Arroyo Grande staff on Tuesday introduced an ordinance to grant Phillips 66 Pipeline LLC a franchise to construct, operate and maintain pipeline segments within city limits, and the council directed staff to seek added notification language requiring Phillips 66 to notify the city should pipeline segments be reactivated.

Public Works and assistant city manager staff outlined the franchise process under the Public Utilities Code and noted prior city franchises in 1999 and 2009 and a 2024 request. Staff said the city has been working with the Office of the State Fire Marshal (OSFM) and that OSFM inspection reports from 2024 indicate compliance with federal and state maintenance and operation standards. Staff also said a public records request for the last 10 years of inspection data was pending and expected by Dec. 5.

The presentation described multiple leak-detection and monitoring systems used by pipeline operators, including real-time transient modeling and SCADA, and noted franchise protections such as a $2,000,000 bond and insurance requirements plus grantee obligations to repair damage caused by operations.

Council members asked whether the city could require notification if Phillips 66 re-energizes pipeline segments. Renee Flores, operations manager for midstream operations for Phillips 66, said such notifications would follow protocols with the Office of the State Fire Marshal and that notifying the city "would not be an issue." "It would all go through that," Flores said, adding that the company could be asked to incorporate notification language into the franchise agreement.

Staff said, if the council introduces the ordinance tonight, the third and final adoption hearing would be scheduled for Dec. 9, when staff intends to add the requested inspection history and any negotiated notification language to the council packet. The matter was introduced by council action; the franchise remains subject to a final council adoption vote.