On December 20, Benicia’s City Attorney announced that she had been advised by Valero’s attorney that the refinery is no longer planning to sue the City of Benicia over its failed Crude By Rail proposal.
While this is welcome news, worthy of celebration and thanksgiving, Valero’s decision surely was more nuanced than the simple reason given, that it wants to maintain good relations with the City.
Everyone in the city is happy about that – we all want good relations, and no one wanted the issue to drag on in the courts, at great expense in time and money.
But it must be noted that a Benicia lawsuit by Valero would have failed, on multiple grounds. Valero’s best legal advice must have been to quit, or risk additional losses. That advice would’ve been resisted if at all possible, not only for local refinery interests, but on behalf of the wider oil and rail industries.
Valero Benicia was a potential precedent-setting case, with implications for major corporate financial holdings all across the US and Canada. There must have been immense pressure on Valero to sue. The industries needed to win a case claiming that federal preemption laws are enough to overrule local land use regulatory authority.
But with immense activist opposition setting the pace; with California’s Attorney General weighing in and a dozen environmental attorneys, engineers and environmental analysts offering significant commentary during the review process; and with the Federal Surface Transportation Board denying Valero’s last-ditch petition, a lawsuit had little chance of success.
Valero lost that argument here, but no one should rest easy. The oil and rail industries will surely look for another situation where they can more successfully press their unlimited right to endanger health and welfare under federal preemption laws.
The growing movement against oil trains needs to remain active and alert.
Federal action seen as boost to local, state control over projects
By Brian Nearing, Thursday, September 29, 2016 10:03 pm
ALBANY > A federal ruling on a oil-by-rail facility in California could hand state and local officials in New York and across the country a powerful legal tool to oversee the projects, which have been controlled primarily by federal rules.
The federal Surface Transportation Board this month sided with officials in Benicia, a small city near San Francisco, in a dispute with an oil refining company over a proposed storage terminal for crude oil brought in by tanker trains. The Valero Refining Company had argued it was exempt from a city denial because it was functioning as a rail carrier, and governed by federal transportation rules — a legal concept called “preemption” — but the federal board rejected the claim.
“Valero is not a rail carrier, nor is it acting under the auspices of a rail carrier,” according to the federal decision. Critics of oil train traffic directed in recent years to two oil terminals at the Port of Albany hailed the ruling as a victory for more state and local control.
“This puts the state Department of Environmental Conservation in a very strong position to require the oil terminals to explain the full impacts of their operations,” said Chris Amato, an attorney for the not-for-profit environmental group Earthjustice.
This month, the DEC announced it was requiring one terminal operator, Global Partners, to answer additional environmental questions on its request to construct a crude oil heating terminal that could be used to process Canadian tar sands oil.
“Nothing in the opinion suggests that DEC’s current course of action with respect the Port of Albany should be altered,” a DEC statement said.
Critics of earlier DEC environmental approvals for the Global and Buckeye oil terminals have been urging the state to rescind its approvals, but the state had responded that such authority rested with the federal government, not the state.
Ruling by Little-Known Federal Agency Paves Way for Communities to Say No to Oil-by-Rail
By Justin Mikulka, September 28, 2016 – 03:58
The community of Benicia, [California,] in the crosshairs of history, made one of those decisions that will make a difference for the country. They stood up and said the safety of our communities matters.”
That was Yolo County Supervisor Don Saylor talking to The Sacramento Bee about the vote by the Benicia City Council to deny a new oil-by-rail facility that oil company Valero was seeking.
But that vote would have been meaningless if not for a recent decision on September 20 by the Surface Transportation Board (STB) that gave Benicia the legal authority to have some say over what happens within its borders.
Created in 1996, the STB is a federal agency which serves as “an independent adjudicatory and economic-regulatory agency charged by Congress with resolving railroad rate and service disputes and reviewing proposed railroad mergers.”
The STB decision helped clear up some of the gray areas around the issue of “pre-emption,” in which railroads are not subject to any local or state authorities or laws because local and state laws are “pre-empted” by federal law.
In 2013 the STB ruled in favor of Norfolk Southern Railway Company, saying once again that federal pre-emption of state laws protected the rail company from lawsuits filed in the state of Virginia.
The basic idea of pre-emption is that for interstate commerce to work, the federal government needs to be the sole regulator of railroads.
As we have reported previously on DeSmog, pre-emption can effectively place rail companies above local law. This has led to developments such as the case of Grafton, Massachusetts, where the construction of the largest propane transloading facility in the state occurred without the need for local approval, construction permits, or even environmental review.
Regarding the Grafton facility, the New England Center for Investigative Reporting wrote that, “Residents were dumbfounded: The location was in the middle of a residential neighborhood, less than 2,000 feet from an elementary school and atop the town’s water supply.”
This above-the-law approach has served rail companies well. And until the recent STB decision, it also appeared to protect oil companies who were moving oil by rail.
But this latest decision about Benicia appears to deliver a real blow to oil companies when it comes to oil-by-rail transfer facilities. Since the companies who receive the oil from the rail cars aren’t railroads, the STB ruled that they are not protected by federal pre-emption. In the decision the STB refers to Valero as a “a noncarrier” which is why the STB ruled they are not able to claim pre-emption.
This allowed Benicia to say no to an oil-by-rail facility in their community. And it has also changed the discussion about this industry as a whole.
San Luis Obispo County, California, has now delayed further the decision about a new oil-by-rail facility in order to consider the latest STB ruling.
Ethan Buckner was one of the organizers for environmental advocacy group Stand, which was working to stop the Benicia facility.
“This is a victory for the right of communities to say no to refineries’ dangerous oil train projects. 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,” Buckner said. “The oil industry keeps telling communities they have no right to say no to oil trains, but this ruling once and for all refutes this.”
“We’re pleased with the decision and the implications it will have across the country,” said Prange. “This issue is live in a number of sites across the country. This is definitely a decision that I think cities in other states will be looking to.”
They are definitely paying attention in San Luis Obispo County, as well as in Albany, New York.
Albany is the largest oil-by-rail hub on the East Coast.
Opponents of its oil trains recently had cause for celebration. On September 16, the state’s Department of Environmental Conservation announced that the two companies operating oil-by-rail facilities at the Port of Albany would now be required to undergo full environmental reviews before the agency would renew the companies’ permits.
Chris Amato is a lawyer for Earthjustice who has been working on this issue for years. He believes the STB decision supports what Earthjustice has been saying all along about Global Companies, which owns one of Albany’s oil-by-rail facilities.
“The decision by the Surface Transportation Board confirms what we have been saying since 2014: that Global’s claim that state regulation of their operations is pre-empted by federal railroad law is simply wrong,” Amato explained to DeSmog. “Global can no longer attempt to shield their operations from scrutiny under their flawed legal theory.”
Opponents of the Albany oil-by-rail operations have been asking the state to step in for years, but the state has also hidden behind the issue of federal pre-emption. In 2014 the Albany Times Unionreported that “Gov. Andrew Cuomo has been deflecting calls for the state to block the trains, saying rail transportation is controlled by the federal government, not the state.”
It would appear that the STB ruling negates New York’s current position and offers an option for the state to have authority over oil-by-rail facilities in Albany.
While the amount of oil moving by rail is roughly half of what it was two years ago, that is mostly due to the current low price of oil. And it hasn’t stopped oil companies’ continued efforts to build out more oil-by-rail infrastructure.
Meanwhile, oil trains continue to derail and explode, as happened in Mosier, Oregon, in June, and opposition to the oil-by-rail industry continues to grow.
This STB decision appears to be a game-changer in the oil-by-rail story. With it, perhaps now more politicians will agree that “the safety of our communities matter” — much more so than oil company profits.