Phillips 66 seeks six-month delay in rail spur hearing
By Chris McGuinness, August 18, 2016
The oil company proposing one of SLO County’s most controversial projects is asking the SLO County Planning Commission to wait six months before taking up the issue again.
After months of lengthy hearings, Phillips 66 requested that a planned commission meeting on its proposed rail spur extension project scheduled for Sept. 22 be pushed back until March 2017.
The move comes as the company waits for a decision by federal regulators on another controversial proposal also involving oil-carrying trains in the Northern California city of Benicia.
Hearings for Phillips 66’s project, which would allow the company to bring in crude oil by train to its Santa Maria Refinery on the Nipomo Mesa, began in February. In a July 10 letter to county planning staff, the company said it wanted to wait until the Federal Surface Transportation Board ruled on a petition involving an oil train-related project in Benicia. The company in charge of that project, Valero, is seeking declaratory relief from the three-person federal board after the oil company’s proposal to transport 50 trains per-day carrying crude oil through the city was denied by the Benicia Planning Commission and appealed to its City Council.
At the heart of the Benicia case is the issue of pre-emption, or the extent of a local government’s authority over interstate rail transportation, which is the purview of federal government.
The same issue is at play in SLO. The hearings on the Phillips 66 project featured discussions over the county’s ability to set limits or conditions on the project.
“In the interest of efficiency of the commission as well as the planning staff, we believe it would be prudent to further continue the hearing on Phillips 66’s Rail Spur Extension Project until March 2017, so that all parties can benefit from the direction expected from the Surface Transportation Board,” the letter from Phillips read.
Andres Soto is a member of Benicians for a Safe and Healthy Community, an organization of residents who oppose Valero’s proposed project. Soto told New Times he was concerned that the impact of a decision that favored Valero would have far-reaching consequences.
“It would gut local land-use authority across the country,” he said.
Whether Phillips 66 gets the delay will be up to the SLO County Planning Commission. The commission will take up the request at the Sept. 22 meeting.
Phillips 66 oil-by-rail project may be in jeopardy
By David Sneed, July 22, 2016 8:06pm
• Oil company faces Aug. 15 deadline to pay $240,000 in fees and supply information or SLO County will withdraw the application
• County also is critical of Phillips 66’s recent decision to begin trucking crude oil to the Nipomo Mesa refinery
• It is unclear whether a Sept. 22 Planning Commission hearing on the rail project will take place
A controversial proposal by the Phillips 66 oil company to bring crude oil by rail to its Nipomo Mesa refinery is at a crossroads.
The oil company has been given an Aug. 15 deadline to give the San Luis Obispo County department of planning and building additional information about the project — the company wants to install a rail spur connecting the refinery with the main line — and to pay more than $240,000 in fees or the project application will be withdrawn.
In a July 8 letter to the company, county supervising planner Ryan Hostetter wrote, “This letter serves to inform Phillips 66 that without the necessary information and funding, the county cannot complete processing the application as directed by the Planning Commission.”
As of July 22, the county had received only part of the information it has requested and none of the money, Hostetter said.
Phillips 66’s proposal to build the spur so it can bring in three trains per week, each carrying 2.2 million gallons of crude oil, has faced a storm of opposition. Communities on the rail line across California have weighed in, many saying they feared a disastrous derailment.
Phillips 66 did not respond directly to questions by The Tribune on Friday as to whether the company plans to meet the county’s Aug. 15 deadline to pay the fees and provide the missing information. Instead, it sent this statement:
“Phillips 66 presented a strong proposal, and we remain confident about the project,” the statement said. “We understand and respect the review and approval process with the county, and look forward to the next step in the EIR process.”
The county has also informed Phillips 66 that its recent decision to truck oil directly into the refinery is likely a violation of the county’s permit and will require a new permit as well as a trucking plan detailing the new oil-by-truck method. The refinery has been receiving crude oil by pipeline. The county found out about the trucking during an April 15 Planning Commission hearing on the rail spur project.
“Bringing in crude by truck is a modification of the refinery and, additionally, may have the potential to cause significant impacts,” Hostetter said in a June 30 letter to Phillips 66.
The refinery’s maintenance supervisor, James Anderson, responded to the county in a letter dated July 14 in which he denied the assertions that the trucking of oil is a modification of the refinery and disputes the notion that a trucking plan is required. The letter refers to the refinery’s official name, the Santa Maria Refinery.
“Phillips 66 does not need any new permits or modifications to its existing permits to deliver feedstocks by truck to SMR (Santa Maria Refinery) in the manner in which it is currently performed,” Anderson’s letter stated. “Such activity has been a long-standing practice, albeit intermittent, and is not part of the rail extension project.”
Hostetter said the July 14 letter answered some but not all of the county’s questions. No deadline was given for providing the information.
“They are not sitting on it, but we need more information to make a formal call on whether trucking is an allowed use or if they need a new permit,” Hostetter said.
Anderson’s letter went on to give some details about the refinery’s recent oil-by-truck activities:
▪ It began in February.
▪ The number of truck trips per day has ranged from 1 to 25.
▪ Trucks generally hold up to 150 barrels of oil. A barrel contains 42 gallons.
▪ The oil is delivered into an existing pipeline via a flexible hose.
▪ The oil generally originates within California.
Phillips 66 has proposed installing a 1.3-mile rail spur connecting to the main line as a way to expand its sources of crude oil and continue to support the 200 employees who work at the Nipomo refinery. The proposal calls for deliveries from three trains per week; each train would have three locomotives and 80 rail cars to haul 2.2 million gallons of crude oil.
Earlier this year, the county Planning Commission held five full days of hearings that drew thousands of people from around California. The commission has scheduled a hearing for Sept. 22, at which a final decision could be made.
At its most recent hearing, the commission asked for a variety of additional information from Phillips 66, such as how many trains per year would arrive at the refinery under the three-trains-per-week scenario, how many trains could arrive in one day and what impact that would have on air quality around the refinery.
Few of those questions have been answered. Whether the commission even has a Sept. 22 hearing and whether it will be able to make a final decision if a hearing is held, depends on how much additional funding and information Phillips 66 provides, Hostetter said. For example, the company has proposed only funding the project through the Planning Commission phase but not through the likely appeal to the Board of Supervisors.
County policy requires that development applicants pay all the county’s costs in processing their permit, including the cost to hire consultants and write an environmental impact report. The county has estimated the cost of processing the application through the Board of Supervisors appeal hearing to be $240,697.73.
If the county withdraws the application, Phillips 66 could reapply at a later date.
It is a safe bet that Jim Irving hasn’t been to Lac-Megantic, where almost three years ago a very profitable oil train derailed and exploded in the middle of downtown. The immediate damage was 47 lives lost, a massive oil spill, and the burning and contamination of the town center.
Nearly three years later, the downtown has yet to be rebuilt. And as we reported on DeSmog, there were many reasons the Lac-Megantic accident occurred. Averting any one of them could have prevented the accident. All were the result of corporate cost-cutting that put profits ahead of safety.
Also to blame were government regulators who allowed corporations to not invest in safety.
The locomotive engine fire that was the initial cause of the event? Faulty cost-saving repair.
The fact that regulators allowed full oil trains to be parked on a hill above a town, unmanned? Staffing cost savings for railroads.
The “19th century technology” air brakes that failed? More profits over safety.
Poor or non-existent employee training? More savings.
And how about those government regulators’ role in this? How could all of these moves to put profits over safety be allowed? The Globe and Mail looked at all the evidence and pointed the finger directly at the regulators.
There is one federal body that is ultimately responsible for the oversight of Canada’s railways: Transport Canada. The Lac-Mégantic disaster falls squarely at its feet.
It was recently revealed that the government of Canada contributed $75 million to the fund for the victims of Lac-Megantic to avoid further litigation. If they weren’t at fault, why would they pay up?
If you want to ask why allowing the pursuit of profits above all other concerns is a problem — Lac-Megantic is your answer.
Profits Over Safety: The Rule, Not the Exception
The old air braking system that was involved in Lac-Megantic is the standard for all oil trains. There are modern braking systems known as electronically controlled pneumatic (ECP) brakes that have been described as “a quantum improvement in rail safety” by Joseph Boardman, the former head of the Federal Railroad Administration. But this quantum improvement has not been implemented.
Cynthia Quarterman was in charge of the Pipeline and Hazardous Materials Safety Administration for the majority of the multi-year process when the new oil-by-rail regulations were developed, and based on that process, she believes ECP brakes are a top priority.
“The more I think about it, the more I think that the ECP brakes may be more important than the tank car itself,” Quarterman told USA Today. “Because it would stop the pileup of the cars when there’s a derailment or when there’s a need to brake in a very quick fashion.”
So why aren’t ECP brakes required on oil trains? As DeSmog reported in March of 2015, the industry explained its opposition to ECP brakes in a presentation to regulators, and the opposition included the argument that safer brakes would be “too costly.”
And of course there is the issue of the tank cars used to move the dangerous oil. When the fracking boom happened in North Dakota and there weren’t pipelines to move the oil, the industry quickly built rail loading facilities.
Did the industry also build new safe tank cars to move the oil? No. They began filling the readily available DOT-111 tank cars with oil and started rolling them across North America through big cities and small towns — including Lac-Megantic.
The problem was that the DOT-111s were not designed to move flammable materials like Bakken crude oil, but were made to move things like molasses and corn oil.
But there was money to be made – so it was full-speed ahead with the DOT-111s for Bakken crude.
Shipping Bakken crude oil in DOT-111s has been called “an unacceptable public risk” by a member of the National Transportation Safety Board. But it continues anyway because it is profitable. Gee, what could go wrong with that?
The oil could be made safe to transport through a process known as stabilization. But that would require building stabilizing infrastructure in places like North Dakota. That would cut into profits. So it hasn’t been done.
“When it comes to undue industry influence, our rulemaking process is broken from start to finish,” Warrenexplained in March while discussing the report. “At every stage – from the months before a rule is proposed to the final decision of a court hearing a challenge to that rule – the existing process is loaded with opportunities for powerful industry groups to tilt the scales in their favor.”
The math is simple. It is much cheaper to buy lobbyists and influence than it is to invest in safety. And that is what is wrong with an approach that puts the pursuit of profits above all else.
We Can’t Take A Chance That Things Will Be Alright
While the oil and rail industries’ pursuit of profits was championed in California on Monday, a similar discussion was happening on the East Coast in Albany, NY. Albany is the largest oil hub on the East Coast and all of that oil comes by rail.
Now there is a proposal to build a pipeline from Albany to the seaport in Linden, NJ. The pipeline would be fed by oil trains that would arrive in Albany. While it was mostly a symbolic vote — unlike the one in California — the Albany city council voted to oppose the Pilgrim Pipeline this week.
In the public comment period, local Pastor McKinley Johnson, whose church is across the highway from the oil train facility, explained his opposition to the pipeline and more oil trains.
“It is time for us to take a stand,” said Johnson “We can’t take a chance that things will be alright.”
And he is right that this is about taking chances. The oil and rail industries are gambling that an event like Lac-Megantic won’t happen in a big city like Chicago — knowing full well that the proper safety measures are not in place to prevent it.
This past weekend, Albany was the site of one of the worldwide Break Free From Fossil Fuels events, and the issue of the oil “bomb trains” was front and center. City council member Vivian Kornegay, who represents the community that lives directly alongside the rail yards where the oil is offloaded, was one of the featured speakers.
She repeatedly made the point that her constituents were taking all of the risk with the trains and getting no reward, saying, “We assume 100% of the risk…and miniscule benefits.”
If you are an oil company in pursuit of profits, that is exactly how you want it.
Vivian Kornegay addresses Break Free rally in Albany, NY Photo credit: Justin Mikulka