Chapter 3.6 Regulation of Certain Businesses

3.6.10 Purpose of this Chapter

The purpose of this Chapter is to establish procedures governing the regulation of certain businesses in the City of La Habra Heights.

3.6.20 Adoption of License Ordinance

Title 7, Business Licenses, of the Los Angeles County Code as amended and in effect on June 30, 2006, is hereby adopted by reference as the License Ordinance of the City of La Habra Heights. A certified copy of Title 7 of the Los Angeles County Code has been deposited in the office of the City Clerk of the City of La Habra Heights, and shall be at all times maintained by the Clerk for use and examination by the public.

3.6.30 Amendments

Notwithstanding the provisions of Section 3.6.20, Title 7 is hereby amended by deleting Chapter 7.24, Charitable Solicitations. The License Ordinance of the City of La Habra Heights shall include the supplemental matters set forth in the remaining sections of this Chapter.

3.6.40 Contractors

The following requirements are applicable to contractors that conduct business in the City of La Habra Heights.

A.    Definition. Contractor means any person except a licensed architect or a registered civil engineer acting solely in his professional capacity who in any capacity other than as the employee of another with wages or salary as his sole compensation undertakes to or offers to undertake or purports to have the capacity to undertake to or submit a bid to or does himself or by or through others does construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, project, development, improvement or any part thereof, including the erection of scaffolding or other structures or work in connection therewith. Contractor shall include subcontractor or specialty contractor but shall not include an owner-builder or anyone who merely furnishes materials or supplies without fabricating them into or consuming them in the performance of the work of the contractor or owner-builder.

B.    License Required. Every contractor as defined in Section 7.29.010 engaged in the contracting business within the city limits of the City of La Habra Heights shall first obtain and pay for a contractor’s license as required by the Municipal Code of the City of La Habra Heights.

C.    Fee. The license fee required to be paid to perform, carry on, conduct or engage in any contracting activity shall be established by resolution of the City Council and every general and engineering contractor and owner-builder shall:

1.    Require all subcontractors for the performance of any work on each project in the City under his control or direction, whether the subcontract is written or oral, to have a business license as herein provided for the year or years in which the subcontractor’s work is to be done at the time such subcontract is made and before permitting such subcontractor to begin or perform services on any such project of said general or engineering contractor or owner-builder. The failure of such general or engineering contractor or owner-builder to comply with the foregoing provisions of this subsection shall render such general or engineering contractor or owner-builder liable to the City for an additional license fee equal to the amount of such subcontractor’s unpaid license fee plus any penalties for delinquencies accruing thereon pursuant to Title 7 of the Los Angeles County Code.

2.    Furnish the City with a list of all subcontractors to do work on any project of such general or engineering contractor in the City upon forms furnished by the City.

D.    Posting. Each contractor and subcontractor shall post on the site of work or construction a copy of their current business license.

3.6.50 Vehicles

Every person required to have a business license under this ordinance and who regularly uses a vehicle or vehicles in the conduct of their work or business shall obtain from the City a sticker that shall be placed on such vehicle or vehicles identifying the vehicle as belonging to a person with a current business license. Such stickers shall be obtained from the City of La Habra Heights for a fee established by resolution of the City Council.

3.6.60 Resource Extraction Businesses

This Section applies to those entities engaged in resource extraction in the City of La Habra Heights. The following applies to the determination and application of fees.

A.    Terms Specific to this Section. The following terms and definitions are specific to this section:

1.    "Resource extraction business" means a business that operates one or more oil or gas wells located in all or in part within the City of La Habra Heights.

2.    "Oil or gas well" includes any structure or means of extracting oil, gas, or other hydrocarbons from the earth.

3.    "Oil" includes any liquid or semisolid containing hydrocarbons; "gas" includes any gaseous substance containing hydrocarbons.

4.    A "barrel of oil" shall consist of forty-two U.S. gallons of crude petroleum or hydrocarbon substances corrected for temperature variations in accordance with methods generally accepted in the petroleum industry. "Petroleum or hydrocarbon substances" means crude oil remaining after the removal of water or other impurities by preliminary processing in the vicinity of the well site preparatory to shipment.

5.    A "cubic foot of gas" shall consist of one cubic foot of shipped gas corrected for temperature variations in accordance with methods generally accepted in the natural gas industry. "Shipped gas" means gas remaining after the removal of water vapor or other impurities by preliminary processing in the vicinity of the well site preparatory to shipment.

B.    Tax.

1.    Every person engaged in a resource extraction business shall obtain a business license and pay an annual business license tax composed of (a) an annual wellhead tax for each well owned or operated by that person including idle wells, (b) a per barrel tax for each barrel of oil produced by that person, (c) a volume tax for each thousand (1,000) cubic feet of gas produced by that person, excluding gas that is flared or otherwise wasted on site, and (d) a removal volume tax for each thousand (1,000) cubic feet of gas extracted from a storage facility by that person.

2.    The rates for these taxes shall be as follows:

a.    Wellhead Tax. Effective January 1, 2014, the tax per well, whether active or idle, shall be five hundred ($500.00) dollars. This tax shall be increased each January 1, beginning January 1, 2015, by the lesser of (i) three (3) percent or (ii) the percentage by which the Consumer Price Index for all urban consumers for the Los Angeles-Anaheim-Riverside area (as published by the Bureau of Labor Statistics of the United States Department of Labor) or any successor to that index, increases in the twelve (12) months prior to September of the year prior to the adjustment. For example, the tax effective January 1, 2016, shall be increased from the tax effective January 1, 2015, by the lesser of (i) three (3) percent or (ii) the percentage by which the Consumer Price Index increases between September 2014 and September 2015.

b.    Per Barrel Tax. Effective April 1, 2013, the tax per barrel of oil produced shall be sixty ($0.60) cents. Each January 1 thereafter, the tax per barrel shall be re-calculated based on the California Crude Oil First Purchase Price (the "Oil Index") as published by the U.S. Energy Information Administration (or any successor to that index) using the following formula: the tax per barrel shall be sixty ($0.60) cents multiplied by the ratio obtained by dividing (i) the average of the monthly Oil Index for each of the months in the twelve (12) month period ending with the September prior to the adjustment by (ii) one hundred seven (107). For reference, one hundred seven (107) was the twelve (12) month oil index average for the period including May 2011 through April 2012.

c.    Volume Tax. Effective April 1, 2013, the tax per one thousand (1,000) cubic feet of gas shall be ten ($0.10) cents. Each January 1 thereafter, the tax per one thousand (1,000) cubic feet of gas produced shall be recalculated based on the Wellhead Prices per 1,000 Cubic Feet of United States Natural Gas (the "Natural Gas Index") as published by the U.S. Energy Information Administration (or any successor to that index) using the following formula: the tax per one thousand (1,000) cubic feet shall be ten ($0.10) cents multiplied by the ratio obtained by dividing (i) the average of the monthly Natural Gas Index for each of the months in the twelve (12) month period ending with the September prior to the adjustment by (ii) 3.35. For reference, 3.35 was the twelve (12) month Natural Gas Index average for the period including May 2011 through April 2012.

d.    Removal Volume Tax. Each calendar year, the tax rate per one thousand (1,000) cubic feet of gas re-extracted from a storage facility shall be three-fifths of the rate of the volume tax for that year. For example, from April 1, 2013, through December 31, 2013, the rate shall be six ($0.06) cents per one thousand (1,000) cubic feet of gas.

3.    Where this section requires calculation of an annual rate adjustment, the City Manager shall give notice of the results of such calculation in the manner required by law for notice of ordinances of the City.

4.    Each tax that is paid quarterly shall be calculated based on the rate in effect during the months of activity measured. For example, the per barrel tax due on January 30, 2014, based on production occurring from October 1, 2013, through December 31, 2013, shall be calculated based on the rate effective from October 1, 2013, through December 31, 2013.

5.    Each tax that is paid annually shall be calculated based on the rate in effect at the time the tax is due.

6.    Each reference to a "fee" or to "fees" in subsections A through I of this section shall be read to refer to the taxes imposed by this subsection B. Each reference to a "cubic foot fee" in this section shall be read to refer to the volume tax and removal volume tax imposed by this subsection B.

C.    Annual and Quarterly Fee Payments. The wellhead fee shall be due and payable annually under the La Habra Heights Municipal Code. The per-barrel and per cubic foot fees shall be due and payable as follows:

1.    Per barrel and per cubic foot fees shall be paid to the City no later than 30 days after March 31, June 30, September 30, and December 31 of each year with respect to production during the three months prior to those dates. Returns submitted less than three months from the effective date of the ordinance that adopts this section, however, need only be made with respect to production after the effective date of that ordinance.

2.    Each person required to have a license under this Part shall keep full, true, and accurate records as to the amounts of oil and gas produced and shipped or sold. Those records shall be maintained for at least three (3) years and shall be made available, together with any shipping documents or sales invoices, for inspection by the City at any reasonable time.

3.    Each person required to have a license under this Part shall file with the City, along with each quarterly payment of per barrel and per cubic foot fees, a written return setting forth the number of wells in operation during any part of that quarter and the number of barrels of oil or cubic feet of gas produced by each well during the quarter for which the return is filed. Each such person shall pay the per barrel and per cubic foot fees calculated by applying the current rates to the production reported on the return. Each return shall be signed under penalty of perjury by one with authority to legally bind the business. No return shall be conclusive against the City as to the information set forth therein, nor shall the filing of a return preclude the City from collecting by appropriate action any additional fee that is determined to be due and payable.

D.    Failure to Remit. Any person who fails to remit any fee due under this Chapter within the time required shall pay a penalty of ten percent per month or fraction thereof of the amount of the fee due, exclusive of penalties, in addition to the amount of the fee. If the City determines that nonpayment of any remittance due under this Chapter is due to fraud, a penalty of twenty-five percent of the amount of the fee shall be added thereto in addition to the other penalties stated in this section. In addition to other penalties imposed, any person who fails to remit any fee due under this Chapter shall pay interest at the rate of one-half of one percent per month or fraction thereof on the amount of the fee due, exclusive of penalties, from the date on which the remittance first became delinquent until paid. Every penalty imposed and such interest as accrues under the provisions of this section shall become a part of the fee required to be paid.

E.    Determination of Fee by City. If any person fails or refuses to make, within the time provided in this Part, any report and remittance of the fee or any portion thereof required by this Part, the City shall proceed in any reasonable manner to obtain facts and information on which to base an estimate of the fee due. As soon as the City procures such facts and information as are available and determines an estimate of fee due, the City shall assess against the person the fee, interest and penalties provided for by this Part. The City Clerk shall give notice of the assessment by personal service to the person or the person’s representative, or by depositing it in the United States mail, postage pre-paid, addressed to the person’s last known address. Within ten days after the service or mailing of such notice, the person may make written application to the City Clerk for a hearing. If application by the person for a hearing is not made within the time prescribed, the fee, interest and penalties, if any, assessed shall become immediately due and payable. If such application is timely made, the City Clerk shall give not less than five days’ written notice to the person, in the manner prescribed in this section for the notice of the amount assessed, of the time and place fixed for a hearing. At such hearing, the person may appear and offer evidence why such specified fee, interest and penalties should not be assessed. After such hearing, the City Manager shall determine the fee to be remitted and shall give written notice to the person in the manner prescribed in this section of such determination and the amount of such fee, interest and penalties so due. The amount due shall thereupon be immediately due and payable.

F.    Appeal. Any person aggrieved by any decision of the City Manager at or following a hearing with respect to the amount of fee, interest, and penalties due, may file a notice of appeal with the City Clerk within fifteen days after the serving or mailing of notice of the City’s determination. The City Clerk shall set a time and place for hearing such appeal, and shall give written notice of the time and place of such hearing to the person at the person’s last known address. The findings of the City Council shall be final and conclusive and notice thereof shall be served upon the appellant in the manner prescribed in Section 7.29.240 for service of notice of assessment. Any amount found to be due, together with interest at the rate prescribed in Section 7.29.230 from the date such fee accrued and any penalty imposed, shall be immediately due and payable upon the service of notice.

G.    Additional Powers and Duties of the City Manager. The City Manager shall have the power to adopt rules and regulations not inconsistent with the provisions of this Chapter for the purpose of carrying out and enforcing the payment, collection and remittance of the fees herein imposed. A copy of such rules and regulations shall be maintained on file in the office of the City Manager. The City Manager may enter into administrative agreements to vary the strict requirements of this Part so that collection of any tax imposed hereby may be made in conformance with the collection procedures of a particular resource extraction business so long as said agreements result in collection of the tax in conformance with the general purpose and scope of this Part. A copy of each such agreement shall be maintained on file in the office of the City Manager.

H.    Application of Part. In the manner and upon the terms and conditions set forth in this Part, it shall be lawful for any person to drill a well for and to produce oil, gas or other hydrocarbon substances and to conduct any other lawful operations, including the installation and maintenance of any derrick, drilling and producing equipment and appurtenance structures or machinery proposed or intended to be used for or in connection with the drilling for or production of oil and gas on any land within the City which is zoned to permit such operations, and on any other land where such operations may be authorized pursuant to the provisions of the zoning ordinance of the City; provided, that all of such operations shall conform with the provisions of this Part.

I.    Administration and Enforcement of Part. It shall be the duty of the City Manager, or his/her designee to administer and enforce the provisions of this Part.

J.    Permits Required. It shall be unlawful for any person to construct, commence to construct or maintain or use within the City any derrick or other structure, equipment or machinery proposed or intended to be used or used for or in connection with the drilling for or production of oil, gas or other hydrocarbon substances without first obtaining a written permit therefore, to be issued by the Fire Chief in accordance with the terms of this Part. The re-drilling of an existing well shall be subject to the permit requirements of this section.

K.    Not Required for Servicing. No permit shall be required for well servicing.

L.    Permit Coverage. The following permit coverage requirements are applicable.

1.    Fire Permit Coverage: Each Fire Permit evidencing the inspection of any well shall require payment of fees sufficient to cover the costs of bi-annual inspection of all structures, tanks, equipment and facilities necessary or convenient for the temporary field storage, separating, gauging, handling and shipping of oil, gas and other substances produced from or injected into any well; the inspection of all temporary structures, steel derrick or portable mast, tanks, equipment and facilities necessary or convenient for such operation.

2.    Drilling Permit Coverage: Each permit authorizing the drilling of any well shall also authorize the installation and use of all temporary structures, steel derrick or portable mast, tanks, equipment and facilities necessary or convenient for such operation, except as otherwise noted in the permit or as otherwise provided by this Code.

3.    Operation and Maintenance Permit Coverage: Each permit authorizing the operation and maintenance of any oil well shall also authorize the installation and use of all structures, tanks, equipment and facilities necessary or convenient for the temporary field storage, separating, gauging, handling and shipping of oil, gas and other substances produced from or injected into any well customarily used in connection with such operation, except as otherwise noted in the permit or as otherwise provided by this Code.

M.    Resource Extraction Business Regulations. Any person desiring any permit required by this Part shall file a written application therefore with the Fire Chief on forms furnished for that purpose which shall contain and be accompanied by the name or number and location of the proposed or existing well as such well may be identified and described in notices filed with the division of oil and gas. Each well shall be identified on a site map or parcel map depicting the location of the well and all other structures on the property. Under the Zoning Ordinance of the City of La Habra Heights the drilling or re-drilling of a well requires a conditional use permit. Application for the conditional use permit shall be filed with the department of planning and development within five days of filing for a drilling permit.

N.    Bond to Accompany Application. Except as provided elsewhere in this Part, every application for a permit required by this Part, for which a bond is not on file, shall be accompanied by a faithful performance bond in a form approved by the City Attorney in the sum of fifty thousand dollars for each well. Such bond shall be conditioned that the principal named in the bond shall faithfully comply with all of the provisions of this Part. The bond shall secure the City against all costs, charges and expenses incurred by it by reason of the failure of the permittee to comply fully with the provisions of this Part. The bond shall include a provision that the City be given written notice not less than sixty days prior to the cancellation or reduction in the coverage of the bond.

O.    Blanket Bond. In lieu for filing the bond as required by this Chapter for each well, a blanket bond in the amount of five hundred thousand dollars to cover all operations under this Part of a single permittee may be filed. Riders to such blanket bond may be filed with the City identifying each well to be covered by such blanket bond.

P.    Bond to Be Kept in Full Force and Effect. Each bond filed pursuant to this Chapter shall be kept and maintained in full force and effect until terminated or superseded as provided in this Part.

Q.    Termination of Liability Under Bond. The applicant, as principal, and the surety under any bond filed pursuant to this Chapter may have such bond terminated and canceled if and when the applicant or the assignee of any permit granted pursuant to the Part shall furnish a new bond therefore. Any bond or rider thereto shall be terminated and canceled upon the final and permanent cessation or abandonment of all operations in connection with any wells for which such bond or rider thereto was given, in compliance with the applicable provisions of this Part.

R.    Permit Issuance. The application for an oil well permit submitted pursuant to this Chapter shall be approved and the permit granted by the Fire Chief within five working days after the granting of the conditional use permit and after receipt of such application which conforms with the provisions and requirements of this Part. No permit shall be issued which would conflict with any provision of the zoning ordinance or any other provision of this Code.

S.    Drilling Permit. A fee in an amount established by City Council resolution shall accompany each application for a permit to cover the drilling of a new well and the re-drilling of an existing well to recomplete it at a different level or zone than the existing well hole.

T.    Permit Valid for One Fiscal Year. Each oil well permit shall be valid only for the fiscal year for which issued.

U.    Permit Renewal Required Each Year. Each permit issued pursuant to this Chapter shall be renewed at the beginning of the fiscal year following the year in which it was granted or renewed, unless such well has been abandoned prior thereto. At least 15 days prior to the end of each fiscal year, the owner of any existing well not abandoned shall make application for a permit covering the operation and maintenance thereof.

V.    Change of Ownership, Transfer of Permit. In the event of any change of ownership of any oil or gas well after a permit has been granted to cover the drilling thereof or to cover the operation and maintenance of an existing well, the permit, and all the rights and obligation pertaining thereto may be assigned and transferred to such new owners, as provided in this Chapter.

W.    Notice to Fire Chief, New Bond Required. The permittee shall notify the Fire Chief in writing of the sale, assignment, transfer, conveyance or exchange of any well within thirty days after such sale, assignment, transfer, conveyance or exchange, and the new owner thereof shall succeed to all the rights and obligations of the permittee under the permit applicable to such well upon the filing by the new owner of a faithful performance bond, as provided in this Part, to cover future operation and maintenance of such well. The notice shall contain the following:

1.    The name and address of the person to whom such well is sold, assigned, transferred, conveyed or exchanged.

2.    The name and location of the well.

3.    The date of sale, assignment, transfer, conveyance, or the date when possession was relinquished by the former permittee.

X.    Revocation - Grounds Generally. Any permit issued pursuant to this Part may be revoked by the City Council upon its finding, after a public hearing as provided in this Chapter, that the permittee has failed, neglected or refused to perform, comply with and abide by any of the conditions and provisions of this Part.

Y.    Notice of Intention; Remedy of Noncompliance Required. Proceedings before the City Council for the revocation of any permit issued pursuant to this Section may be instituted by the Fire Chief, who shall cause to be posted in a conspicuous place on the premises covered by the permit, readable from the ground level, a notice entitled "Notice of intention to revoke permit," and who shall cause a copy thereof to be mailed, postage prepaid, to the permittee, or his designated agent, at his last known address and a copy to be filed with the City Council. Such notice shall set forth the date of the posting, in accordance with this section, and the reasons and grounds upon which such revocation will be based and shall require the permittee within fifteen days after the date of posting specified therein to cure and remedy any default, noncompliance with, or violation of any condition of the permit or of this Part or to show cause before the City Council why such permit should not be revoked.

Z.    Extension of Time for Compliance. Upon application therefore by a permittee under this Part, the City Council may, at its discretion, extend the time for curing and remedying any claimed default, noncompliance or violation by the permittee, but no such extension of time shall be for a longer period than a total of sixty days from the service upon the permittee of notice of intention to revoke the permit pursuant to this Chapter.

AA.    Request for Hearing; Failure to Request. At any time prior to the expiration of the fifteen days allowed for remedying any noncompliance with the permit or with this Part, or any extension thereof, the permittee may file with the City Council a written appeal, as provided in this Chapter, from the order, requirement, decision or determination of the Fire Chief as set forth in the notice given pursuant to this Chapter and request a hearing thereon by the City Council. Failure to file a demand for such hearing within the allowed period of time, or any extension thereof, shall be deemed to be an admission on the part of the permittee that valid grounds exist for the revocation of the permit, unless the permittee shall have commenced within that time a diligent and bona fide effort to cure and remedy any default, noncompliance or violation for which such notice was issued.

BB.    Hearing Allowed. If a hearing before the City Council is timely requested pursuant to this Chapter the permit shall not be modified or revoked unless and until so ordered by the Council after the completion of such hearing. (Ord. 2013-02 § 1)