Refinery Town Says No to Valero’s Oil-by-Rail Plan
By Matthew Renda, Friday, September 23, 2016 5:14 PM PT
BENICIA, Calif. (CN) — The City Council of a small city of 27,000 in California’s San Francisco Bay Area made a decision this week that may have huge ramifications for the nation’s energy infrastructure.
The five-person Benicia City Council voted unanimously to reject the Valero Crude Oil by Rail Project — a substantial setback for an oil and gas industry that operates several refineries nearby and setting an interesting precedent for local government’s assertion of jurisdiction over oil and gas routes.
The Valero Crude Oil by Rail Project would have allowed the oil company, which operates a large refinery in Benicia, to bring in crude oil by rail rather than exclusively by ship as the current arrangement dictates.
However, Benicia City Council ended a divisive community fight over the issue by finding the project is too dangerous for the community. The potential for contamination of the Sulphur Springs Creek and other watersheds in the event of a derailment proved too much for the council members to brook.
“I have seen stories piled on top of the other about what wasn’t working and what is particularly troubling is the lack of financial resources provided in the case of a catastrophic event,” Mayor Elizabeth Patterson said during deliberation on Wednesday night. “The money comes in too late, people have to go out of business and people have to move away.”
Leading up to the decision, several questions about whether the City Council even had jurisdiction hovered over the matter, with project proponents asserting that the federal government regulates rail and any decision made by the city government is preempted.
However, the Surface Transportation Board wrote the city on Wednesday before the meeting saying while the federal government does regulate interstate commerce and the railroad, the proposed $70 million rail depot was within the regulatory purview of the city.
While many local residents applauded the decision, environmental groups talked about its reverberations.
“This is a victory for the right of communities to say no to refineries’ dangerous oil train projects,” Ethan Buckner with the group Stand — formerly ForestEthics — said. “The federal government has said once and for all that there is nothing in federal law that prevents cities from denying these oil companies’ dangerous rail projects.”
In the series of meetings leading up to the decision, Valero touted its safety record and said the train project carried minimal risk and would bring jobs and economic activity to the region.
“After nearly four years of review and analysis by independent experts and the city, we are disappointed that the City Council members have chosen to reject the crude by rail project,” Valero said in a statement. “At this time we are considering our options moving forward.”
Valero is the largest employer in the city, according to a recent comprehensive financial report compiled by the city’s finance team.
However, Patterson said the city’s general plan calls for a more diversified economy that relies heavily on small businesses, many of which would be hampered by the crude oil by rail project, particularly if something went wrong.
“We have to be less dependent on the refinery as we pivot into an era of attracting different kinds of businesses,” she said.
In 2014, trains transporting crude oil spilled about 57,000 gallons of the environmentally hazardous substance, more than any other year since the Pipeline and Hazardous Materials Safety Administration began keeping track in 1975.
The Columbia River, one of America’s most scenic rivers as it carves out the border between Oregon and Washington state, was spoiled by 42,000 gallons of oil when a train derailed due to a defective bolt on the track.
While many celebrated the possibly precedent-setting decision undertaken by the small city body, Councilman Mark Hughes resigned himself to certain litigation and its associated expense.
“Regardless of the decision tonight, I believe a lawsuit will be filed,” Hughes said.
So whether Benicia’s decision will be the first in an onslaught of local entities attempting to regulate elements of the oil and gas industry out of their communities or whether that will be left to federal and state authorities may be a matter for the courts to decide.
There are five major refineries in the Bay Area including the Valero refinery in Benicia: Chevron in Richmond, Tesoro outside of Concord, Phillips 66 in Rodeo and Shell in Martinez also operate and contribute significantly to both the local economy and air pollution.
The five refineries process about 800,000 barrels of crude oil per day and along with other oil and gas companies generate about $4.3 billion in local tax revenue, according to a 2014 study performed by Los Angeles County Economic Development Corporation and commissioned by the Western States Petroleum Association.
But Ralph Borrmann, public information officer for the Bay Area Air Quality Management District, told Courthouse News recently that the refineries are responsible for anywhere from 4 to 41 percent of the pollutants in the area, depending on which pollutant is identified.
Grant Cooke: Benicia’s future is with Patterson, Young and the new economy
By Grant Cooke, August 17, 2016
If Valero’s crude-by-rail, or CBR, project goes through, it will do irreparable damage to Benicia. If the three councilmembers—Mark Hughes, Christina Strawbridge and Alan Schwartzman— continue their support for the project, they will do an extraordinary disservice to the city.
I respect those who work on behalf of local government; however, in this case, the legacies of three pro-Valero councilmembers will be that when Benicia needed them, they stood down. They just didn’t have the vision or the ability to do what is right and best for the city.
While the same can be said for numerous elected officials in other American small towns, particularly those dominated by a fossil fuel company, it’s a painful thing to witness. What makes Benicia’s situation more painful, is that the city is gifted with a bright and forward thinking mayor and is nestled on the edge of the most innovative and financially robust center in the world.
Yet, the pro-Valero majority on the council mirrors the city’s self-inflicted company town identity. This fossil fuel dependence holds the city back from partaking in the Bay Area’s knowledge-based economy and its prosperity.
The company town malignancy is intensified by a remarkable and insulating geography that creates the city’s beauty. The town has an idyllic and picturesque quality that is enhanced by a touch of eccentricity and bohemian romanticism left over from the halcyon days of the Gold Rush.
This combination allows for a complacency in the social milieu that is on the one hand charming, but on the other, remarkably short-sighted. In fact, it’s just plain dumb, since it allows for the tacit acceptance of the status quo and masks the reality that problems are coming and action needs to be taken.
For a half-century, Benicia has allowed the refinery to prosper, hardly inhibiting its use of the atmosphere as a garbage can. For most of this time, the refinery has been the largest source of tax revenue, exercising dominant economic and political influence. Which is a pity, since the rest of the Bay Area embarked on a scientific, technological and economic renaissance that is unparalleled in human history.
Now, the era of carbon generated wealth and dominance is in decline, particularly in densely populated areas where growing number of residents are pushing back, protective of their health and well-being. Carbon-generated wealth, usually from extraction industries, is being overtaken by knowledge-based wealth. High-tech workers are transforming the communities throughout the Bay Area. Cities like Richmond that were mired in the death grip of the fossil fuel industry, are now undergoing gentrification and renewal.
So where does that leave Benicia? If the pro-Valero councilmembers have their way and Valero’s CBR project is approved, then the city will continue to be dependent on the refinery and the fossil fuel industry.It’s clear from the evidence that crude-by-rail transportation is unsafe, unhealthy, and disruptive, but it won’t matter if the project is approved and the 50-car trains take over the Industrial Park, cutting off access and exit for most of the existing businesses. Once the trains loaded with toxic and volatile Bakken crude start to roll, there will be no “do overs,” and the city’s future will languish.
There is no doubt that the fossil fuel and oil industries are in decline. Oil prices are dropping as too much supply hits the market. Renewable energy is cheaper, more plentiful and when connected to smart grids far more flexible and cleaner. Vehicles are getting more efficient and transitioning to hybrid, electric, and hydrogen power. The fossil fuel era with its environmental destruction, social and political upheavals, and corrupt power politics is winding down.
So by approving CBR, Benicia will be locked into a decline—all the while the rest of the Bay Area flourishes as the new knowledge-based economy expands.
As an interesting aside, in the last three months, Valero, Inc. made $19.6 billion in gross revenue and $87.8 billion for all of 2015. As part of the company’s second-quarter earnings announcement, Joe Gorder, Valero’s CEO, said “We are also encouraged by ample supplies of medium and heavy sour crude oils in the market…”
So, if there is plenty of supply, and the refinery’s current crude delivery process is creating substantial profits, why does the refinery still want to ship explosive Bakkan crude by trains through towns that oppose it? And why do they claim it’s necessary to bring it to a loading area with a potential blast zone that includes an elementary school?
Admittedly, Valero’s CBR project is not simple. There are key issues at stake, including the tax revenues versus the city’s right and responsibility to protect the health and well-being of its residents. Many people are involved to various degrees in the decision. Unfortunately, the town’s residents can’t vote on the project, since the decision is solely in the hands of the city council.
The pro-Valero CBR faction has tried to diminish the importance of the decision by claiming the opposition is simply a ruckus stirred up by passionate environmentalists opposed to Big Oil. The intent is to frame the local election, and opposition to the project, as simply a one issue ballot. But the reality is far different. It’s not merely a CBR issue, or whether the refinery is good or not for the city, but a clear and simple question of what is to be Benicia’s future? Will the city – pushed by the three pro-Valero councilmembers – be locked into fossil fuel’s decline, or will it have the wherewithal to step into the 21st century and join the Bay Area’s booming knowledge-based economy?
If Benicia is going to survive as a chartered city, it has to go where the future beckons, which is to the new economy. If it dithers, the city will be passed over, as the new economy leapfrogs to Vallejo and other cities along the Interstate 80 corridor.
Three decades in, the scientific and technological Renaissance is just getting started, powered by a steamroller of venture capital. Silicon Valley is awash with cash and opportunity, and the Bay Area’s great universities and national laboratories are brimming with patents just waiting for implementation. High-tech and green tech startups and businesses are growing exponentially each year. Chinese and other foreign buyers are trolling Northern California for the newest inventions and technology.
The Green Industrial Revolution will continue to grow, pushing out along the region’s main transportation corridors. Eventually it will extent from Palo Alto to Sacramento. Just as Apple overcame Exxon, the new economy will push out the fossil fuel industry in the Bay Area. Within a couple of decades, the Bay Area refineries will lock their gates, unable to withstand the shifts in the energy markets and the expenses of offsetting carbon emissions.
What the fossil fuel industries in the Bay Area—and by extension those cities that have cast their lot with them—are not realizing is that there is a generational and workforce shift taking place. The older work force who had a high tolerance for the fossil fuel and heavy industrial manufacturing industries are being overtaken by a tsunami of high tech workers. These young folks are sophisticated, intelligent and extremely sensitive to health and recreation. (Just visit San Francisco’s marina green on the weekend). Their lifestyles are far different than the established group. High-tech workers live in denser neighborhoods, drive efficient autos and take public transportation. (Visit Emeryville, or the area around Pleasant Hill’s BART station.)
Above all, tech workers have enormous amounts of money that is rapidly changing the real estate market and the Bay Area’s lifestyle. As these workers mature, they will pressure politicians for the things they value, which is certainly not carbon emissions or refineries.
Rarely in life does time and circumstance allow us to decide our fate. The future is often veiled and clouded, and usually clarity only comes with necessity, too often calamity. This is true for individuals as well as cities. Cities, especially small company towns, rarely have the visionary leadership and the ability to break loose from the status quo, until like Stockton or Vallejo they implode.
Benicia’s fate is remarkably unambiguous; stick with the old fossil fuel industry and go down with its decline, or join the Bay Area’s Renaissance and prosper. Throughout the world, other cities have faced much harsher realities and have been successful in transitioning to a new economy. Melbourne, Copenhagen, Berlin and Bristol leap to mind. In each, change was driven by strong visionaries who understood that change was the best option and who had the leadership skills to pull the cities and their residents forward.
Does Benicia have similar visionary leadership? That is clearly central to November’s local election. There are two councilmembers up for re-election—Tom Campbell and Christina Strawbridge. Mayor Elizabeth Patterson is being challenged by Vice Mayor Mark Hughes. Three councilmembers – Strawbridge, Hughes and Alan Schwartzman who is not up for re-election – favor Valero and its CBR project.
Mayor Patterson has shown time and again that she understands the dilemma the city faces and why its future lies with the new economy. She clearly has the vision, talent and leadership required to move the city forward, and should be re-elected. Councilmember Campbell also understands that Benicia’s future prosperity can’t be dependent on Valero’s CRB project and he should continue.
Steve Young, a new challenger for a council position possess exceptional talent and leadership skills, and clearly understands that the city’s best interests are to reject Valero’s CBR. As a member of Benicia’s Planning Commission, he spent countless hours on the issue, painstakingly doing the research and leading the commission through the pros and cons as each member came to agree that the CBR project was not the town’s best option.
Patterson and Campbell were outvoted by the three other councilmembers, and the council failed to accept the Planning Commission’s recommendation, instead giving Valero the opportunity to reopen the issue with the Surface Transportation Board. Cluttering the decision was some questionable recommendations from the city staff, goofy advice from a consulting attorney, and bullying from Valero’s high-powered lawyer. In short, the whole process reeked of the misinformation and strong-armed tactics so common when an oil company puts pressure on small town politics.
Given his remarkable dedication to Benicia and the work required to bring the whole CBR permitting process into the public light, Steve Young has clearly shown that he has the intelligence, talent and leadership skills needed to help the city transition away from the past and embrace the future.
For Benicia, come the November election, Mayor Patterson and Tom Campbell should be re-elected. Steve Young should be the newly elected councilmember.
Grant Cooke is a longtime Benicia resident and CEO of Sustainable Energy Associates. He is also an author and has written several books on the Green Industrial Revolution. His newest is “Smart Green Cities” by Routledge.
What Benicia can learn from the Oregon train derailment
By Steve Young, June 7, 2016
On Friday, June 3, a Union Pacific train carrying Bakken crude oil derailed in the town of Mosier, Ore. Fourteen rail cars came off the tracks, and four exploded over a 5 hour period.
There are several things that the City Council needs to keep in mind whenever they re-open discussion of the appeal of the Planning Commission’s unanimous decision to reject the Valero Crude-by-Rail project. Many of the assurances given to the public about the safety of transporting crude by rail have been called into question by this derailment.
The train cars that derailed and exploded are the upgraded CPC-1232 version promised to be used by Valero for this project.
The train derailed at a relatively slow speed as it passed through the small town of Mosier. Union Pacific trains carrying Bakken to Valero will travel at speeds up to 50 mph in most of Solano County.
The portion of track on which the train derailed had been inspected by Union Pacific three days before the derailment.
A Union Pacific spokesman, while apologizing for the derailment and fire, would not answer a reporter’s question as to whether the Bakken oil had been stabilized with the removal of volatile gases prior to shipment.
At the Planning Commission hearing, I tried repeatedly without success to get an answer from both UP and Valero as to whether they intended to de-gassify the Bakken oil prior to transport.
A major interstate, Interstate 84, was closed for 10 hours in both directions while first responders used river water to try and cool the tank cars to a point where foam could be used to try and put out the fire. It took more than 12 hours to stabilize the scene.
An oil sheen is in the river, despite the deployment of containment booms.
And finally, Oregon Public Broadcasting on June 4 had an exchange with the Fire Chief of Mosier, about how this experience changed his opinion about the safety of transporting crude by rail:
“Jim Appleton, the fire chief in Mosier, Ore., said in the past, he’s tried to reassure his town that the Union Pacific Railroad has a great safety record and that rail accidents are rare.
“He’s changed his mind.
“After a long night working with hazardous material teams and firefighters from across the Northwest to extinguish a fire that started when a train carrying Bakken crude derailed in his town, Appleton no longer believes shipping oil by rail is safe.
“’I hope that this becomes the death knell for this mode of shipping this cargo. I think it’s insane,’ he said. ’I’ve been very hesitant to take a side up to now, but with this incident, and with all due respect to the wonderful people that I’ve met at Union Pacific, shareholder value doesn’t outweigh the lives and happiness of our community.’”
When the City Council took up the appeal of the Planning Commission decision in April, Mayor Patterson and Councilmember Campbell stated their opposition to the project, while the other three councilmembers (Hughes, Schwartzman and Strawbridge) approved Valero’s request to delay a decision on this project until at least Sept. 20. There is still time for the citizens of Benicia to tell their elected officials how they feel about this project. I urge them to do so.
Steve Young, a member of the Benicia Planning Commission, is running for the Benicia City Council in November.