TO: MAYOR AND CITY COUNCIL MEMBERS, CITY OF CHINO
FROM: SWATI MESHRAM, PHD, AICP, DIRECTOR OF DEVELOPMENT SERVICES
SUBJECT
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Appeal of the Planning Commission Action Denying the Dirac Battery Energy Storage System (BESS) Project.
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RECOMMENDATION
recommendation
1) Conduct a public hearing; 2) adopt Resolution No. 2026-061, granting the appeal and thereby approving PL25-0085 (Special Conditional Use Permit) and PL25-0086 (Site Approval); and 3) introduction of Ordinance No. 2026-013, to be read by number and title only, approving the Development Agreement between the City of Chino and Dirac BESS LLC for the Dirac Battery Energy Storage System (BESS) Project.
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FISCAL IMPACT
If the appeal is granted and the “Project”, including the Development Agreement (DA) is approved, the Project would result in fiscal benefits to the City. Pursuant to the DA, the Applicant would provide two Community Benefit payments totaling $6 million and guarantee that the City receives at least $4 million in combined Project sales and use tax revenue and Development Impact Fees (DIF). In addition, the Applicant would provide $600,000 for fire suppression, emergency management and preparedness related to the Project, and other public services identified by the City. Collectively, the DA would provide a minimum of $10.6 million in community and fiscal benefits to the City.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Financial Stability
• Responsible Long-Range Planning
• Effective Technology
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BACKGROUND
On July 15, 2026, the Planning Commission conducted a public hearing to consider PL25-0085 (Special Conditional Use Permit) and PL25-0086 (Site Approval) for the proposed Dirac Battery Energy Storage System (BESS) facility (the “Project”), as well as a recommendation to the City Council regarding a Development Agreement (DA) between the City of Chino and Dirac BESS, LLC. The Project consists of a 400-megawatt BESS utilizing lithium-iron phosphate (LFP) battery technology on an approximately 13.89-acre site. The Project also includes an operations and maintenance building, an on-site substation, and a 230-kilovolt generation interconnection line connecting the Project to the adjacent Southern California Edison (SCE) Chino Substation. The Planning Commission staff report is included as Exhibit “A.” Staff recommended approval of the Project based on its determination that the Project is consistent with the General Plan, Zoning Code, applicable development standards, and the findings required for approval of the requested entitlements.
During public testimony at the public hearing, residents spoke and raised concerns regarding fire safety, the proximity of the Project to residential areas, potential off-site impacts associated with a potential BESS fire, and previous fire incidents involving other BESS facilities not located in the City. Following public testimony, the Planning Commission deliberated and discussed fire safety, emergency response planning, the City’s existing regulations applicable to BESS facilities, and whether specific development standards or independent third-party review would be beneficial. A motion was made to approve PL25-0085 (Special Conditional Use Permit) and PL25-0086 (Site Approval) and recommend City Council approval of the DA. The motion failed by a 3-4 vote, resulting in the denial of PL25-0085 (Special Conditional Use Permit) and PL25-0086 (Site Approval) and no recommendation on the DA. Since the motion to approve the Project failed, the Planning Commission did not adopt a written resolution setting forth findings or reasons for the denial of the Project entitlements. The Planning Commission meeting minutes are included as Exhibit “B.”
On July 24, 2026, Dirac BESS LLC, formerly known as Dirac Project LLC (the "Appellant" or “Applicant”) filed a timely appeal of the Planning Commission's action pursuant to Section 20.23.150 of the Zoning Code. The Appellant requests that the City Council overturn the Planning Commission’s action and approve the Project entitlements and the DA. The Appellant's appeal application and letter are included as Exhibit “C.”
APPEAL
The Appellant requests that the City Council overturn the Planning Commission’s action and approve the Project based on three primary grounds: It is supported by the administrative record, the role of battery energy storage systems in meeting California’s statewide energy goals, and the updated regulatory and safety requirements applicable to BESS facilities. In addition, the City Council is being asked to consider the associated DA. The Appellant’s grounds for appeal, staff’s responses, and the DA are discussed in further detail below.
The Planning Commission’s Denial is Not Supported by the Record
The Appellant contends that the Planning Commission’s denial of the Project is not supported by the administrative record. According to the Appellant, the technical studies, environmental analysis, Project plans, applicable regulatory requirements, and conditions of approval demonstrate that the Project satisfies the findings required for approval of PL25-0085 (Special Conditional Use Permit) and PL25-0086 (Site Approval). The Appellant further contends that concerns raised during the Planning Commission hearing regarding fire safety and other BESS facilities did not constitute substantial evidence contradicting the technical information provided for the Project. The Appellant maintains that the Project is appropriately located within the General Industrial (M2) zoning district, is consistent with the City’s General Plan and Zoning Code, and incorporates safeguards necessary to protect public health, safety, and general welfare.
Staff response
The Project site is designated General Industrial (GI) by the General Plan and zoned General Industrial (M2). The M2 zoning district allows major utility uses subject to approval of a Special Conditional Use Permit (SCUP). The City's Zoning Code defines major utilities to include services of a regional nature that normally entail the construction of new buildings or structures, including generating plants and sources, electrical switching facilities, stations or substations, and similar facilities. The proposed BESS facility is classified as a major utility use and is therefore an allowable use within the M2 zoning district subject to approval of a SCUP. Staff evaluated the Project plans, technical studies, environmental analysis, applicable regulatory requirements, and conditions of approval and determined that the Project is consistent with applicable General Plan policies, zoning requirements, and development standards. Based on the analysis contained in the Planning Commission staff report and the administrative record, staff determined that the required findings could be made for the Project. The findings supporting approval of PL25-0085 (Special Conditional Use Permit) and PL25-0086 (Site Approval) are included in Resolution No. 2026-061.
Battery Energy Storage Systems are an Essential Part of California’s Plan to Meet a Zero-Carbon Future by 2045
The Appellant contends that battery energy storage systems are an essential component of California's efforts to achieve a zero-carbon electricity system by 2045. According to the Appellant, BESS facilities support electrical grid reliability by storing energy generated during periods of low demand and making energy available during periods of high demand. The Appellant states that the Project would provide up to 400 megawatts of energy storage capacity and would contribute to the reliability and resiliency of California’s electrical grid. The Appellant further identifies the Project’s location adjacent to the existing SCE Chino Substation as appropriate because it allows the Project to interconnect directly with existing electrical infrastructure.
Staff response
The Project proposes a 400-megawatt BESS facility adjacent to the existing SCE Chino Substation, allowing the Project to connect directly to the existing electrical infrastructure. While statewide energy storage objectives provide context for the proposed use, staff’s recommendation is based on the Project’s compliance with the City’s General Plan, Zoning Code, applicable development standards, environmental requirements, and the findings required for approval of the requested entitlements. Based on staff’s review of the Project, staff determined that the Project is an allowable use within the M2 zoning district and that the applicable findings required for approval of the Project can be made.
Assembly Bill 205 (AB 205), enacted in 2022 and expanded in 2023 established an accelerated permitted pathway under the California Energy Commission (CEC) for large clean energy projects, including BESS projects. AB 205 allows a BESS project to obtain approval through a state permit from the CEC through the Opt-In Certification Program, which supersedes and replaces required permits from local agencies, including California Environmental Quality Act (CEQA) compliance, tribal consultation, and community engagement. To qualify for the Opt-In Certification Program, a BESS project must have an energy storage capacity of at least 200 MWh, the project must be a clean energy facility as defined under AB 205 (this includes standalone battery storage), and the developer must voluntarily elect to use the program. Under the Opt-In Certification Program, the CEC is required to prepare the appropriate environmental document under CEQA, certify compliance of a Community Benefits Agreement (CBA) and project labor agreements, and make a decision on the project within 270 days of receiving a complete application. When a developer utilizes the Opt-In Certification Program, the City does not have any voice in negotiating the CBA. Rather, CBAs compliant with the Opt-In Certification Program may benefit community-based organizations, such as local non-profits or labor organizations. The Applicant has processed the proposed BESS project pursuant to City requirements and has negotiated a community benefit with the City through the proposed DA. If the appeal is denied, the applicant may elect to process the proposed BESS project through the Opt-In Certification Program, which would eliminate the DA negotiated with the City.
Updated Regulatory Standards Established Comprehensive Safety Requirements for Newly Proposed BESS Facilities
The Appellant contends that current BESS facilities are subject to updated and comprehensive fire and life safety requirements that were developed in response to lessons learned from earlier battery storage facilities and incidents. According to the Appellant, these requirements include the California Fire Code, National Fire Protection Association (NFPA) 855, Underwriters Laboratories (UL) 9540 certification, UL9540A fire-propagation testing, and California Public Utilities Commission (CPUC) General Order 167-C. These requirements address equipment certification, thermal-runway prevention and propagation, unit spacing and separation, fire detection and suppression, emergency response planning, and continuing operational oversight. According to the Appellant, the proposed Project differs materially from older BESS facilities, including Moss Landing, CA, with respect to battery chemistry, facility configuration, enclosure design, and applicable fire and safety requirements. The Appellant states that the Project would utilize lithium-iron phosphate (LFP) battery technology housed in physically separated outdoor enclosures and would incorporate battery management systems, fire detection, automatic shutdown capabilities, and other safety features. The Appellant asserts it has satisfied recent State legislation (SB 38) regulating BESS emergency-response and emergency planning. The Appellant further states that the Project would be subject to current fire and safety standards, as well as the CPUC’s continual oversight and enforcement under General Order 167-C.
Staff response
Fire safety was a primary issue raised during the Planning Commission public hearing. The Project includes multiple fire protection features designed to detect, prevent, and respond to potential fire incidents. Fire detection systems would be installed throughout the site and within each battery enclosure. Each battery enclosure would be equipped with a battery management system (BMS) that continuously monitors the condition of the battery cells 24 hours a day. The system can detect abnormal conditions and automatically shut down the affected unit to reduce potential hazards. Each enclosure would include a fire alarm control panel that identifies the specific unit involved and notifies first responders. Battery enclosures would be required to meet applicable testing and certification requirements for battery systems, fire protection and system controls. The Project would also be required to comply with all applicable fire safety codes, standards and regulations.
The Chino Valley Fire District reviewed the Project and provided conditions applicable to the construction and operation of the facility. Final equipment specifications, engineering plans, hazard-mitigation measures, and emergency systems would remain subject to further technical review as part of subsequent permitting. The Fire District also advised the Planning Commission that an emergency response plan would be required during the permitting process and that the District would work with the Applicant in preparing for emergency response.
Staff’s evaluation of the Project is based on the specific design and operating characteristics of the proposed Dirac BESS facility, the technical studies prepared for the Project, applicable regulatory requirements, and the conditions of approval rather than the operating characteristics of other BESS facilities. Based on the Project design, applicable regulatory requirements, technical studies, and conditions of approval, staff determined that the required findings related to public health, safety, and general welfare could be made. Also, in response to the concerns raised by the Planning Commission and members of the public, the Applicant requested supplemental conditions of approval be added to further demonstrate their commitment to developing and operating the Project safely. The supplemental conditions include the following:
1. Installation and maintenance of a continuous, real-time carbon monoxide detection and air monitoring system within each BESS enclosure and at strategic locations along the site perimeter;
2. Annual third-party BESS emergency response training for Chino Valley Fire District personnel at the Applicant’s expense;
3. Prior written approval from the Chino Valley Fire District before the use of any alternative battery chemistry, supported by independent third-party safety testing and technical analysis; and
4. Coordination and distribution of the Project’s Emergency Response Plan with Chino Valley Fire District and Chino Police Department, including updates following any material changes to the plan or emergency response procedures.
The Chino Valley Fire District conditions of approval (COAs 4.1, 4.2, 4.3 and 4.4) and Planning Division conditions of approval (COAs 5.8.1 and 5.8.2) have been revised to include the supplemental conditions.
Development Agreement
In addition to consideration of the appeal of the Planning Commission's action on PL25-0085 (SCUP) and PL25-0086 (SA), the City Council is being asked to consider a DA between the City and the Applicant for the Project. The DA establishes certain development rights and timing obligations for the Project, as well as community and fiscal benefits to be provided to the City. Under the DA, the City has agreed to make reasonable efforts to meet certain milestones associated with Project permitting, including issuance of demolition permits for the existing buildings on the Project site by October 1, 2026, a grading permit by November 1, 2026, and building permits by December 1, 2026. In exchange, the Applicant has agreed to provide the City with certain community and fiscal benefits. Specifically, the DA provides for the following:
• A $3,000,000 Community Benefit Payment to the City within 30 days following issuance of building permit issuance for the Project;
• A second $3,000,000 Community Benefit Payment to the City within 30 days following issuance of a certificate of occupancy for the Project;
• Additional, $600,000 for fire suppression and emergency management and preparation within 30 days of building permit issuance for the Project;
• Designation of the City as the point of delivery for the purchase of taxable items associated with the development, construction, and operation of the Project;
• A guarantee that the City will receive at least $4,000,000 in combined Project sales and use tax revenue and Development Impact Fees (DIF); and
• Reasonable efforts by the Applicant to target local residents for employment opportunities associated with the construction, operation, and maintenance of the Project.
Collectively, the Community Benefit Payments and guaranteed sales and use tax revenue and DIF provide a minimum of $10,600,000 in community and fiscal benefits to the City pursuant to the DA. If the appeal is denied and the DA not approved, the applicant will have the ability to process the BESS project through the Opt-In Certification Program, which does have a requirement of a community benefit. However, through this program, the community benefit would be negotiated through the CEC with one or more community-based organizations, and the City would have no guarantee of funds dedicated to the City to mitigate any potential impacts from the BESS project.
Pursuant to State law and the City's Zoning Code, the Planning Commission considered the DA at its July 15, 2026, public hearing for the purpose of making a recommendation to the City Council regarding whether the provisions of the DA are consistent with the General Plan. A motion to approve the Project entitlements and recommend City Council approval of the DA failed by a 3-4 vote. Accordingly, the Planning Commission did not adopt written findings or make a recommendation to the City Council regarding approval of the DA. The DA is now before the City Council, which is the approval authority for the agreement. In considering the DA, the City Council must determine whether the provisions of the agreement are consistent with the General Plan. Staff previously determined that the DA is consistent with the General Plan because it facilitates development of the Project within an area designated and zoned for industrial and utility-related uses and advances General Plan objectives related to infrastructure reliability, economic development, fiscal sustainability, and community investment.
PUBLIC NOTICE
A 10-day notice was mailed to all property owners within a 300-foot radius of the project site, and a notice was published in the Chino Champion on September 5, 2026. The notice meets legal requirements. Since the Planning Commission hearing on July 15, 2026, the City has received letters in support and letters in opposition of the Project. Letters received through posting of the agenda are included as Exhibits D and E.
ENVIRONMENTAL REVIEW
The proposed Project has been determined to be within the scope of the previously certified 2045 General Plan Update Environmental Impact Report (EIR) (State Clearinghouse No. 202409083), adopted on September 2, 2025. The EIR adequately describes the environmental effects of the Project for purposes of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15183. The proposed Project is consistent with the land use designation and applicable policies established by the City's General Plan and underlying zoning, all of which were evaluated in the certified EIR. Pursuant to CEQA Guidelines Section 15183(b), a focused evaluation of the Project was conducted, and the analysis concluded that the Project would not result in any new or more significant environmental impacts beyond those identified in the certified General Plan EIR. The Project is also subject to uniformly applicable development policies and mitigation measures identified in the 2045 General Plan Update EIR, which would reduce potential impacts to less than significant levels. Accordingly, pursuant to CEQA Guidelines Section 15183, no additional environmental review is required.
CONCLUSION
Based on the administrative record, Project plans, technical studies, environmental analysis, applicable regulatory requirements, and conditions of approval, staff determined that the findings required for approval of PL25-0085 (Special Conditional Use Permit) and PL25-0086 (Site Approval) can be made. Accordingly, staff recommends that the City Council grant the appeal, approve the Project entitlements, and approve the associated DA, which establishes certain development rights and timing obligations for the Project and provides community and fiscal benefits to the City.
Attachments: Exhibit “A” - Planning Commission Staff Report - July 15, 2026
Exhibit “B” - Planning Commission Minutes - July 15, 2026
Exhibit “C” - Appeal Application
Exhibit “D” - Letters in Support
Exhibit “E” - Letters in Opposition
Exhibit “F” - Resolution No. 2026-061
Exhibit “G” - Ordinance No. 2026-013