TGG was retained by Natural Resources Defense Council (NRDC) in 2013 to provide an expert report on a proposed crude-by-rail (CBR) terminal project at a Valero refinery in Benicia, California. In July 2013, TGG filed Comments on Initial Study/Mitigated Negative Declaration (IS/MND) Valero Crude by Rail Project Benicia, California with the City of Benicia. In our report, TGG provided a market analysis of the project. The report was included as an attachment to NRDC’s Comments on Notice of Intent to Adopt a Mitigated Negative Declaration for the Valero Crude by Rail Project, filed with the City of Benicia on July 1, 2013.

As further detailed in the Update section, the IS/MND was the first step in a multi-year review of the project, which included a full EIR and multiple rounds of comments. After nearly four years of review, evaluation and deliberation, the Benicia City Council unanimously rejected Valero’s CBR project in September 2016. In October 2016, the City Council adopted a resolution to deny the Use Permit for the Valero CBR project.

Background

In its 2013 Declaration (IS/MND), the City of Benicia assumed that the project would not significantly affect crude quality and would not displace crude delivered by pipeline. However, drawing on the evidence of our collaborating expert, Dr. Phyllis Fox (specializing in environmental engineering, including air quality management), TGG emphasized that refinery air emissions can increase due to changes in crude quality. Therefore, to meaningfully evaluate the proposed project, TGG considered how the crudes delivered by rail to Valero’s refinery might differ from those delivered by marine vessel and pipeline. TGG’s market analysis focused on the crude and refinery markets for California and the West Coast, which were relevant for the Valero CBR project.

TGG concluded that the project could significantly affect crude supply (and thus crude quality and air emissions) for the refinery, and recommended that a full Environmental Impact Report (EIR) be undertaken.

Update

In mid-2013, in light of the voluminous public comments on the IS/MND, which expressed concerns about the environmental effects of the project, the City of Benicia decided to prepare a full EIR for the project (as recommended by TGG). TGG continued to provide technical assistance on multiple sets of comments by Dr. Phyllis Fox in the multi-year review and evaluation of the Valero CBR project, including comments on the Draft EIR (DEIR) and Final EIR (FEIR).

Review and evaluation of the Valero CBR project also included important participation by Calfornia’s Attorney General (AG Kamala Harris, subsequently a US Senator and now Vice-President). In October 2014, California’s AG submitted comments on the Draft EIR, prefacing strong criticism of the DEIR as follows:

Unfortunately, the DEIR for this Project fails to properly account for many of the Project’s potentially significant impacts pursuant to the California Environmental Quality Act (CEQA).

The major concerns with the DEIR identified by the Calfornia AG included two of the same key issues analyzed by TGG in our 2013 comments on the IS/MND:

• The DEIR’s failure “to analyze the impacts on air quality from the foreseeable change in the mix of crude oils at the Refinery.”
• The DEIR’s acceptance of Valero’s claims of Confidential Business Information, “which results in the nondisclosure of the types of crude oil to be shipped by rail and refined onsite. Consequently the DEIR fails to provide the information required to adequately evaluate the project.

In February 2016, after Benicia’s Planning Commission declined to certify the Final EIR and denied the Use Permit for the project, Valero appealed the decision. The company maintained that the Commission’s decision was based on grounds that were either pre-empted by federal law (and/or other laws). California AG Harris responded with another strongly-worded letter in April 2016, which concluded that:

Under federal law, the City retains its authority to take discretionary action to approve or deny Valero’s Project. In exercising that authority, state law requires the City to analyze and disclose the Project’s direct and indirect environmental impacts, and thus to be fully informed of the consequences of its action. The. City has done that here, and its action has not interfered with federally regulated activities. Valero’s assertion that the Planning Commission’s action was illegal is without merit.

AG Harris’ comments buttressed opposition to the project and attracted national media attention to the issue.

TGG’s review of the Valero CBR project informed our subsequent market analysis work on the Trans Mountain Expansion Project, the Tesoro Savage Vancouver Energy Distribution Terminal, and the Dakota Access Pipeline. As discussed in the Analysis of the Potential Costs of Accidents/Spills Related to Crude by Rail, there is continuing controversy surrounding CBR. In recent years, there have been numerous CBR accidents (including some serious ones), with many involving Bakken crude. These ongoing accidents underscore the continuing risks of CBR, specifically in the transportation of Bakken crude.

Other Project Products

STRATEGIC/TECHNICAL ADVICE | 2013-2016
Technical assistance on multiple sets of comments by Dr. Phyllis Fox (a collaborating expert) in the multi-year review and evaluation of the Valero CBR project, including comments on the IS/MND, Draft EIR (DEIR), Recirculated DEIR (RDEIR), Final EIR (FEIR) and Valero’s Appeal of Planning Commission’s Denial. The City of Benicia’s Valero Crude by Rail web page provides links to the library of documents relating to the multi-year review of the project, including comments by TGG and Dr. Fox.