AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 16-000605
MEETING DATE:	06/28/16
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	2
SUBMITTING Agency/Department:	John Wayne Airport (Approved)
Department contact person(s):	Barry A. Rondinella (949) 252-5183
	David DeLeon (949) 252-5291

Subject: Approve Third Amendment to Hydrant Fueling Facilities Lease

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Agreement to Form

Discussion

4/5 Vote

Budgeted: N/A

Current Year Cost: N/A

Annual Cost: N/A

Staffing Impact:

# of Positions:

Sole Source: N/A

Current Fiscal Year Revenue: N/A

Funding Source: N/A	County Audit in last 3 years: No

Prior Board Action: 09/14/2010 #15

RECOMMENDED ACTION(S):

Find that Final Mitigated Negative Declaration No. CPP 2013-00087, previously adopted by Director, OC Development Services on May 8, 2014, reflects the independent judgment of the County of Orange and is adequate to satisfy the requirements of CEQA for the approval of the Third Amendment to Hydrant Fueling facilities lease project based on the following additional findings:

a. The circumstances of the project are substantially the same and Final Mitigated Negative Declaration No. CPP 2013-00087 adequately addressed the effects of the proposed project. No substantial changes have been made in the project, no substantial changes have occurred in the circumstances under which the project is being undertaken and no new information of substantial importance to the project which was not known or could not have been known when the previous Mitigated Negative Declaration No. CPP 2013-00087 was adopted had become known; therefore, no further environmental review is required.

b. Mitigated Negative Declaration No. CPP 2013-00087 is adequate to satisfy the requirements of CEQA for the Third Amendment to Hydrant Fueling facilities lease project.

Approve Third Amendment to the Hydrant Fueling Facilities Lease with SNAFUEL, Inc.

Authorize the Airport Director to grant easement to Wickland Pipelines LLC for construction and installation of fuel pipeline on Airport property.

SUMMARY:

Approving a Third Amendment to the Hydrant Fueling Facilities lease with SNAFUEL Inc. will authorize SNAFUEL Inc. to construct, maintain and operate a new fuel storage tank farm, which would decrease vehicle traffic congestion, reduce local road maintenance costs, improve airport security, and decrease air pollution.

BACKGROUND INFORMATION:

The purpose of this Agenda Staff Report is to request Board of Supervisor (Board) approval of a Third Amendment to Hydrant Fueling Facilities Lease (Amendment). The current lease is between the County and SNAFUEL INCORPORATED (SNAFUEL), and has a termination date of December 31, 2030. Approval of the Third Amendment will amend the lease termination date to be 25 years beginning from the date of construction completion of new fueling facilities, as described below, which is required to occur within 15 months following Board approval. The 25-year term is based on SNAFUEL's ability to amortize its investment in the fueling facilities.

SNAFUEL is a non-profit consortium of commercial airlines and cargo operators at John Wayne Airport (JWA) that provides fueling services for the consortium. The current consortium members are: Alaska, American, Delta, Frontier, Southwest, United, WestJet, FedEx and UPS. The carrier non-members, Skywest, Compass, and Horizon, operate through their partnerships with Alaska, Delta and United.

On September 14, 2010, the Board of Supervisors approved a Second Amendment to a Hydrant Fueling Facilities Lease and Consent to Hypothecation of Leasehold with SNAFUEL, Inc.

The current lease with SNAFUEL requires that construction of structures, improvements and facilities must be built according to plans approved by the County. In addition, SNAFUEL must also maintain said construction in good condition throughout the term of the lease and must comply with all applicable federal, state or County regulations, including those set forth by the Regional Water Quality Control Board. All SNAFUEL-constructed improvements, exclusive of trade fixtures, become the property of the County upon lease expiration should the County exercise its option. However, the County retains the right to require SNAFUEL to remove some or all of the improvements at no cost to the County.

The Amendment authorizes SNAFUEL to construct, maintain and operate a new above-ground jet fuel storage tank farm (Expanded Fueling Facilities) comprised of two new tanks, each with a net operating capacity of 37,000 barrels, or 1.5 million gallons. One tank will supply the airlines for one week. The Amendment also authorizes the construction, maintenance and operation of pipeline connections between the new and existing tank farms, and between the Expanded Fueling Facilities and a common carrier jet fuel pipeline (Pipeline).

The Expanded Fueling Facilities and associated amenities will be constructed by Pond and Company on behalf of SNAFUEL. SNAFUEL will be responsible for maintenance and operation of the Expanded Fueling Facilities. The Pipeline will be constructed, owned and maintained by Wickland Pipelines LLC (Wickland) pursuant to the authority granted in a separate easement attached hereto.

The Pipeline is a California Public Utilities Commission (CPUC) regulated public utility being built for the express purpose of serving JWA. The following is a list of benefits that the Expanded Fueling Facilities and Pipeline will provide to JWA and the adjacent community:

1. Decreased Traffic Congestion: Currently, airline jet fuel is transported daily, causing significant wear and tear on JWA's access road as well as neighboring public roads. The Pipeline will eliminate about 44 tanker truck trips per day (approximately 16,000 annual trips).

2. Potential to Lower Jet Fuel Prices: The Pipeline will enable any Long Beach area refinery or fuel importer to competitively bid on supplying jet fuel to the Airlines operating out of JWA and make large fuel deliveries to JWA through a system of CPUC regulated pipelines. Over the long term, pipeline transportation costs will be less than truck deliveries.

3. Improved Airport Security: Elimination of tanker truck deliveries of jet fuel will significantly reduce the amount of nighttime vehicular traffic entering JWA's secure area. The presence of non-JWA personnel truck drivers in the secure area is avoided, making it much easier for security personnel to police the premises.

4. Decreased Air Pollution: Cessation of tanker truck trips will reduce the mobile source air emissions, including greenhouse gases, generated by that method of transporting jet fuel. Engine emissions generated by daily jet fuel tanker trucks contribute to localized and regional air pollution. Transport of jet fuel by the Pipeline is projected to reduce future air quality impacts as compared to continuation of daily tanker truck trips.

Furthermore, the Third Amendment with SNAFUEL and the Grant of Easement for the Pipeline contain indemnity and insurance provisions that place liability for the Expanded Fueling Facilities and the Pipeline on SNAFUEL and Wickland. Given this and the above benefits to JWA and the airlines, it would be of significant value to the Airport to have the new fuel Pipeline and Expanded Fueling Facilities.

Additional information is provided in the attached Third Amendment Summary.

Compliance with CEQA: This project is a necessarily included element of the project considered in Mitigated Negative Declaration No. CPP 2013-00087, “approved by the Director, OC Development Services on May 8, 2014, for Encroachment Permit Application No. CPP #2013-00087-Wickland Jet Fuel Pipeline Project, which adequately addressed the effects of the proposed project. No substantial changes have been made in the project, no substantial changes have occurred in the circumstances under which the project is being undertaken and no new information of substantial importance to the project which was not known or could not have been known when the Mitigated Negative Declaration No. CPP 2013-00087 was approved has become known; therefore, no further environmental review is required.

FINANCIAL IMPACT:

N/A

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Attachment A - Third Amendment to Hydrant Fueling Facilities Lease
Attachment B - Amendment Summary
Attachment C - Wickland Pipeline Easement