Repost from The Sacramento Bee

Sacramento crude oil transfers halted; air quality official says permit was granted in error

By Tony Bizjak and Curtis Tate, 10/22/2014

A Sacramento fuel distributor has agreed to stop unloading train shipments of crude oil at McClellan Business Park after the county’s top air quality official said his agency mistakenly skirted the state’s environmental rules by issuing a permit for the operation.

InterState Oil Co. said in a letter Wednesday to the Sacramento Metropolitan Air Quality District that as of Nov. 7 it will no longer use McClellan as a transfer station for crude oil shipments to the Bay Area.

The move settles a lawsuit filed in September by EarthJustice, a San Francisco-based environmental group, that contended the Sacramento air quality district should not have granted InterState Oil a permit to transfer crude oil from trains to tanker trucks bound for Bay Area oil refineries without a full environmental impact review.

Air district head Larry Greene now says a full review was, in fact, required by the California Environmental Quality Act.

“We made an error when the permit was developed, and it should have gone to full CEQA review,” Greene said Wednesday. “We have notified (InterState) and the environmental group to that effect. InterState is voluntarily giving that permit back.”

Greene said InterState will continue other transfer operations at its McClellan site, including transfers of ethanol.

It is unclear whether the company will apply for a new permit to load crude oil. Its representatives did not respond to a request for comment.

A lawyer for EarthJustice called this a major victory in the group’s fight against potentially unsafe oil shipments.

“It signals that industry and government may not benefit from a lack of transparency and play dice with lives of people who live along the paths of these dangerous oil trains,” attorney Suma Peesapati said. “This is the first crude transfer project that has been stopped dead in its tracks in California.”

The reversal by the Sacramento air quality district could bolster efforts by environmental groups to slow or stop crude oil projects on rail lines elsewhere, particularly in Washington state. A proposed terminal in Vancouver, Wash., would transfer oil from trains to tanker ships that could supply California refineries.

Patti Goldman, a managing attorney in the Seattle office of EarthJustice, said the decision sounded “a wake-up call” for permitting authorities to consider community input.

“We have been seeing local authorities blindly approve crude-by-rail projects without being open with the public and without considering the full effects,” she said.

The McClellan operation is relatively small compared with the kind of crude oil train terminals now proposed elsewhere in California. One, in southwestern Kern County in the southern Central Valley, will be able to receive one 100-car train full of of crude oil each day; the McClellan facility was permitted to unload a similar amount once every two weeks.

The Kern facility, which could begin operating this month, was already zoned for transfer operations, and required no new environmental reviews or public comments.

In September, the Kern County Board of Supervisors approved a separate facility at a Bakersfield refinery that could receive two trains a day. EarthJustice sued the board earlier this month, contending that Kern’s environmental review was inadequate.

Environmental groups lost a legal fight in the Bay Area city of Richmond, where a terminal operated by pipeline company Kinder Morgan unloads crude oil from trains to trucks that take it to local refineries. A judge rejected the lawsuit in September, ruling that the six-month statute of limitations had expired. That project involves 100-car oil trains that come through midtown Sacramento.

Another proposed oil-train terminal at the Phillips 66 refinery in Santa Maria could mean even more of the cargo passing through Sacramento.

A Sacramento Bee story in March revealed the existence of the McClellan operation to a number of surprised local officials, including the head of the county Office of Emergency Management and the chiefs of the Sacramento city and Metropolitan fire departments. It noted that InterState began handling crude oil last year without obtaining a permit.

Some of the crude unloaded at McClellan may have originated in North Dakota’s Bakken region. That type of oil, extracted through hydraulic fracturing, has been under increased scrutiny since a July 2013 derailment killed 47 people in Lac-Megantic, Quebec.

That accident and a series of fiery derailments since then have prompted the rail industry and its federal regulators to take steps to improve track conditions and operating practices. A stronger construction standard for tank cars used to ship flammable liquids is being finalized by the U.S. Department of Transportation.

The California Energy Commission projects that the state could receive more than 20percent of its petroleum supply by rail in the next two years. State emergency officials and fire departments have said they don’t feel they are prepared to handle a major explosion from a derailment.

Earlier this month, BNSF Railway and Union Pacific sued California over a state law that requires railroads to develop oil spill prevention and response plans. The railroads argue that only the federal government has the power to regulate them.