and transportation. PAA's Project Portfolio Totals Over $5 Billion (Includes Approved Projects} >$5 Billion +Portfoflo includes wide range of projects including: Pipelines, Terminals, Gas Storage, Raif, Barge, Dock and Gas Processing Facilities +Composed of >200 projects, excluding 3 largest projects, total would be -$4.7 billion +$1 billion of this portfolio represented by 2012 capital program CL!~'.~~~~ PAA's Portfolio The company sports over $5 billion in portfolio across a range of assets. The company has over 19,000 miles of pipeline in North America as its largest transportation asset, and is beefing up rail transportation to address short term shortages with $1 billion in rail n/14/?011 ?·O'i A~ A Close Look At Plains All American Pipeline I Investing.com http://www.investing.com/analysis/a-close-look-at-plains-all-american. ? nf7 depot projects in the last several months. The segment also includes trucks, trailers, and barges. Facilities provide storage, terminals, and throughput services for oil, natural gas, LPG, and refined products. The segment also offers LPG fractionation and processing of natural gas. Supply and Logistics purchases product and resells it at the other end of their transportation networks. Plains dropped down its natural -as storage into a separate LP, PM Natural Gas Storage (PNG), which I will discuss in a future article. North American Assets The recent purchase of BP's Canadian NGL assets provides Plains with an opportunity to process and transport those products in Canadian to U.S. markets, as well as using the infrastructure for moving other refined products that capture higher premiums on the market. Plains management expects their retail approach to raise margins on these former assets which BP used primarily for internal purposes. 6/14/?011 ?.·O" Al\ A Close Look At Plains All American Pipeline I Investing.com http://www.investing.com/analysis/a-close-look-at-plains-all-american. 3 of7 BP Acquisition Outside of the BP purchase, Plains has concentrated on expanding pipelines, storage, and rail at existing sites to take advantage of local market knowledge while reducing the risk of asset under-utilization. Plains management has positioned assets in active and sizeable oil and gas plays that should allow smooth monetization and provide solid returns for investors. The approach to Plains' expansion is a solid one with real gains seen in each business segment. I believe that Plains business model closely aligns with growth in the oil and gas segments, specifically in pipelines and rail to markets and in fractionation of natural gas liquids. The company has a forward-thinking market approach and has appeared to spend their money wisely given current market trends. Business Risk In keeping with my risk-based approach to investing, the following is my analysis of the risks that Plains All American Pipleline faces in the market. First, the recent expenditures in rail appear to alleviate the near-term shortage of transportation needs to various markets. However, pipelines have a higher return over time and the industry is expected to invest very heavily in pipelines that will compete in some areas directly with Plains rail expansion. Determining what competition will arise is difficult as future demand volumes are in many cases difficult to predict accurately. Some of Plains' rail may compete with pipelines and receive lower margins while some of it may sell at a premium due to lack of alternatives in the area. This is a chance that investors must take in assessing any of the midstream energy companies. Generally Plains has added rail where large pipeline alternatives do not exist to mitigate this risk, but it should not be expected that this scenario will hold true for all Plains future projects. One mitigating factor for the rail projects is that pipelines face political and environmental challenges that rail has tended to avoid thus far. Another is that pipelines are very costly, and rail can more quickly be implemented to support current market demand waiting on pipeline build out. Because U.S. natural gas infrastructure is woefully behind, my instinct is that Plains will be fine. The rail expansion serves critical market needs and is profitable now. Likely it will be years before pipelines catch up to market demands and they may never meet all 6/14/20112:0"; Al\ A Close Look At Plains All American Pipeline I Investing.com http://www.investing.com/analysis/a-close-look-at-plains-all-american. iof7 localized requirements for oil and gas products by themselves. Another risk for companies structured as MLPs are that most profits are distributed to the investors. As such, most expansion projects, being CAPEX intensive, are financed by share dilution and debt. Therefore, debt grades for PAA are one step above speculative. But I feel this rating is a bit misleading for those who understand how the sector operates in the long run. Normally I would warn away from companies that have relatively low operating margins and high debt levels, but in the case of energy MLPs I make an exception. I do not see many scenarios in a normal market hungry for grid power, transportation alternatives to rising oil costs, and cheap petrochemicals where income drops significantly for Plains and similar MLPs. Natural gas serves as a hedge for the trend of expensive oil and its byproducts and both products will experience strong demand. Plains' assets should be slowly and methodically be monetized by the market. In addition, Plains targets a near 50-50 debt to equity ratio in order to keep finance options balanced. Too much share dilution will reduce distributions while too much debt may scare away lenders and investors wary of future liquidity issues. The financing balance targeted by Plains management has appeared to work as planned so far. Plains' profits are falrly immune from market prices for oil, gas, and refined products because the company mostly operates as a toll road charging fees to various companies for transportation of the fuels. Certain parts of the company income including liquids re-sales, storage, and fractionation fluctuate by demand for a given product. Those portions of the Plains portfolio, however, make up a minority share of the income stream for the company. Profits and distributions should remain fairly consistent and independent of market prices in a normal market. Taxation One thing that must be mentioned with Master Limited Partnerships .is that taxation for investors is treated differently by the IRS. Because income is not taxed twice, but passed down to investors, some of the income received from investment will be taxed at ordinary income tax rates and some will be taxed at capital gains rates. The National Association of Publicly Traded Partnerships has provided an easy to understand example of how MLPs are taxed. Year 2: All units sold @ $32.00 $32,000 Depreciation recapture-taxed at ordinary income rates $1,500 MLP Tax Example Taxes are assessed yearly on net income per unit owned (which equals income minus depreciation taken by the partnership). A K1 will be issued to each investor for their yearly taxes which details what is taxable. In addition, upon sale of the asset, the investor is taxed yet again. Essentially, any depreciation deducted each year the MLP is owned will be 'recaptured' at sale at ordinary income 6/14/2011 2:05 Al\ A Close Look At Plains All American Pipeline I Investing.com http://www.investing.com/analysis/a-close-look-at-plains-all-american. '; nf7 tax rates. Capital gains are applied on the portion of cash distributions owing to growth in unit value. MLPs offer tax deferral of some taxation, but the taxation of recaptured depreciation at ordinary rates upon sale of the units can more than offset the tax deferral benefits depending on the unit yield (currently at 4.6% yearly for Plains) and holding time. Since the yield is taxed at the capital gains rate, MLPs which offer consistently rising yields over long time periods offer valuable tax shelters that may offset future ordinary income taxes for some investors. MLPs are a complicated investment vehicle for this reason, and each investor should consult with a tax professional before making any investment purchases to fully understand the tax implications. Financials As mentioned previously, Plains has a high debt to account for expansion, leading to a current ratio of 0.99. Period Ending Sep 29, 2012 Jun 29, 2012 Mar 30, 2012 Dec 30, 2011 ~l~~~Lf'~ll'~~·~§~liJ Current Assets Cash And Cash Equivalents Short Term Investments Net Receivables Inventory Other Current Assets Total Current Assets Long Term Investments Property Plant and Equipment Goodwill Intangible Assets Accumulated Amortization Other Assets Deferred Long T81T!1 Asset Charges 32.000 3-319.000 1.320.000 142.000 4,813,000 289.000 9.635.000 2.119,000 1.331.000 12.000 14.000 26,000 3.174.000 2,902.000 3.190.000 1, 172.000 1.079.000 978.000 318.000 171.000 157,000 4,676,000 4,166,000 4,351,000 193.000 1.824.000 191.000 9,535.000 8.121,000 7,875.000 2.112.000 1.879.000 1.854.000 1290.000 1.091,000 1.110.000 Total Assels 18,187,000 17,806,000 17,081,000 15,381,000 MfMj(.@'!?J.&'£M•m~iff%1BiX.fffi1m'W%.Mif8.1.iif~Jf&itW~-~&k~~ Current Liabilities Accounts Payable 3.707.000 3268.000 3,489.000 3.599,000 Short/Current Long Term Debt 834.000 997.000 757.000 679.000 Other Current Liabillties 345.000 549.000 196.000 233,000 Total Current Liabilities 4,886,000 4,814,000 4,442,000 4,511,000 Long Term Debt 5.811.000 5.793.000 5.794.000 4.520.000 Other liabilities 565.000 554,000 332.000 376,000 Deferred Long Term liability Charges Minority Interest 505.000 510.000 516.000 524.000 Negative Goodwill Total liabirmes 11,262,000 11,161,000 10,568,000 9,407,000 ~-ilf~£f~ff ... if&'tlfi~ff.d&1..tlffeld&".f~3JfimW'AK@IDri'F£'@.f..$~ Misc Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Other Stockholder Equity Total Stockholder Equity 6.420.000 6.135,000 5.997.000 5,450,000 Net Tangible Assels (2, 119,000) (2, 112,000) (1,379,000) (1,854,000) --·------·----------------------~·------------·-------·- Balance Sheet Data courtesy of Yahoo Finance Accounts receivables and inventories exceed accounts payable, but not all current liabilities. Therefore, we know that Plains All American will need to use some future net income to offset these liabilities. The good news is that all assets (minus goodwill) are substantially larger than liabilities. This suggests that Plains has created value through recent investment and will need to monetize developments into positive cash flow over time. Investors should expect operating margin to increase somewhat {beyond Q3 of 4.1 %) due to strategically placed expansion projects and the ability to add value with the BP Canadian NGL acquisition, based upon 6114/2011 2:05 All A Close Look At Plains All American Pipeline I Investing.com http://www.investing.com/analysis/a-close-look-at-plains-all-american. 6of7 management guidance. The most important accounting metrics I look at are Book Value, Price I Book Value, and Enterprise Value EV I EBITDA. The first, currently at 18.65 per share, provides a basement value for the stock in the event several negatives earnings announcements lead the market to a fear of default, and the price drops. If earnings estimates are wrong and income falls precipitously for the company, inventors can generally expect to get something near book value for their stock at least. Plains trades at 2.83 times book ($52. 78 price I $18.65 book value) which is not an unreasonable figure, but high for my tastes. The company trades at a 13.54 EV I EBITDA which is high for any company that I consider buying. It suggests the company is 'worth' 13.54 times earnings potential to shareholders and debtors. I usually do not go above a measure of 10 EV I EBITDA. Note that I am very conservative investor regarding valuations, and I don't give much thought to competitor valuations in the same market. Too many times I have seen entire sectors become overvalued, rendering this analysis short-sighted and potentially dangerous. Investors may have jumped the gun on Plains All American, and I would wait for a pullback before entering. Analysts expect Plains to beat earnings on February 6th, and the stock has run pretty high on expectations of extensive future growth yet to occur. Rising income will eventually 1) pay down debt and cause the company to 2) repurchase shares as they have in the past, while 3) raising cash distributions for investors in the process. But Plains is in expansion mode and current valuations shouldn't be supported in the near term. Technical Indicators an 29. 20H: ~PAA 52.62 s SMA.{50) 47.1-0 i;.z SMA(2:6&}-"a.s.s Hay Jul Sep Oct 2013 Feb ...,. 7.0M O.OM 5.DM ..... J J.OM 111lil11ll.1111111 l111/lli1h11111l111111l11.1111h11111111111ii.1111h11111111111,u1l1l111111.11lt.1111i.111i.1il1,nhi.111.i.11111l""'""'"'"hh11l11111l1111111111 ....... 1111 .. 1111~llll11.11111111111llhtllll.1111l11!111!1!111111IR11i t:::i M Siow Stochastic; %R(15} 9JJ15 m 'o/o0(5} 93.55 .~. ~ ~ \ s MACD(26.12} 154 ~ EMA(9) L28 "'* Oiver--gence 0,27 :c-oe PAA's Technicals 20.0S ~1.50 1.00 0.50 0.0-0 The yearly chart for PAA tells us that a slow, orderly climb has been replaced with a hard uptick in anticipation of earning announcements. However, technical indicators such as Stochastic and MACO indicate a leveling off on average volume. Last 6/14/?0l"i ?·O"i Al\ A Close Look At Plains All American Pipeline I Investing.com http://www.investing.com/analysis/a-close-look-at-plains-all-american 7 of7 month's run wasn't based upon long-term fundamentals. Even if earnings adhere to predictions, I expect the stock to retest the 50 day moving average around $45 per share. That could be your short-term entry point, a week or two after earnings are announced this week, which will allow reasonable yield moving forward. Long term, I see the stock price leveling off lower than $45 and I personally would not enter into a long position until EV I EBITDA roughly equals a 10 multiple. Investing in MLPs, due to taxation and nature of oil and gas infrastructure build out is a long term proposition. Investors should consider all factors before placing money on this bet. 6/14/2013 2:05 M CITY OF TO: FROM: DATE: SUBJECT: HONORABLE MAYOR & CITY COUNCIL MEMBERS CITY CLERK JUNE 18, 2013 ADDITIONS/REVISIONS AND AMENDMENTS TO AGENDA** Attached are revisions/additions and/or amendments to the agenda material presented for tonight's meeting: Item No. N 8 9 Respectfully submitted, Description of Material Staff email with revised contract Email from April L. Sandell Email from Ms. Yarber dated 6/18/13 with responses; Email from Mickey Radich ~~ -Carla Morreale ** PLEASE NOTE: Materials attached after the color page(s) were submitted through Monday, June 17, 2013**. W:\AGENDA\2013 Additions Revisions to agendas\20130618 additions revisions to agenda.doc Carla Morreale From: Sent: To: Cc: Subject: Attachments: Importance: Shiri Roger Dennis Mclean Tuesday, June 18, 2013 4:09 PM sklima@rwglaw.com; kpulliam@vtdcpa.com Kathryn Downs; Ryan Mills; Carol Lynch <clynch@rwglaw.com>; Carla Morreale; Teresa Takaoka PSA -Vavrinek, Trine, Day & Co. 20130618_Updated VTD PSA.docx High I've attached the working draft of the PSA. It is (essentially} the same PSA presented to Council for approval tonight. Based on discussions with Roger Alfaro during the day today (6/18/2013), VTD agrees to terms of insurance coverage. RWG shall timely review policies compared with the Certificate of Insurance and the PSA prior to commencement of services (preferably before 7 /31/2013}. Any reasonable insurance policy coverage change requested by the City (if any) must be agreed upon by both City & VTD; otherwise PSA shall terminate prior to commencement of services. Roger also said that WC coverage providers do not always provide 30 day notice of cancellation. Regardless, VTD would endeavor to provide timely notice of WC coverage. This email will be provided to the City Council as Late Correspondence. Thanks, Dennis Mclean Director of Finance and Information Technology t: City of Rancho Palos Verdes Finance and Information Technology 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 www.palosverdes.com/rpv dennism@rpv.com -(310) 544-5212 p -(310) 544-5291 f Do you really need to print this e-mail? This e-mail message contains information belonging to the City of Rancho Palos Verdes, which may be privileged, confidential and/or protected from disclosure. The information is intended only for use of the individual or entity named. Unauthorized dissemination, distribution, or copying is strictly prohibited. If you received this email in error, or are not an intended recipient, please notify the sender immediately. Thank you for your assistance and cooperation. Professional Auditing Services Agreement between The City of Rancho Palos Verdes & Vavrinek, Trine, Day & Co., LLP THIS AGREEMENT ("Agreement") is made and entered into this 18 day of June, 2013 by and between the City of Rancho Palos Verdes (hereinafter referred to as the "CITY") and Vavrinek, Trine, Day & Co., LLP (hereafter referred to as "AUDITOR"). IN CONSIDERATION of the covenants hereinafter set forth, the parties hereto agree as follows: ARTICLE 1 SCOPE OF SERVICES 1.1 Project Description AUDITOR shall perform auditing services and duties that are set forth in Exhibit "A" of this Agreement, which is attached hereto and incorporated herein by this reference: CITY shall notify AUDITOR in writing, whether or not AUDITOR'S services shall include: (a) a single audit of federal financial assistance; (b) preparation of CITY'S State Controller's Reports; and/or (c) preparation of CITY'S State Street Report. Notwithstanding services described above, the CITY may request and AUDITOR may agree to perform other services. The scope of such services and compensation shall be agreed to in writing, signed by both parties and shall become a part of this Agreement. 1 .2 Description of Services AUDITOR shall perform all services and duties pursuant to this Agreement in a professional and timely manner, at the direction of the Director of Finance & Information Technology, or his designee. All directives, instructions, or other communications from CITY to AUDITOR shall be through only the Director of Finance & Information Technology, or his designee. 1.3 Schedule of Work Upon receipt of written Notice to Proceed from the CITY, AUDITOR shall perform with due diligence the services requested by the CITY. Time is of the essence in this Agreement. AUDITOR shall not be responsible for delay, nor shall AUDITOR be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of CITY to furnish timely information or to approve or disapprove AUDITOR's work promptly, or delay or faulty performance by CITY, other AUDITORs/contractors, or governmental agencies, or any other delays beyond AUDITOR's control or without AUDITOR's fault. Page 1 of 11 ® ARTICLE 2 COMPENSATION 2.1 Terms of Compensation CITY shall pay AUDITOR for auditing services rendered and costs incurred pursuant to this Agreement in accordance with the amounts set forth in Exhibit "A". Notwithstanding any and all provisions of this Agreement, in no event shall compensation for the services exceed $43,070 each fiscal year, unless authorized in writing by the CITY and approved by the CITY Council. All payments due AUDITOR shall be paid to: Vavrinek, Trine, Day & Co., LLP 8270 Aspen Street Rancho Cucamonga, CA 91730 AUDITOR will submit invoices monthly for the percentage of work completed in the previous month. CITY agrees to pay all undisputed invoice amounts within thirty (30) days of receipt of the invoice. CITY agrees to use its best efforts to notify AUDITOR of any disputed invoice amounts within ten (10) days of the receipt of each invoice. However, CITY'S failure to timely notify AUDITOR of a disputed amount shall not be deemed a waiver of CITY'S right to dispute such amount or percentage. 2.2 Additional Services CITY may request additional specified work under this Agreement. All such work must be authorized in writing by the CITY's Director of Finance & Information Technology prior to commencement. AUDITOR shall perform such services, and CITY shall pay for such additional services in accordance with AUDITOR's Schedule of Hourly Rates, which is within Exhibit "B." The rates in Exhibit "B" shall be in effect through the end of this Agreement. 2.3Term of Agreement This Agreement shall commence on June 18, 2013, and shall terminate on June 17, 2016 unless sooner terminated pursuant to Article 4 of this Agreement. Additionally, the City reserves the right to extend the term of the Agreement for two (2) additional one-year terms with the mutual written consent of both parties. Page 2of11 ® ARTICLE 3 INDEMNIFICATION AND INSURANCE 3.1 Indemnification. Hold Harmless. and Duty to Defend. AUDITOR shall defend, indemnify, and hold the CITY, its officials, officers, employees, agents and independent contractors seNing in the role of CITY officials, and volunteers (collectively "lndemnitees") free and harmless from any and all claims, demands, causes of action, costs, expenses, liabilities, losses, damages or injuries, in law or equity, to property or persons, including wrongful death (collectively "Claims"), in any manner arising out of or incident to any acts or omissions of AUDITOR, its officials, officers, employees or agents in connection with the performance of this Agreement., including without limitation the payment of all consequential damages, attorneys' fees, and other related costs and expenses, except for such Claims arising out of the sole negligence or willful misconduct of the lndemnitees. With respect to any and all such Claims, AUDITOR shall defend lndemnitees at AUDITOR's own cost, expense, and risk and shall pay and satisfy any judgment, award, or decree that may be rendered against lndemnitees. AUDITOR shall reimburse lndemnitees for any and all legal expenses and costs incurred by each of them in connection therewith or in enforcing the indemnity herein provided. AUDITOR's obligation to indemnify shall not be restricted to insurance proceeds, if any, received by AUDITOR or lndemnitees. All duties of AUDITOR under this Section shall suNive termination of this Agreement. 3.2 General Liability AUDITOR shall at all times during the term of the Agreement carry, maintain, and keep in full force and effect, a policy or policies of Commercial General Liability Insurance, with minimum limits of one million dollars ($1,000,000) for each occurrence and two million dollars ($2,000,000) general aggregate for bodily injury, death, loss or property damage for products or completed operations and any and all other activities undertaken by AUDITOR in the performance of this Agreement. Said policy or policies shall be issued by an insurer admitted to do business in the State of California and rated in AM. Best's Insurance Guide with a rating of A:VII or better. 3.3 Professional Liability AUDITOR shall at all times during the term of this Agreement, carry, maintain, and keep in full force and effect a policy or policies of professional liability insurance with a minimum limit of one million dollars ($1,000,000) per claim and aggregate for errors and/or omissions of AUDITOR in the performance of this Agreement. Said policy or policies shall be issued by an insurer admitted to do business in the State of California and rated in Best's Insurance Guide with a rating of A:VII or better. Page 3of11 G) If a "claims made" policy is provided, such policy shall be maintained in effect from the date of performance of work or services on the CITY's behalf until three (3) years after the date of work or services are accepted as completed. Coverage for the post-completion period may be provided by renewal or replacement of the policy for each of the three (3) years or by a three-year extended reporting period endorsement, which reinstates all limits for the extended reporting period. If any such policy and/or policies have a retroactive date, that date shall be no later than the date of first performance of work or services on behalf of the CITY. Renewal or replacement policies shall not allow for any advancement of such retroactive date. 3.4 Automobile Liability AUDITOR shall at all times during the term of this Agreement obtain, maintain, ·and keep in full force and effect, a policy or policies of Automobile Liability Insurance, with minimum of one million dollars ($1,000,000) per claim and occurrence and two million dollars ($2,000,000) in the aggregate for bodily injuries or death of one person and five hundred thousand dollars ($500,000) for property damage arising from one incident. 3.5 Worker's Compensation AUDITOR agrees to maintain in force at all times during the performance of work under this Agreement worker's compensation insurance as required by the law. AUDITOR shall require any subcontractor similarly to provide such compensation insurance for their respective employees. 3.6 Notice of Cancellation (a) All insurance policies shall provide that the insurance coverage shall not be cancelled by the insurance carrier without thirty (30) days prior written notice to CITY, or ten (10) days notice if cancellation is due to nonpayment of premium. Additionally, AUDITOR shall provide immediate notice to the CITY if it receives a cancellation or policy revision notice from the insurer. AUDITOR agrees that it will not cancel or reduce said insurance coverage. (b) AUDITOR agrees that if it does not keep the aforesaid insurance in full force and effect, CITY may immediately terminate this Agreement. 3.7 Certificate of Insurance At all times during the term of this Agreement, AUDITOR shall maintain on file with the CITY Clerk a certificate of insurance showing that the aforesaid policies are in effect in the required amounts. The commercial general liability policy shall contain endorsements naming the CITY, its officers, agents and employees as additional insureds. Page 4of11 (9 3.8 Primary Coverage The insurance provided by AUDITOR shall be primary to any coverage available to CITY. The insurance policies (other than workers compensation and professional liability) shall include provisions for waiver of subrogation. ARTICLE 4 TERMINATION 4.1 Termination of Agreement (a) This Agreement may be terminated at any time, with or without cause, by the CITY upon thirty (30) days prior written notice or by AUDITOR upon ninety (90) days prior written notice. Notice shall be deemed served if completed in compliance with Section 6.14. (b) In the event of termination or cancellation of this Agreement by AUDITOR or CITY, due to no fault or failure of performance by AUDITOR, AUDITOR shall be paid compensation for all services performed by AUDITOR, in an amount to be determined as follows: for work satisfactorily done in accordance with all of the terms and provisions of this Agreement, AUDITOR shall be paid an amount equal to the percentage of services performed prior to the effective date of termination or cancellation in accordance with the work items; provided, in no event shall the amount of money paid under the foregoing provisions of this paragraph exceed the amount which would have been paid to AUDITOR for the full performance of the services described in this Agreement. ARTICLE 5 OWNERSHIP OF DOCUMENTS 5.1 Ownership of Documents and Work Product All final documents, plans, specifications, reports, information, data, exhibits, photographs, images, video files and media created or developed by AUDITOR pursuant to this Agreement ("Written Products") shall be and remain the property of the CITY without restriction or limitation upon its use, duplication or dissemination by the CITY. All Written Products shall be considered "works made for hire," and all Written Products and any and all intellectual property rights arising from their creation, including, but not limited to, all copyrights and other proprietary rights, shall be and remain the property of the CITY without restriction or limitation upon their use, duplication or dissemination by the CITY. AUDITOR shall not obtain or attempt to obtain copyright protection as to any Written Products. PagQ)11 AUDITOR hereby assigns to the CITY all ownership and any and all intellectual property rights to the Written Products that are not otherwise vested in the CITY pursuant to the paragraph directly above this one. AUDITOR warrants and represents that it has secured all necessary licenses, consents or approvals to use any instrumentality, thing or component as to which any intellectual property right exists, including computer software, used in the rendering of the services and the production of all Written Products produced under this Agreement, and that the CITY has full legal title to and the right to reproduce the Written Products. AUDITOR shall defend, indemnify and hold the CITY, and its elected officials, officers, employees, servants, attorneys, designated volunteers, and agents serving as independent contractors in the role of CITY officials, harmless from any loss, claim or liability in any way related to a claim that CITY's use of any of the Written Products is violating federal, state or local laws, or any contractual provisions, or any laws relating to trade names, licenses, franchises, copyrights, patents or other means of protecting intellectual property rights and/or interests in products or inventions. AUDITOR shall bear all costs arising from the use of patented, copyrighted, trade secret or trademarked documents, materials, equipment, devices or processes in connection with its provision of the services and Written Products produced under this Agreement. In the event the use of any of the Written Products or other deliverables hereunder by the CITY is held to constitute an infringement and the use of any of the same is enjoined, AUDITOR, at its expense, shall: (a) secure for CITY the right to continue using the Written Products and other deliverables by suspension of any injunction, or by procuring a license or licenses for CITY; or (b) modify the Written Products and other deliverables so that they become non-infringing while remaining in compliance with the requirements of this Agreement. This covenant shall survive the termination of this Agreement. Upon termination, abandonment or suspension of the Project, the AUDITOR shall deliver to the CITY all Written Products and other deliverables related to the Project without additional cost or expense to the CITY. If AUDITOR prepares a document on a computer, AUDITOR shall provide CITY with said document both in a printed format and in an electronic format that is acceptable to the CITY. This Article 5 "Ownership of Documents" does not apply to audit documentation or audit working papers. Copies of the audit documentation and audit working papers shall be available to the City even subsequent to the termination of this Agreement, provided such disclosure does not undermine the independence or the validity of the audit process. 6.1 Representation ARTICLE 6 GENERAL PROVISIONS The CITY representative shall be the Director of Finance & Information Technology or his or her designee, and AUDITOR shall notify CITY of AUDITOR's Page 6of11 @ designated representative. These individuals shall be the primary contact persons for the parties regarding performance of this Agreement. 6.2 Fair Employment Practices/Equal Opportunity Acts In the performance of this Agreement, AUDITOR shall comply with all applicable provisions of the California Fair Employment Practices Act (California Government Code Sections 12940-48), the applicable equal employment provisions of the Civil Rights Act of 1964 (42 U.S.C. 200e-217), and the Americans with Disabilities Act of 1992 (42 U.S.C. § 11200, et seq.). 6.3 Personnel AUDITOR represents that it has, or shall secure at its own expense, all personner required to perform AUDITOR's services under this Agreement AUDITOR shall make reasonable efforts to maintain the continuity of AUDITOR's staff who are assigned to perform the services hereunder and shall obtain the approval of the Director of Finance & Information Technology of all proposed staff members who will perform such services. AUDITOR may associate with or employ associates or subcontractors in the performance of its services under this Agreement, but at all times shall AUDITOR be responsible for its associates and subcontractors' services. 6.4 AUDITOR's Representations AUDITOR represents, covenants and agrees that: a) AUDITOR is licensed, qualified, and capable of furnishing the labor, materials, and expertise necessary to perform the services in accordance with the terms and conditions set forth in this Agreement; b) there are no obligations, commitments, or impediments of any kind that will limit or prevent AUDITOR's full performance under this Agreement; c) to the extent required by the standard of practice, AUDITOR has investigated and considered the scope of services performed, has carefully considered how the services should be performed, and understands the facilities, difficulties and restrictions attending performance of the services under this Agreement. 6.5 Conflicts of Interest AUDITOR agrees not to accept any employment or representation during the term of this Agreement or within twelve (12) months after completion of the work under this Agreement which is or may likely make AUDITOR "financially interested" (as provided in California Government Code Sections 1090 and 87100) in any decisions made by CITY on any matter in connection with which AUDITOR has been retained pursuant to this Agreement. 6.6 Legal Action (a) Should either party to this Agreement bring legal action against the Page 7of11 ® other, the validity, interpretation, and performance of this Agreement shall be controlled by and construed under the laws of the State of California, excluding California's choice of law rules. Venue for any such action relating to this Agreement shall be in the Los Angeles County Superior Court. (b) If any legal action or other proceeding, including action for declaratory relief, is brought for the enforcement of this Agreement or because of an alleged dispute, breach, default or misrepresentation in connection with this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees, experts' fees, and other costs, in addition to any other relief to which the party may be entitled. (c) Should any legal action about a project between CITY and a party other than AUDITOR require the testimony of AUDITOR when there is no allegation that AUDITOR was negligent, CITY shall compensate AUDITOR for its testimony and preparation to testify at the hourly rates in effect at the time of such testimony. 6.7 Assignment Neither this Agreement nor any part thereof shall be assigned by AUDITOR without the prior written consent of the CITY. Any such purported assignment without written consent shall be null and void, and AUDITOR shall hold harmless, defend and indemnify the CITY and its officers, officials, employees, agents and representatives with respect to any claim, demand or action arising from any unauthorized assignment. Notwithstanding the above, AUDITOR may use the services of persons and entities not in AUDITOR's direct employ, when it is appropriate and customary to do so. AUDITOR's use of subcontractors for additional services shall not be unreasonably restricted by the CITY provided AUDITOR notifies the CITY in advance. 6.8 Independent Contractor AUDITOR is and shall at all times remain, as to the CITY, a wholly independent contractor. Neither the CITY nor any of its agents shall have control over the conduct of AUDITOR or any of the AUDITOR's employees, except as herein set forth, and AUDITOR is free to dispose of all portions of its time and activities which it is not obligated to devote to the CITY in such a manner and to such persons, firms, or corporations as the AUDITOR wishes except as expressly provided in this Agreement. AUDITOR shall have no power to incur any debt, obligation, or liability on behalf of the CITY or otherwise act on behalf of the CITY as an agent. AUDITOR shall not, at any time or in any manner, represent that it or any of its agents, servants or employees, are in any manner agents, servants or employees of CITY. AUDITOR agrees to pay all required taxes on amounts paid to AUDITOR under this Agreement, and to indemnify and hold the CITY harmless from any and all taxes, assessments, penalties, and interest asserted against the CITY by reason of the independent contractor relationship created by this Agreement. AUDITOR shall fully comply with the workers' Pa~11 ~ compensation law regarding AUDITOR and its employees. AUDITOR further agrees to indemnify and hold the CITY harmless from any failure of AUDITOR to comply with applicable workers' compensation laws. The CITY shall have the right to offset against the amount of any fees due to AUDITOR under this Agreement any amount due to the CITY from AUDITOR as a result of its failure to promptly pay to the CITY any reimbursement or indemnification arising under this Article. 6.9 Titles The titles used in this Agreement are for general reference only and are not part of the Agreement. 6.10 Entire Agreement This Agreement, including any other documents incorporated herein by specific reference, represents the entire and integrated agreement between CITY and AUDITOR and supersedes all prior negotiations, representations or agreements, either written or oral. This Agreement may be modified or amended, or provisions or breach may be waived, only by subsequent written agreement signed by both parties. In order to comply with the AICPA Clarified Standards and Government Auditing Standards, the CITY and AUDITOR agree that an annual engagement letter substantially in the form of Exhibit "C" will be signed. All of the components of the annual engagement letter are incorporated by reference as an attachment to this Agreement. In the event of a conflict between the Agreement and the terms of the annual engagement letter, the Agreement shall take precedence. 6.11 Construction In the event of any asserted ambiguity in, or dispute regarding the interpretation of any matter here!n, the interpretation of this Agreement shall not be resolved by any rules of interpretation providing for interpretation against the party who causes the uncertainty to exist or against the party who drafted the Agreement or who drafted that portion of the Agreement. 6.12 Non-Waiver of Terms. Rights and Remedies Waiver by either party of any one or more of the conditions of performance under this Agreement shall not be a waiver of any other condition of performance under this Agreement. In no event shall the making by the CITY of any payment to AUDITOR constitute or be construed as a waiver by the CITY of any breach of covenant, or any default which may then exist on the part of AUDITOR, and the making of any such payment by the CITY shall in no way impair or prejudice any right or remedy available to the CITY with regard to such breach or default. 6.13 Severability Page 9of11 ® If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 6.14 Notice Except as otherwise required by law, any notice or other communication authorized or required by this Agreement shall be in writing and shall be deemed received on (a) the day of delivery if delivered by hand or overnight courier service during AUDITOR's or CITY's regular business hours or (b) on the third business day following deposit in the United States mail, postage prepaid, to the addresses listed below, or at such other address as one party may notify the other: To CITY: Responsible Person: To AUDITOR: Responsible Person: Address: Dennis Mclean City of Rancho Palos Verdes 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 Kevin Pulliam 8270 Aspen Street Rancho Cucamonga, CA 91730 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. VAVRINEK, TRINE, DAY & CO., LLP ("AUDITOR") By:~~~~~~~~~~~~~ Printed Name: ~~~~~~~~~ Printed Name: ~~~~~~~~~ Pag~11 ® Dated: ---------- ATTEST: By: __________ _ City Clerk Title: ---------- CITY OF RANCHO PALOS VERDES ("CITY") By: __________ _ Mayor APPROVED AS TO FORM: By: __________ _ City Attorney Page 11 of 11 @) Exhibit "A": City's Request For Proposals Exhibit "B": AUDITOR's Proposal and Schedule of Hourly Rates Exhibit "B" @ Exhibit "C": Annual Engagement Letter Date: ___ _ Dear Mr. McLean: You have requested that Vavrinek, Trine, Day & Co., LLP (hereafter known as "we," "us" and "our") audit the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Rancho Palos Verdes (hereafter known as the "City," "entity," "you," "your," and "Management"), as of June 30, 2013, and for the year then ended, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. In addition, we will audit the City's compliance over major federal award programs for the period ended June 30, 2013. Also, we will perform agreed-upon procedures with respect to the City's calculation of the GANN Limit. We are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter. Our audit will be conducted with the objective of our expressing an opinion on each opinion unit. Accounting principles generally accepted in the United States of America require that certain required supplementary information (RSI), such as management's discussion and analysis (MD&A) be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to the required supplementary information (RSI) in accordance with auditing standards generally accepted in the United States of America. These limited procedures will consist primarily of inquiries of management regarding their methods of measurement and presentation, and comparing the information for consistency with management's responses to our inquiries. We will not express an opinion or provide any form of assurance on the RSI. The following RSI is required by accounting principles generally accepted in the United States of America. This RSI will be subjected to certain limited procedures but will not be audited: 1) Management's Discussion and Analysis Supplementary information other than RSI will accompany the City's basic financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the basic financial statements and certain additional procedures, including comparing and reconciling the supplementary information to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and additional procedures in accordance with auditing standards generally accepted in the United States of America. We intend to provide an opinion on the following supplementary information in relation to the financial statements as a whole: 1) Combining and Individual Fund Statements and Schedules 2) Schedule of Expenditures of Federal Awards Schedule of Expenditures of Federal Awards We will subject the schedule of expenditures of federal awards to the auditing procedures applied in our audit of the basic financial statements and certain additional procedures, including comparing and reconciling the schedule to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and additional procedures in accordance with Exhibit "C" (@ auditing standards generally accepted in the United States of America. We intend to provide an opinion on whether the schedule of expenditures of federal awards is presented fairly in all material respects in relation to the financial statements as a whole. Also, the document we submit to you will include the following other additional information that will not be subjected to the auditing procedures applied in our audit of the financial statements: 1) Introductory Section 2) Statistical Section Audit of the Financial Statements We will conduct our audit in accordance with auditing standards generally accepted in the United States of America (U.S. GAAS) and Government Auditing Standards of the Comptroller General of the United States of America; the Single Audit Act Amendments of 1996; and the provisions of OMB Circular A- 133. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the.basic financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to error, fraudulent financial reporting, misappropriation of assets, or violations of laws, governmental regulations, grant agreements, or contractual agreements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Because of the inherent limitations of an audit, together with the inherent limitations of internal control, an unavoidable risk that some material misstatements may not be detected exists, even though the audit is properly planned and performed in accordance with U.S. GAAS and Government Auditing Standards of the Comptroller General of the United States of America; the Single Audit Act Amendments of 1996; and the provisions of OMB Circular A-133. In making our risk assessments, we consider internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. However, we will communicate to you in writing concerning any significant deficiencies or material weaknesses in internal control relevant to the audit of the financial statements that we have identified during the audit. We will issue a written report upon completion of our audit of the City's basic financial statements. Our report will be addressed to the governing body of the City. We cannot provide assurance that unmodified opinions will be expressed. Circumstances may arise in which it is necessary for us to modify our opinions, add an emphasis-of-matter or other-matter paragraph(s), or withdraw from the engagement. In accordance with the requirements of Government Auditing Standards, we will also issue a written report describing the scope of our testing over internal control over financial reporting and over compliance with laws, regulations, and provisions of grants and contracts, including the results of that testing. However, providing an opinion on internal control and compliance over financial reporting will not be an objective of the audit and, therefore, no such opinion will be expressed. Audit of Major Program Compliance Our audit of the City's major federal award program(s) compliance will be made in accordance with the requirements of the Single Audit Act, as amended; and the provisions of U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; and will include tests of accounting records, a determination of major programs in accordance with Circular A- 133, and other procedures we consider necessary to enable us to express such an opinion on major federal award program compliance and to render the required reports. We cannot provide assurance that an unmodified opinion on compliance will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion or withdraw from the engagement. Circular A-133 requires that we also plan and perform the audit to obtain reasonable assurance about whether the entity has complied with applicable laws and regulations and the provisions of contracts and grant agreements applicable to major federal award programs. Our procedures will consist of determining major federal programs and performing the applicable procedures described in the U.S. Office of Management and Budget Circular A-133 Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of the entity's major programs. The purpose of those procedures will be to express an opinion on the entity's compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to Circular A-133. Also, as required by Circular A-133, we will perform tests of controls to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each of the entity's major federal award programs. However, our tests will be less in scope than would be necessary to render an opinion on these controls and, accordingly, no opinion will be expressed in our report. · We will issue a report on compliance that will include an opinion or disclaimer of opinion regarding the entity's major federal award programs, and a report on internal controls over compliance that will report any significant deficiencies and material weaknesses identified; however, such report will not express an opinion on internal control. Management's Responsibilities Our audit will be conducted on the basis that management acknowledge and understand that they have responsibility: 1. For the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; 2. For the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to error fraudulent financial reporting, misappropriation of assets, or violations of laws, governmental regulations, grant agreements, or contractual agreements; 3. For safeguarding assets; 4. For identifying all federal awards expended during the period; 5. For identifying and ensuring that the entity complies with laws, regulations, grants, and contracts applicable to its activities and its federal award programs; and 6. To provide us with: a. Access to all information of which [management] is aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters; b. Additional information that we may request from [management] for the purpose of the audit; and c. Unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence. With regard to the supplementary information referred to above, you acknowledge and understand your responsibility (a) for the preparation of the supplementary information in accordance with the applicable criteria, (b) to provide us with the appropriate written representations regarding supplementary information, ( c) to include our report on the supplementary information in any document that contains the supplementary information and that indicates that we have reported on such supplementary information, and ( d) to present the supplementary information with the audited financial statements, or if the supplementary information will not be presented with the audited financial statements, to make the audited financial statements readily available to the intended users of the supplementary information no later than the date of issuance by you of the supplementary information and our report thereon. In addition, as required by Circular A-133, it is management's responsibility to prepare the schedule of expenditures of federal awards in accordance with Circular A-133 requirements, follow up and take corrective action on reported audit findings from prior periods and to prepare a summary schedule of prior audit findings, and follow up on current year audit findings and prepare a corrective action plan for such findings. .\"fanagement is also responsible for submitting the reporting package and data collection form to the appropriate parties. Management will also make the auditor aware of any significant vendor relationships where the vendor is responsible for program compliance. You agree that you will confirm your understanding of your responsibilities as defined in this letter to us in your management representation letter. As part of our audit process, we will request from management, written confirmation concerning representations made to us in connection with the audit. We understand that your employees will prepare all confirmations we request and will locate any documents or invoices selected by us for testing. If you intend to publish or otherwise reproduce the financial statements and make reference to our firm, you agree to provide us with printers' proofs or masters for our review and approval before printing. You also agree to provide us with a copy of the final reproduced material ·for our approval before it is distributed. Vavrinek, Trine, Day & Co., LLP has owners that are not licensed as certified public accountants as permitted under Section 5079 of the California Business and Professions Code. It is not anticipated that any of the non-licensee owners will be performing audit services for the City, except in connection with the preparation of the State Controller's Report. Fees and Timing The timing of our audit will be scheduled for performance and completion as follows: Begin Document internal control and preliminary tests June 2013 Mail confirmations July 2013 Perform year-end audit procedures (onsite fieldwork to be September 2013 completed in September) Issue audit reports* November 2013 Complete July 2013 October 2013 December 2013 ~~~~~~~~-'-~~~~~~~ *Single Audit March 31st. Kevin Pulliam is the engagement partner for the audit services specified in this letter. His responsibilities include supervising Vavrinek, Trine, Day & Co., LLP's services performed as part of this engagement and signing or authorizing another qualified firm representative to sign the audit report. Our fees are based on the amount of time required at various levels of responsibility in accordance with our proposal and are defined in the Audit the Agreement. Invoices will be rendered each month as work progresses and are payable upon presentation. We will notify you immediately of any circumstances we encounter that could significantly affect our fee estimate. Whenever possible, we will attempt to use the City's personnel to assist in the preparation of schedules and analyses of accounts. This effort could substantially reduce our time requirements and facilitate the timely conclusion of the audit. Other Matters During the course of the engagement, we may communicate with you or your personnel via fax or e-mail, and you should be aware that communication in those mediums contains a risk of misdirected or intercepted communications. The audit documentation for this engagement is the property of Vavrinek, Trine, Day & Co., LLP and constitutes confidential information. However, we may be requested to make certain audit documentation available to a regulator or its designee, a federal agency providing direct or indirect funding, or the U.S. Government Accountability Office pursuant to authority given to it by law or regulation, or to peer reviewers. If requested, access to such audit documentation will be provided under the supervision of Vavrinek, Trine, Day & Co., LLP's personnel. Furthermore, upon request, we may provide copies of selected audit documentation to these agencies and regulators. The regulators and agencies may intend, or decide, to distribute the copies of information contained therein to others, including other governmental agencies. We agree to retain our audit documentation or work papers for a period of at least seven years from the date of our report. Further, we will be available during the year to consult with you on financial management and accounting matters of a routine nature. With respect to any nonattest services we perform, the City's management is responsible for (a) making all management decisions and performing all management functions; (b) assigning a competent individual to oversee the services; ( c) evaluating the adequacy of the services performed; ( d) evaluating and accepting responsibility for the results of the services performed; and ( e) establishing and maintaining internal controls, including monitoring ongoing activities. During the course of the audit, we may observe opportunities for economy in, or improved controls over, your operations. We will bring such matters to the attention of the appropriate level of management, either orally or in writing. We agree to retain our audit documentation or work papers for a period of at least seven years from the date of our report. At the conclusion of our audit engagement, we will communicate to the Finance and Audit Committee the following significant findings from the audit: • Our view about the qualitative aspects of the entity's significant accounting practices; • Significant difficulties, if any, encountered during the audit; • Uncorrected misstatements, other than those we believe are trivial, if any; • Disagreements with management, if any; (!?)C" • Other findings or issues, if any, arising from the audit that are, in our professional judgment, significant and relevant to those charged with governance regarding their oversight of the financial reporting process; • Material, corrected misstatements that were brought to the attention of management as a result of our audit procedures; • Representations we requested from management; • Management's consultations with other accountants, if any; and • Significant issues, if any, arising from the audit that were discussed, or the subject of correspondence, with management. In accordance with the requirements of Government Auditing Standards, we have attached a copy of our latest external peer review report of our firm for your consideration and files. Please sign and return the attached copy of this letter to indicate your acknowledgment of, and agreement with, the arrangements for our audit of the financial statements compliance over major federal award programs including our respective responsibilities. We apprec;iate the opportunity to be your financial statement auditors and look forward to working with you and your staff. Respectfully, Kevin Pulliam Vavrinek, Trine, Day & Co., LLP RA:gbl 130223 Attachment RESPONSE: This letter correctly sets forth our understanding. City of Rancho Palos Verdes Acknowledged and agreed on behalf of City of Rancho Palos Verdes By: Title: Date: Exhibit "C" @ Carla Morreale From: Sent: To: Cc: Subject: April Sandell < hvybags@cox.net> Monday, June 17, 2013 11:04 PM cc Lacombe Lacombe; Ken Delong Agenda item /June 18 WESTERN AVE. VISION PLAN Dear Mayor and Council members, As you are aware the Western Ave. Corridor suffers from existing traffic issues. These "issues" are a shared concern among residents in RPV as well as LA. Few, if any, desire bike lanes on Western from PV Dr. North to Summerland. Reducing emissions is a wonderful goal we should all embrace. However, the number of stalled and delayed vehicles due to the proposed vision will cause greater emissions than the current bike lane proposals hopes to reduce. As you are most likely aware, the Ponte Vista proposed housing project is pending and lessening the lanes is not a sensible idea at this time. Improving the appearance of Western Avenue is a worthy cause but not at the expense of the thousands that cannot feasibly ride a bike to the market, run errands, go to and from work, take children to and from school etc. etc. That is just not going to happen. I urge your no vote on this item. Unless, the staff can move forward with the "vision" absent the bike lanes as proposed. Thank you for your consideration. April L. Sandell RPV,CA.90275 1 Carla Morreale From: Sent: To: Cc: Subject: Carla, sharon yarber <momofyago@gmail.com> Tuesday, June 18, 2013 7:50 AM Carla Morreale CC; Carolyn Lehr Sanr Ramon Om page 9-16 of tonight's staff report staff says "Attached are emails from the project manager to the contractor advising him of the risk that the change order had not been approved by the City." The emails are not attached to the staff report. Please forward them to me immediately. Also, please provide me with a copy today of the 4/15/13 letter of intent executed by Woods and Northwest ifthe city was provided with a copy. The materials provided by Carolyn Lehr with "further information" includes an email from Alan Braatvedt to Randall Berry and others sent May 15th that includes the statement: "If you still have strong reservations about any aspects of this submittal revision, please contact me as soon as possible .... " Please provide to me today the correspondence from Mr. Berry that expresses his "strong reservations". Thank you. Sharon 9 Alan Braatvedt From: Sent: To: Cc: Subject: Mike Alan Braatvedt Wednesday, May 01, 2013 11 :56 AM mireland@lhwoods.com Jose Rolon Orolon@lhwoods.com); mjenkins@koacorp.com; Ron Dragoo (rond@rpv.com) Value Engineering for Steel Pipe This is follow up to the discussion that you and I had in the field on 4/30/13 with regards to the amount that the City will accept for the value engineering for the steel pipe. If L.H. Woods & Sons covers the cost of welding inspection from a certified independent welding inspector, City Staff will recommend accepting a fixed saving amount of $315,334.40. As there are extenuating circumstances to this value engineering, this value engineering will be presented to the City council for approval In the form of a change order. Final acceptance of the proposed pipe substitution is subject to approval of: • The pipe submittals by Harris & Associates • The Change Order by the City Council Please acknowledge these terms and I will draft a change order for your signature and send it to you today. Alan Braatvedt City of Rancho Palos Verdes. Public Works Department www.palosverdes.com/rpv/ Tel (310) 544-5272 Fax (310) 544-5292 alanb@rpv.com L.H. WOODS & SONS, INC. qenera{ r.En9ineering Contractors • · April 15, 2013 Northwest Pipe Company, Water Transmission Group 5721 SE Columbia Way, Suite 200 Vancouver, WA 98661 Phone: 360-397-6250 Re: Value Engineering Pipe Substitution, San Ramon Canyon SD 54" Steel Pipe Supply for Project, awarded to NWP SUBJECT: LETTER OF INTENT TO ENTER INTO A PURCHASE ORDER AGREEMENT CONTINGENT UPON THE FINAL VALUE ENGINEERING PROPOSAL CHANGES TO THE SUPPLY OF STEEL PIPE, SUBMITTAL APPROVALS AND COMPLETED MANUFACTURE DATES OF THE AFOREMENTIONED PROJECT. Attn: Mr. Michael DeMascio This letter is an acknowledgement that L.H. Woods & Sons, Inc. intends to issue a Purchase Agreement to Northwest Pipe for the Manufacture and Delivery of the Steel pipe for the San Ramon Canyon Storm Drain Project. We understand that the procurement of Steel plate is of paramount importance to the delivery dates discu$sed and that NWP will immediately order the required raw materials for this project with the execution of this letter. Please be aware that there still may be minor changes as this process completes over the next week and we may ask for minor scope changes however, the overall material aspect of the project will not differ. L.H. WOODS & SONS, INC. Northwest Pipe Company ·Signature Signature Michael C. Ireland Print Name Print Name Project Manager Title Title April 15. 2013 Date Date Corporate Office: 2115 La Mirada Drive • Vista, CA 92081 • (760) 599-5500 • Fax: (760) 599-5510 ® Alan Braatvedt From: Sent: To: Cc: Subject: Attachments: Randy Alan Braatvedt Wednesday, May 15, 2013 8:07 AM Randall Berry (RBerry@harris-assoc.com); ereyes@harris-assoc.com Ehab Gerges (Egerges@harris-assoc.com); Ron Dragoo (rond@rpv.com); Andyw@rpv.com; mjenkins@koacorp.com RE: Submittals: #36.0: Submittal 36-Welded Steel Pipe Front End Package & Submittal 43 Pipe lining and coating Sunbittal 36 and 43-Steel Pipe-Response 5-14-13.pdf The contractor's responses to the issues raised from your review of the proposed pipe substitution are attached and appear to adequately address the concerns. The value engineering component is being handled directly between the City and the contractor, so no further input in that regard is required. The resolution of the steel pipe substitution is rapidly becoming a critical path issue and so we need to find ways to expedite the issue. If you still have strong reservations about any aspects of this submittal revision, please contact me as soon as possible instead of waiting for a formal response to the revised submittal to enable us to short circuit the approval process. Regards Alan Braatvedt City of Rancho Palos Verdes. Public Works Department www.palosverdes.com/rpv/ Tel (310) 544-5272 Fax (310) 544-5292 alanb@rpv.com From: Randall Berry [mailto:RBerry@harrjs-assoc.com] sent: Thursday, May 09, 2013 4:41 PM To: Alan Braatvedt; Alan Braatvedt (alanb@koacorporation.com) Cc: Elizabeth Reyes; Ehab Gerges Subject: RE: Submittals: #36.0: Submittal 36-Welded Steel Pipe Front End Package & Submittal 43 Pipe lining and coating Alan -thanks for your patience on this! Randall G. Berry, PE, Associate Design Manager I Harris & Associates. Shaping the {urur1. One proJe't at a time,,.,, 34 Executive Park, Suite 150-Irvine, CA 92614 Phone: 949.655.3900 ext. 2314, Fax: 949.655.3995 www.harris-assoc.com ;tiThink Green From: Alan Braatvedt [mailto:AlanB@rpv.com] Sent: Tuesday, April 30, 2013 2:17 PM To: Randall Berry Cc: Elizabeth Reyes; Ehab Gerges Subject: RE: Submittals: #36.0: Submittal 36-Welded Steel Pipe Front End Package Randy, 1. The City is negotiating a value-engineering credit with the contractor and currently looking at sharing in a saving in excess of $600k 2. We do not mind if you contact Kennedy Jenks, however bear in mind that the City contracted with them to produce the report and does not have any further contractual relationship with them, but I am sure that they will answer a couple of questions. The contact person there is: James Bowland, P.E. I Project Manager Kennedy/Jenks Consultants 116 Lupfer Aven1,.1e, Suite B I Whitefish, MT 59937 P: 406.730.1343 I F: 406.730.1345 I C: 406.897.4498 Alan Braatvedt City of Rancho Palos Verdes. Public Works Department www .palosverdes.com/rpv/ Tel (310) 544-5272 Fax (310) 544-5292 alanb@rpv.com From: Randall Berry [mailto:RBerry@harris-assoc.com] Sent: Tuesday, April 30, 2013 9:46 AM To: Alan Braatvedt; Alan Braatvedt (alanb@koacorporation.com) Cc: Elizabeth Reyes; Ehab Gerges Subject: RE: Submittals: #36.0: Submittal 36-Welded Steel Pipe Front End Package Alan -we are still looking over this pipe submittal, but I have 2 questions in the meantime: 1. Did the contractor offer a cost credit as part of this submittal? If he does not intend to offer a credit to the city then that would put into questions as to why the city would want to consider this lesser pipe material (the spiral weld pipe per ASTM A1018, although potentially feasible as a substitution, is not equal to the "can rolled" longitudinally welded pipe per ASTM A36). 2. If we have any technical questions would it be OK to contact James Bowland at Kennedy/Jenks? If yes, do you have his phone number? We could also go thru you if you would prefer. Th ks Randy Randall G. Berry, PE, Associate Design Manager ~ I Harris & Associates. Shaping tht future. Ont project ot o tlmt .Mot 34 Executive Park, Suite 150 -Irvine, CA 92614 Phone: 949.655.3900 ext. 2314, Fax: 949.655.3995 ri -ssoc.com From: Alan Braatvedt rmailto:AlanB@rpv.com] Sent: Friday, Apri126, 2013 1:55 PM To: Randall Berry; Elizabeth Reyes Subject: FW: Submittals: #36.0: Submittal 36-Welded Steel Pipe Front End Package I have attached the steel pipe submittal for review and will forward any other information when received. Alan Braatvedt City of Rancho Palos Verdes. Public Works Department www .palosverdes.com/rpv/ Tel (310) 544-5272 Fax (310) 544-5292 alanb@mv.com · Alan Braatvedt From: Sent: Randall Berry <RBerry@harris-assoc.com> Thursday, May 09, 2013 4:41 PM To: Cc: Alan Braatvedt; Alan Braatvedt (alanb@koacorporation.com} Elizabeth Reyes; Ehab Gerges Subject: RE: Submittals: #36.0: Submittal 36-Welded Steel Pipe Front End Package & Submittal 43 Pipe lining and coating Attachments: H&A Response -Submittals 36 & 43 -Steel Pipe -Liner -Coating 5-9-13.pdf Alan -thanks for your patience on this! Randall G. Berry, PE, Associate Design Manager I Harris & Assodatesw Shaping the future. One pro/eel at a time JAi 34 Executive Park, Suite 150-Irvine, CA 92614 Phone: 949.655.3900 ext. 2314, Fax: 949.655.3995 www.harris-assoc.com ~Think Green From: Alan Braatveclt [mailto:AlanB@rpv.com] Sent: Tuesday, April 30, 2013 2:17 PM To: Randall Berry Cc: Elizabeth Reyes; Ehab Gerges Subject: RE: Submlttals: #36.0: Submittal 36-Welded Steel Pipe Front End Package Randy, 1. The City is negotiating a value-engineering credit with the contractor and currently looking at sharing in a saving in excess of $600k 2. We do not mind if you contact Kennedy Jenks, however bear in mind that the City contracted with them to produce the report and does not have any further contractual relationship with them, but I am sure that they will answer a couple of questions. The contact person there is: James Bowland, P.E. I Project Manager Kennedy/Jenks Consultants 116 Lupfer Avenue, Suite B I Whitefish, MT 59937 P: 406.730.1343 I F: 406.730.1345 I C: 406.897.4498 Alan Braatvedt City of Rancho Palos Verdes. Public Works Department www.palosverdes.com/rpv/ Tel (310) 544-5272 Fax (310) 544-5292 alanb@rpv.com 1 l!) Alan Braatvedt From: Sent: Randall Berry <RBerry@harris-assoc.com> Wednesday, May08, 201311:27 AM To: Cc: Alan Braatvedt; Alan Braatvedt (alanb@koacorporation.com) Elizabeth Reyes; Ehab Gerges Subject: San Ramon -Steel Pipe submittal review status Alan -I have a draft of our response ready to go -the two pending items are input from our structural engineer which just came in and review comments from Ehab -which I will get tomorrow when he gets back to the Irvine office. I expect to be able to send our response tomorrow. Th ks Randy Randall G. Berry, PE, Associate Design Manager •I Harris & Assodates. Shaping the future. One project ot a tlmtJfl 34 Executive Park, Suite 150 -Irvine, CA 92614 Phone: 949.655.3900 ext. 2314, Fax: 949.655.3995 www.harris-assoc.com ;\Think Green 1@ Memo To: Alan Braatvedt Project Manager City of Rancho Palos Verdes Date: May a, 2013 Cc: Ehab Gerges, Uz Reyes From: Randall Berry, PE --Harris & Associates Program Managers Construction Managers Civil Engineers Subject: Response to San Ramon Cyn SD Submittal # 36 -Welded Steel Pipe and Submittal # 43-Steel Pipe Lining & Coating X Per Your Request 0 For Review 0 Please Comment 0 Please Reply X For Your Action Comments: Alan, I have reviewed the subject informal Submittal and have the following comments: Make Corrections I Resubmit 1 ) Since the "Can Rolled" pipe that is being proposed for the 1-inch thick steel pipe has a single superior longitudinal weld, we recommend also using a "Can Rolled• fabrication for the .0.625-inch thick steel pipe. 2) The pipe chart references should be edited to include the applicable storm drain stations (for example from Sta_ to Sta_) and pipe reach cases (slant drain tunnel, open trench, rib & lagging tunnel) so as to minimize the potential for cross-use of pipe in the wrong locations. 3) Per the separate I City-supplied pipe comparison analysis memo prepared by Kennedy-Jenks (dated April 8, 2013) a double welded bell and spigot joint was recommended in order to better match the Pennalok T5 joint, however it appears that the contractor is only proposing a single welded joint -please explain how this double weld requirement is being met or revise the details accordingly to show a double weld. 4) None of the substituted pipe proposed is suitable for jacking or pushing into place, thus we would like the contractor to clarify his sequence of pipe installation and welding ope~atfon such that it is clear that multiple joined segments of pipe will not be pushed into place, which might be prone to telescoping forces. This will also help to make it clear when the welding will occur during the Installation process, because it is envisioned that If the welding will occur after all, or almost all, of the pipe is In place, but before the annular space is grouted, then it would seem that the stulling cross supports could be in the way and tough confined space working conditions for the welders could result. (Note: These items were not an issue with the Permalok pipe since it required a minimum amount of welding and can be jacked/pushed into place.) 5) Please add the shop-fabricated velocity reducer rings to the 1" thick slant drain pipe details. If you would prefer to submit this for a separate approval, then at a minimum please add a reference to "shop-fabricated velocity reducer rings per a separate submittal" to the middle of the slant drain tunnel pipe so that it does not get over1ooked during the fabrication process. 6) On both the 'Weld Bell Joint Detail" and the "Simulated Weld Bell Joint Detail• please clarify that the full limits of the hold back areas will receive an interior lining patch. 7) The contractor still needs to make it clear in writing that the proposed pipe substitution is not being pursued as an "approved equal", rather it is being pursued as an "approved alternative" which requires a credit to the City. Said credit should be broken down in detail, including pipe cost credits and increased cost to the City for such items as the additional cost to hire a full time specialty inspector (for field welding, coating, lining, etc.), which otherwise would not be required If the specified pipe was utilized, etc. Thank you for the opportunity to review these submittals and, as usual, don't hesitate to call if you have any questions or require anything additional. Sincerely, /<~ Randall Berry, PE ATTACHMENT: Only the two c v pages are attached. The numerous supporting documents have not been inclu ed herein. (a\ --~~~~~~~~~& 34 Executive Park, Suite 150 Irvine, California 92614-4705 (949) 655-3900x2314 FAX (949) 655-3995 lrvlne@harris-assoc.com --------------------------·-··--·-··-·····--·. L.H. Woods & Sons, Inc. 2115 La Mirada Drive Vista, California 92081 Submittal #36.0 207. Project: 2~ -San Ramon Canyon Storm Drain 2247 West 25th Street San Pedro, California 90732 Phone: 760-500-7936 Fax: 760-599-5510 Submittal 36-Welded Steel Pipe Front End Package APPROVERS: Mike Jenkins (KOA) CREATED BY: Jose Rolon(L.H. Woods & Sons, Inc.) Alan Braatvedt (KOA) DATE CREATED: 0412612013 STATUS: Open ISSUE DATE: 0412612013 REVISION: 0 RECEIVED FROM: Jose Rolon (LH. Woods & Sons, Inc.) RECEIVED DATE: DUE DATE: 05/1312013 SUBMIT BY: TYPE: Document LOCATION: COST CODE: SPEC SECTION: 207--·---BALL IN COURT: Mike Jenkins (KOA), Alan Braatvedt (KOA) COPIES TO: Mike Jenkins (KOA), Michael Ireland (LH. Woods & Sons, Inc.), Chris Cole (KOA), Alan Braatvedt (KOA) DESCRIPTION: ATTACHMENTS: AD-903 Preliminary From End Dwq, submltt§1±25-13.Qdf APPROVER RESPONSES NAME Mike Jenkins Alan Braatvedt BY L.H. Woods & Sons, Inc. DATE DATE SENT RETURNED STATUS ATTACHMENTS 0412612013 04/26/2013 Pending Pending 0 REVIEWED 0 RESUBMITTAL NOT REQUIRED J NOTE CORRECTIONS o6 RESUBMIT CJ REJECTED -c; ~ f"l/$111 O Thi& docl.lment hH been ,..velwed for general consonn.nce and~ with lilt deelgn concept c4 lie t-•'Ojec;I and WormatiOn given In the COnttact Documents. (Any action ahown la subject to the ~ of fie Q>niraC( Documentt), Appltwal of a spedllc Item d08$ not Include approval or the auembly of which the Item Is a component. Conl~or is responsible for: Confirming and cotrelaling all quaniklea and dimensions; selecting labricatlon procttun and leehntques ol construc:tlori; coordinating and pelforrnlng ~ Work with that of all other trades and performing all Work in a safe and satlafactory Manner. Any dlacrepencies between Coritract Oocumtnts .trul Contractol's submittal Shall I be lhe responsibility of Contractor. Harris & Associates, Inc. DA>:v_&~~ D<Tfi ~3;;:.L COMMENTS Printed On: 04/2612013 01:42 PM L.H. Woods & Sons, Inc. 2115 La Mirada Drive Vista, California 92081 Submittal #43.0 207 -10 Project: 234 • San Ramon Canyon Stonn Drain 2247 West 25th Street San Pedro, California 90732 Phone: 760-500-7936 Fax:760-599-5510 Submittal 43-Steel Pipe Lining & Coating APPROVERS: Mike Jenkins (KOA) CREATED BY: Jose Rolon(L.H. Wooda & Sons, Inc.) Alan Braatvedt (KOA) DATE CREATED: 0510212013 STATUS: Open ISSUE DATE: 0510212013 REVISION: 0 RECEIVED FROM: Jose Rolon (L.H. Woods & Sons, Inc.) RECEIVED DATE: --~-~--------~--~~~----DUE DATE: 05/16/2013 SUBMIT BY: ·--------------------· TYPE: Document LOCATION: COST CODE: SPEC SECTION: 207 • 10 --------------BALL IN COURT: Mike Jenkins (KOA), Alan Braatvedl (KOA) -----··-----COPIES TO: Mike Jenkins (KOA), Michael Ireland {L.H. Woods & Sons, Inc.), Chris Cole (KOA), Alan Braatvedt (KOA) DESCRIPTION: Attached Is the Submittal Data for the Steel Pipe Unings and Coatings. ATTACHMENTS: Ourash!e!d Techo!ca!-Oata·Sheet-OS21 Q.2012100§.pdf ApDljcatfon.Spec!11ca!!OfrSheet-DS21 O-DS210.§1-Steel-P!pe-20120109.cc!f APPROVER RESPONSES NAME DATE SENT DATE STATUS ATTACHMENTS COMMENTS RETURNED Mike Jenkins 05/02/2013 Pending Alan Braatvedt 05/02/2013 Pending 0 REVIEWED C RESUBMITTAL NOT AEOUIAED e1 NOtt~ ii AESUl!WT C REJECTED Sot.. 1'1~ 0 This documtnt hM bffn tevelwed for general conrormenoe end compljance with lhe design concept or the r-'·olect and lnrormallon given In the Contract Oocuhienis. {Ar!r acllo11 etloWrl la eubjeci lo lhe ~ ot 11e COnllad ~>· /{1ptcNa1 a a lpecifle Item doefl not lnclUde approval of lht asasmb.'y of which lhG Item Is a componont C'.or11racto1 la ffl8pOl'lllblc for: Conlinnlng ISnd ~ alt quanlitlec end clilTMnslona; sebctlng fabrication procoues and ~Utt Of cortStrucllon• ~and performing tho 'o:t. wllh that 01 ail o ~ *ltd petfonnlng ell Work In a safe nnd *8tllfaolory m.nnor. Any dl~s between e'ntract Oocurn~ and Cor.trac:lor'a aubmittal lhan tht relpOnliblljty ot Contractor. Harris & Associates, Inc. • BY /l., r~-.,: j nA~ 5' .,_/11 BY D'(i,,.. I I ... uni:S ro L.H. Woods & sons, Inc. Page1of1 ® Printed On: 05/0212013 10:2.il AM lg] Northwest PlpeCompany Page 1 of2 May 14, 2013 L.H. Woods & Sons, lnc. 471 Washington Blvd. Marina Del Rey, CA 90292 Attn: Michael Ireland, Project Manager Re: San Ramon Canyon Stonn Drain ·City of Rancho Palos Verdes NWP Job# AD-13-903, Sales Order No. TBD NWP-LTR-AD-13-903-001 Subject: Responses to returned comments for Northwest Pipe's Front End Drawings submittal. Dear Mr. Ireland, This letter is in response to the comments, forwarded to us on May 13, 2013, from the Engineer to Northwest Pipe's Front End Drawings submittal. 1) The 1-inch thick steel pipe that will be used for the Slant Drain Tunnel will be fabricated from roJled cans due to the fact that the wall thickness exceeds the capabilities of the spiral mill. Spiral, longitudinal and circumferential welds in the pipe are tested in the same manner, in accordance with A WW A C200 standard, and we are not sure what would make someone think that one weld is superior to the other. Note that the rolled can pipe will also have circumferential welds as each 20' joint will be made out of2-10' sections. 2) The Front End drawings package covers only the pipe joints and fabrications details. The limits of the two tunnels and open trench pipe will be clearly delineated in the two subsequent drawing submittals (Package A-Open Trench pipe and Package B-Slant Drain and Timber lagging Tunnels). A note will be added to the tables identifying the tunnel and open trench pipe and stations. 3) L.H. Woods & Sons, Inc. to address this comment. 4) Pushing spiral welded and straight seam pipe into place in casing/tunnel is a common practice in the steel water pipe industry and it has been successfulJy done in several projects for which Northwest Pipe has been the steel pipe supplier. Carner pipe is covered in the A WWA C604 standard in paragraph 4.4.9.2 (see attached), which states that the carrier pipe may be pushed or pulled into place. Attached please find a list of project in which weld bell and spigot joints have been pushed into place in casing. lg) Northwest PlpeCompany Page 2of2 5) The velocity reducing rings wil1 be shown in the drawing submittal for the Slant Drain Tunnel pipe. Each pipe section will show the velocity reducing ring; in addition a detail drawing for the rings will be included in the submittal. 6) L.H. Woods & Sons, Inc. to address this comment. 7) L.H. Woods & Sons, Inc. to address this comment. If you should have any questions, please do not hesitate to call. Project manager. Northwest Pipe Company ' @ NWP Order No.: AD-09-732 Project Name: City Trunk Line South -Unit 2 Project owner: LADWP Pipe: 2,380' of 66", 0.750" thick Carrier pipe NWP Order No.: AD-09-744 Project Name: City Trunk Line South -Unit 5 Project owner: LADWP Pipe: 540' of 60", 0.625" thick Carrier pipe NWP Order No.: AD-11-863 Project Name: Ophir Road Pipe line Project owner: Placer County WO Pipe: 300' of 45", 0.281" thick Carrier pipe NWP Order No.: AD-12-882 Project Name: Paisano Water Line Replacement, Phase 3 Project owner: El Paso Water Utilities Pipe : 5,900' OF 48", 0.250" thick Carrier pipe 28 AWWA C604-11 4.4.6.1.4 Final backfill above the pipe embedment shall not be placed until the compaction of the pipe embedmem: backfill is satisfactorily complete. To pre- vent damage to the pipe, sufficient compacted backfill shall be placed over the pipe before allowing any type of vehicle over it. NoTE: Loosely placed final backfill above the pipe may promote unwanted surface settlement, which could be detrimental to improvements subsequently placed over the trench. 4.4.6.2 Compaction. Care shall be taken co ensure compaction equip- ment does not damage the pipe coating. Ensure proper compaction of backfill to avoid ovalling of the pipe be>'.ond the required limits. 4.4.6.3 Partial backfilling during testing. Newly installed pipelines are normally tested afcer backfillii1g. 'When '1:11\lSual conditions require: that pressure: and leakage testing be iccomplished before com,pletion of backfilling, or with pipe joints accessible for examination, sufficient backfill material shall be placed over the pipe barrel !.>etween the i,oints to prevent movement, and due consideration shall be given to restraining thrust forces during testing. 4.4.7 Flushing. Foreign material left in pipelines during installation can result in va.lve or hyd~ant seat leakage during pressure tests. Every effort shall be made to keep lines dean during installation. Thorough flushing is recommended prior to a pressure test; flushing shall be accomplished by partially opening and closing valves several times under cxpe-tted line pressure, with flow velocities ade- quate to flush foreign material out of the valves. 4.4.8 Disinfection. Newly installe<i mains carrying potable water shall be disinfected in accordance with ANSI/AWWA C651. Provisions shall be made to avoid contamination of existing m.ains by cross connection during testing/ disinfection/flushing of newly installed mains. NoTE: Discharge: from flushing or disinfection shall be directed away from the pipe alignment so that trench stability is not affected and shall be in accordance with federal, state, and local point discharge requirements. 4.4.9 Highway and railroad crossings. 4.4.9.l Casing pipe. When casing pipe is specified for highways or rail- road crossings, the project shall be completed in accordance with applicable fed- eral, state or provincial, and local regulations. In the case of railroad crossings, the project shall also comply with regulations established by the railroad. 4.4.9.2 Carrier pipe. The casing pipe and other pipe appurtenances shall be a minimum of 8 in. (200 mm) larger than the outside diameter of the steel pipe Copyright© 2011 American Water Works Association. All Rights Reserved. @ Sec. 5.1 Sec. 5.2 INSTALLATION OF BURIED STEEL WATER PIPE-4 IN. (100 MM) AND LARGER 29 bells to prevent damage during installation and to prevent pipe-to-casing contact. Carrier pipe may be pushed or pulled through the completed casing pipe. Spacers and/or insulator skids shall be placed around the carrier pipe to ensure approxi- mate centering within the casing pipe and to prevent damage during installation or flotation. Care shall be exercised to avoid metal-to-metal comact. If the casing annulus is grouted, grout pressures and lifts must be: maintained to avoid dcBc:cting or collapsing the steel carrier pipe. CarefuJly monitor the carrier pipe during the grouting operation to verify the proper grouting techniques are being used. 4.4.10 Subaqueous crossings. 4.4.10.l Subaqueous installations. When it is necessary to cross a body of water, the preferable practice is to dewater the area and proceed according to the convemional pipeline cc)nstructfon practices described in this standard. In the event the purchaset;s doc~ments allow subaqueous construction, the constructor is strongly advised to use an engineered system specifically developed for the pipe, crossing depth, intended cover, arid means planned for such a crossing. The use of a restrained-type joint (welded or mechanical) is recommended. However, the additional details necessary for subaqueous construction are not covered in this standard. SECTION 5: VERIFICATION . . '.·' Inspection 5.1.1 Inspection 012. ·Je#very. All pipe and appurtenances are subject to inspection at the point of delivery. Material found to be defective because of manu- facture or damage in shipment shall be recorded on the bill of lading and may be rejected. There shall be agreement between the purchaser and constructor regard- ing any necessary repairs. The purchaser shall be allowed to monitor the repairs prior to installation. Hydrostatic Field Testing WARNING: 1he testing methods desaibed in this section are specific for water- pressure testing. 1hese procedures shall not be applied Joi· a.fr-pressure testing because of the serious safety hazards involved. The main objective of a field hydrostatic pressure test (hydro test) is to check the watertightness of joints, as each length of pipe is shop tested per purchaser's documents. The hydro test can be performed after backfilling is complete and Copyright© 2011 American Water Works Association. All Rights Reserved. @ (gJ Northwest PlpeCompany Page 1 of 2 May 14, 2013 L.H. Woods & Sons, Inc. 471 Washington Blvd. Marina Del Rey, CA 90292 Attn: Michael Ireland, Project Manager Re: San Ramon Canyon Stonn Drain · City of Rancho Palos Verdes NWP Job# AD-13-903, Sales Order No. TBD NWP-LTR-AD-13-903-001 Subject: Responses to returned comments for Northwest Pipe's Front End Drawings submittal. Dear Mr. Ireland, This letter is in response to the comments, forwarded to us on May 13, 2013, from the Engineer to Northwest Pipe's Front End Drawings submittal. 1) The I-inch thick steel pipe that will be used for the Slant Drain Tunnel will be fabricated from rolled cans due to the fact that the wall thickness exceeds the capabilities of the spiral mill. Spiral, longitudinal and circumferential welds in the pipe are tested in the same manner, in accordance with A WW A C200 standard, and we are not sure what would make someone think that one weld is superior to the other. Note that the rolled can pipe will also have circumferential welds as each 20' joint will be made out of2-10' sections. 2) The Front End drawings package covers only the pipe joints and fabrications details. The limits of the two tunnels and open trench pipe will be clearly delineated in the two subsequent drawing submittals (Package A-Open Trench pipe and Package B-Slant Drain and Timber lagging Tunnels). A note will be added to the tables identifying the tunnel and open trench pipe and stations. 3) L.H. Woods & Sons, Inc. to address this comment. 4) Pushing spiral welded and straight seam pipe into place in casing/tunnel is a common practice in the steel water pipe industry and it has been successfully done in several projects for which Northwest Pipe has been the steel pipe supplier. Carner pipe is covered in the A WWA C604 standard in paragraph 4.4.9.2 (see attached), which states that the carrier pipe may be pushed or pulled into place. Attached please find a list of project in which weld bell and spigot joints have been pushed into place in casing. @ ·1£] Northwest PlpeCompany Page2 of2 5) The velocity reducing rings wil1 be shown in the drawing submittal for the Slant Drain Tunnel pipe. Each pipe section will show the velocity reducing ring; in addition a detail drawing for the rings will be included in the submittal. 6) L.H. Woods & Sons, Inc. to address this comment. 7) L.H. Woods & Sons. Inc. to address this comment. If you should have any questions, please do not hesitate to call. Project manager. Northwest Pipe Company ' NWP Order No.: AD-09-732 Project Name: City Trunk line South -Unit 2 Project owner: LAOWP Pipe: 2,380' of 66", 0.750" thick Carrier pipe NWP Order No.: AD-09-744 Project Name: City Trunk line South -Unit 5 Project owner: LADWP Pipe : 540' of 60", 0.625" thick Carrier pipe NWP Order No.: AD-11-863 Project Name: Ophir Road Pipe line Project ow~er: Placer County WD Pipe: 300' of 45", 0.281" thick Carrier pipe NWP Order No.: A0-12-882 Project Name: Paisano Water line Replacement, Phase 3 Project owner: El Paso Water Utilities Pipe : 5,900' OF 48", 0.250" thick Carrier pipe -------------------------·-··--- 28 AWWA C604-11 4.4.6.1.4 Final backfill above the pipe embedment shall not be placed until the compaction of the pipe embedment backfill is satisfactorily complete. To pre- vent damage to che pipe, sufficient compacted backfill shall be placed over the pipe before allowing any type of vehicle over it. NoTE: Loosely placed final backfill above the pipe may promote unwanted surface settlement, which could be detrimental to improvements subsequently placed over the trench. 4.4.6.2 Compaction. Care shall be taken to ensure compaction equip- ment does not damage the pipe coating. Ensure proper compaction of backfill to avoid ovalling of the pipe beyond the required limits. 4.4.6.3 Partial backfilling during testing. Newly installed pipelines are normally tested afcer backfilling. W:hen µn1,1sual conditions require that pressure and leakage testing be accomplished before co~pletion of backfilling, or with pipe joints accessible for examination, sufficient backfil~ material shall be placed over the pipe barrel between the joints t0 prevent movement, and due consideration shall be given to restraining thrust forces during testing. 4.4.7 Flushing. Foreign material left in pipelines during installation can result in valve or hyd~ant seat leakage during pressure tests. Every effort shall be made to keep lines clean during installation. Thorough flushing is recommended prior to a pre.ssurc test; flushing shall be accomplished by partially opening and closing valves several times under expeeted line pressure, with flow velocities ade- quate to flush foreign material out of the valves. 4.4.8 Disinfection. Newly installed mains carrying potable water shall ' ' be disinfected in accordance with ANSI/AWWA C651. Provisions shall be made to avoid contamination of existing m.ains by cross connection during testing/ disinfection/flushing of newly installed mains. NoTE: Discharge from flushing or disinfection shall be directed away from the: pipe: alignment so rhar trench stability is not affected and shall be in accordance with federal, state, and local point discharge requirements. 4.4.9 Highway and railroad crossings. 4.4.9.1 Casing pipe. When casing pipe is specified for highways or rail- road crossings, the project shall be completed in accordance with applicable fed- eral, state or provincial .• and local regulations. In the case of railroad crossings, the project shall also comply with regulations established by the railroad. 4.4.9.2 Carrier pipe. The casing pipe and other pipe appurtenances shall be a minimum of 8 in. (200 mm) larger than the outside diameter of the steel pipe Copyright© 2011 American Water Works Association. All Rights Reserved. Sec. 5.1 Sec. 5.2 INSTALLATION OF BURIED STEEL WATER PIPE-4 IN. (100 MM) AND LARGER 29 bells to prevent damage during installation and to prevent pipe-to-casing contact. Carrier pipe may be pushed or pulled through the completed casing pipe. Spacers and/or insulator skids shall be placed around the carrier pipe to ensure approxi- mate centering within the casing pipe and to prevent damage during installation or flotation. Care shall be exercised to avoid metal-to-metal contact. If the casing annulus is grouted, grout pressures and lifts must be: maintained to avoid deflecting or collapsing the steel carrier pipe. CarefulJy monitor the carrier pipe during the grouting operation to verify the proper grouting techniques are being used. 4.4.10 Subaqueous crossings. 4.4.10.1 Subaqueous installations. When it is necessary to cross a body of water, the preferable practice is to dewater the area and proceed according to the conventional pipeline cl:)nsrruction .practices described in this standard. Jn the event the purchaser's documents allow subaqueous construction, the constructor is strongly advised co use an engineered system specifically developed for the pipe, crossing depth, intended cover, and means planned for such a crossing. The use of a restrained-type joint (welded or mechanical) is recommended. However, the additional details necessary for subaqueous construction are not covered in chis standard. SECTION 5: V:eRIF~.GATION Inspection 5.1.1 Inspection 01i. :de"very. All pipe and appurtenances are subject to inspection at the point of delivery. Material found to be defective because of manu- facture or damage in shipment shall be recorded on the bill oflading and may be rejected. There shall be agreement between the purchaser and constructor regard- ing any necessary repairs. The purchaser shall be allowed to monitor the repairs prior to installation. Hydrostatic Field Testing WARNING: 1he testing methods described in this section are specific far water- pressure testing. 1hese procedures shall not be applied fa,. air-pressure testing because of the serious saftty hazards involved. The main objective of a field hydrostatic pressure test (hydro rest) is to check the warertighmess of joints, as each length of pipe is shop tested per purchaser's documents. The hydro test can be performed after backfilling is complete and Copyright© 2011 American Waler Works Association. All Rights Reserved. ® Carla Morreale From: Sent: To: Subject: Mickey Rodich <mickeyrodich@gmail.com> Monday, June 17, 2013 8:29 PM cc San Ramon Canyon As you may recall, at the Council meeting on May 21st, I questioned the Staff report on San Ramon Canyon (SRC) and specifically Change Order #1 (C01). The Council voted to put SRC on the Agenda for the June 4th meeting. I read the C01 thoroughly and on June 4th Council meeting I spoke about the Staff report and C01. Another speaker, Sharon Yarber also spoke about SRC. On June 5th, I sent an email to "cc@mv.com" making comments about CO 1. My computer confirmed that the email was sent and received. When the Agenda for the June 18th Council meeting was made available, I was surprised to see that my email never made it on the Agenda. On Saturday June 15th I sent another email to the same email address questioning the omission and a few minutes later I received an email from the Carolyn Lehr stating that she will correct the error on Monday.' On Monday, I received another email from her stating that she could not confirm that the original email was received. I forwarded a copy to her and she acknowledged that it showed that it was properly sent. Maybe RPV has ghosts in their email files? Could it have been intentional? I don't know. Since my May 5th email was not received and my questions were not answered, and since I now have a copy of the Staff Report dated June 18th, responding to Sharon Y arber's allegations, I now will reply to all of the above. As in my email of June 5th, I still have major concerns on a number of issues. Everything must start with McCarrell Canyon (MCC). I don't understand the logic used by Staff in their 2 reports. 1) Mccarrell Canyon: a) Staff hires Harris to be the Engineer for MCC. No one mentions that, since Harris claims not to be a pipe expert, someone must have made the recommendation based on something? Was there any study made by Harris/Staff that selected Permalock over other pipe choices such as Northwest Pipe? b) Woods is awarded the contrct for MCC. Either the Staff/Harris/Woods should have been aware, at that time, of the Northwest pipe. Someone should have known then, that theNorthwest Pipe was a comparable product. c) Someone also should have known that Northwest Pipe was significantly cheaper. Why was it not selected? I think that for the MCC Project, no pipe comparison pipe study was ever made. I believe Harris selected Permalok and that was what was used and nothing else was ever considered. d) Someone should have known, at that time, that Northwest was used in the vast majority of drain pipes used throughout the US, was cheaper and would also work in MCC. e) Either they knew or they did not know, but in any event, they should have known. This is where the biggest mistake occurred. f) In the May 21st Staff Report was the first time I heard that they had so many problems with damage to the Permalock pipe. Staff never made anyone on the Council or us residents aware of the problems. They covered it up. g) Over a year passes and no mention is made about the problems. It came to light on the May 21st report. Why was the Staff reluctant to talk about the problems? Could it be that the wrong pipe was used? Did Harris/Woods/Staff have something to hide? 2) SAN RAMON CANYON: Now here is where I have my biggest problem. The Staff knew, for a long time that the Permalock pipe did not perform as advertised. They never said anything about it for over 15 months. However Harris/Staff still recommended the use of Permalock pipe for SRC. The following chain of events leads me to believe that someone is not telling the truth. q a) We know for a fact that the Staff lied. They said on the Staff Report of May 21st that "there were a number of shortcomings, which include the need to do extensive amounts ofrepairs to the pipe lining, which was damaged through transportation." and "the lining is brittle and has not performed as well as expected". No report was ever made and given to the manufacturer, Council.or us residents. I think the Council has the right to know about any problems and their extent. I think we have a problem here. In spite of that, it was still recommended by Staff/Harris for the SRC project. b) In the June 18th report, Staff makes no mention of the extensive damage through transportation for the Permalock pipe, they only talk about wear. That's a lie and I think they tried to cover the problem. The May 21st report states differently. c) Contract awarded to Woods on March 5th. d) On March 18th, Woods makes a value engineering proposal to the Staff to use a comparable pipe and receive a cost saving of $630,000. Of course with the change Woods stands to split the savings and obtain a $315,000 increase on their bid. And of course RPV does not get the full $315,000 either. Because of the State matching funds, California gets half of it. e) In the Staff report of June 18th, it states that, 4 days later, on March 22nd, Harris rejected the the pipe substution. Was it because it was trying to protect it's reputation? After all, they were the ones who selected Permalock pipe, because maybe they already had a deal with Permalock to use their pipe, for some consideration to be made later. t) Magically on Thursday April 5th Alan Braatvedt ofKOA Corporation and the City's Construction Manager found Kennedy Jenks and contracted with them to make a pipe comparison study, which they received on Monday April 8th. I have never heard of a report,that was so critical, and worth a lot of money, returned that fast over a week-end. I think there may be a conflict of interest because Alan is involved with all 3 sides of this equation. g) On May 14th Woods gives the Staff a stamped memorandum that the Northwest pipe is "revised as a substitute & not an approved equal". This is an unbelievable statement, because they were the ones that made the original proposal. What are they trying to hide? This is not a customary practice. Who are they protecting; the Staff? h) Les Jones was questioned by the Council on if the Northwest pipe was ordered. His reply was that he did not know for sure, but he thought so. On an item that is so critical to this project I think he should know the status of the complete project at all times, period. Now let me present you with my take on these projects. The scenario begins with all the problems that occurred at MCC. Why was not Harris/Woods/Staff aware of the Northwest pipe back then? Why were they not aware,, at that time, that the vast majority of drain pipes used throughout the country were Northwest pipe. Why were they not aware that the Northwest pipe was significantly cheaper and would reduce the overall coat? I don't think anyone checked that out. Harris made the decision, but was not qualified to make that decision about the Permalock pipe, because by their own admission, they are not pipe specialists. When the damage problems occurred with the Permalock pipe Staff/Harris/Woods were all trying to save face. The report of May 21st is an attempt to cover up some problems and justify using Northwest pipe by showing a large savings to the City. It was then (or maybe they knew sooner) that they found out that Northwest pipe was a better solution and was used in the vast majority of pipes in the country. Someone screwed up, big time. Harris/Woods/Staff got to know each other very well during the MCC project and were protecting one another. They are covering up something. Because of the very tight time schedule, as described above, I feel something was not right. It is quite possible that Harris/Woods/Staff discussed the Northwest pipe solution way before the SRC project was let out for bids. By that time, they could have known about the $630,000 savings by using Northwest pipe and figured that Woods could bid $315 ,000 lower, which would more than likely allow Woods to still win the contract. The $315,000 would be a reward for Woods for helping cover up the problems. When Harris rejected the preliminary proposal for the Northwest pipe on March 22nd, Alan Braatvert scrambled to get Kennedy Jenks, who he is associated with, to give him an approval over a week-end to satisfy Harris. He tried to use a larger consultant, but said it would take too long and delay the project. The Staff then prepared their May 21st report to convince the Council about the savings and at the same time cover up their failures. When Sharon Yarber made her allegations on June 4th, the Staff responded with their report for June 18th. In that report, Staff completely ignored MCC. To me, that is the beginning of all this massive cover up. That report also contains things that I have problems with. Staff says various types of pipes were evaluated for SRC. Something does not make sense. If various pipes were evaluated before those bids were let out, they would have known about Northwest pipe and could have incorporated it in their bid specifications .. They would have known that it was comparable, they would have known it was much cheaper. I think this is another lie, because other pipes were not evaluated, especially Northwest pipe. Woods made their suggestion on March 18th, but I believe they were aware of it much sooner .. . Staff does not say that the Permalock pipe suffered extensive damage during transit. That is another lie. The May 21st report states otherwise. This report also states that "To assure that the City Council was aware of the proposed pipe substitution and to promote transparency, Staff brought the proposed change order to the City Council for approval at the City Council meeting on May 21st". Where was the transparency for MCC. Your analogy that the Director of Public Works can approve substutions is a perfect example that the Staff runs the City and not the City Council. That is the responsibility of the City Council and the contract should have stated that. Staff drew up. the contract so that they have complete control to bypass the City Council. Again this Staff report states that Harris admits that they are not pipe specialists, so why did they select the Permalock pipe for MCC and SRC? You state the success ofMCC, but MCC had major problems that were never reported to the City Council. Why not? You mention that Kennedy Jenks was selected by Staff after negotiations with another large consultant. You didn't have time to do all of that in this limited time frame. As you can see there are excuses and lies made by the Staff. They and Harris and Woods were derelict in their responsibilities and duties. Something is being covered up here, that goes all the way back to MCC. I think this whole matter deserves much more scrutiny and I do feel that an independant investigator should be hired to get to the bottom of this. Something is very wrong here. CrTYOF TO: FROM: DATE: SUBJECT: HONORABLE MAYOR & CITY COUNCIL MEMBERS CITY CLERK JUNE 17, 2013 REVISED: ADDITIONS/REVISIONS AND AMENDMENTS TO AGENDA Attached ·are revisions/additions and/or amendments to the agenda material received through Monday afternoon for the Tuesday, June 18, 2013 City CQuncil meeting: Item No. Description of Material 9 Emails from: Sharon Yarber; Mickey Rodich Respectfully submitted, (kL~~ Carla Morreale W:IAGENDA\2013 Additions Revisions to agendas\20130618 additions revisions to agenda through Monday afternoon.doc From: Sent: To: Subject: Dear Council Members, sharon yarber <momofyago@gmail.com> Thursday, June 13, 2013 11:03 PM cc Meeting on June 18, 2013 Since you indicated that this item would be for the purpose of a full vetting of all of the issues surrounding this matter, I suggest you plan on spending a lot more time than 30 minutes to get through this agenda item. Sharon Yarber 1 9. From: Sent: Subject: Mickey Radich <mickeyrodich@gmail.com> Wednesday, June 05, 2013 5:44 PM San Ramon Canyon -Change Order #1 At the May 21 City Council meeting I asked to speak and find out the particulars about Change Order #1 (COl) for San Ramon Canyon (SRC). I did not see the Staff report beforehand, but Carolynn Petru was nice enough to email me a copy. Now that I had a chance to read it, I am very concerned over what has transpired. 1) McCarrell Canyon: It seems to me that there are major concerns over the study and selection of the type of pipe that was used in Mccarrell Canyon (MCC). According to the SRC Change Order #1 (COl), staff states that "The vast majority of all large diameter steel piping used through the country is installed using the bell lap welded method previously described". In spite of that, Staff selected the Permalok pipe for MCC. Why was that done? a) Did Staff have a qualified consultant examine the various pipe products and materials available to use on MCC and did they then follow their recommendation for MCC? b) What about high density polypropylene? Was that ever another option? c) In the CO 1, the Staff says that Harris & Assoc. recommended the Permalok pipe system for both MCC and SRC .. Was their selection based on a study comparison of different pipes? On what basis did they make their selection? Did they use a consultant? In the CO 1 report the Staff states that Harris and Assoc. "are not steel pipe specialists". Why then did Harris & Assoc. select the pipe in the first place or did the Staff make the selection? d) The Staff also stated in the COl report that the pipe was delivered to MCC and" sustained a fair amount of damage to the epoxy coating" e) This is the first time I heard that the pipe was damaged during transit. Did the contractor or the Staff ever contact Permalok about the problem? What was the resolution? f) Who made the repairs to the pipe and what was the cost for those repairs? Who paid for those repairs? 2) San Ramon Canyon: Now, in the case of SRC, I don't understand the exact timetable of events that occurred, and resulted in CO 1? There are many questions that must be answered in order to understand the logic used by the RPV Staff. a) According to Staff, they knew in late 2011, that the pipe lining in MCC was not wearing well. Staff also knew that the SRC project was to begin in early 2013. So what did the Staff do during that period of time (15 months)? They still recommended to use the same Permalock pipe even though their CO 1 report says they had concerns about turn around time, transportation time, transit damage, wear problems and quality issues. The Staff never questioned the use of Permalok pipe when letting out bids for SRC. q b) All of a sudden some unusual events occurred. The City Council awards the SRC project to L.H. Woods on March 5,2013. The Staff states that" The Permalokpipe system was recommended by the design engineer, Harris & Assoc." c) On March 18,2013 L.H. Woods makes the suggestion to Staff to use a different pipe that will be equivalent in all respects or better, while saving the City over $630,000. They awarded L.H.Woods half of that amount based on a 50150 shared basis for any cost savings. d) Magically, someone finds Kennedy & Jenks to do a comparative study,that the Staff never did before, in a very short time, on the 2 pipes and they had a report back to the City Staff on April 8,2013. e) L.H.Woods starts the project in the beginning of May. f) On May 14, 2013 L.H. Woods gives the Staff a stamped memorandum stating that the new pipe is "revised as a substitute & not as an approved equal". What does this mean?? They are the ones who requested and recommended the new pipe in the first place. This does not make sense. I don't know if any pipe was ordered from Permalok for SRC or if an order was made and cancelled, but the Staff and/or contractor should have ordered the pipe the day after the contract was given to L.H.Woods, because of the known time constraints. All of the above is occurring in a very short period of time and this pipe is the most important element of this total project. The acting Public Works director did not know, for sure if any pipe was yet ordered for the SRC. I also was made aware of a bid that was to be made by a Bubalo Company at the last minute, and the Staff was not interested in recording it and said the contractor was a minute late and they returned the bids. Because of all of these unanswered questions the Staff, contractors and consultants must be held accountable for their actions and provide us answers and furnish copies of all correspondence they had. I think the City Council should perform an independent investigation of this matter. Something is wrong here. Our Staff is not very transparent. There are too many unanswered questions and plenty of excuses for their behavior.