July 16, 2024
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Phillips 66’s crude-by-rail proposal denied


The San Luis Obispo County Planning Commission denied Phillips 66’s proposal to expand its crude-by-rail operations on the Nipomo Mesa.

The commissioners voted 3-2 against the project, which involves building a rail spur that would connect its refinery to Union Pacific’s major interstate railroad so it can import tar sands crude from Canada and other crude throughout North America.

After months of public comment largely speaking out against the project, including opposition from seven supervisors from across the state, the commission ultimately sided with the staff recommendation that the associated risks outweigh the potential benefits.

They took a straw vote earlier this year that allowed them to continue reviewing the project and hinted at an eventual approval, but upon further review Commissioner Jim Irving voted against the proposal.

“I am very disappointed with Phillips as applicant,” Irving said at the meeting, adding that Phillips didn’t present a clearly defined project and that it initially presented the project prior to there being a disruption in oil supply.

“The case hasn’t been made that we can override the recommendations of the staff and the county,” he said.

Commissioner Ken Topping said that in order to follow state law, Phillips would need to provide a net reduction in environmental impacts through various offsets and that, ultimately, wasn’t possible. Even though the county was preempted by federal law when it came to operations on the main line, the county is responsible for what happens locally, he said.

“The revised Phillips 66 proposal is not consistent with the General Plan safety element,” specifically in regard to reducing potential exposure to hazards, Topping said. The project is in conflict with the planned residential expansion near the facility, he added.

Commissioner Don Campbell said there are already a significant number of trains that move through the area and the 156 trains a year Phillips 66 would add to the mix do not present statistically significant risks. Commissioner Jim Harrison had a similar take.

“I don’t think this has any greater danger and quite frankly I think it is safer than trucks and just as safe as pipelines,” Harrison said.

Commissioner Eric Meyer said the potential harm and cost of a train derailment outweighs 12 new jobs and Phillips 66’s potential increased profit margin. On top of the possible safety risk, average train derailments cost $25 million to $30 million that would fall predominantly on the taxpayers, he said.

“Those in favor of the project say that the risk is acceptable and the people of California will have to pay for it,” Meyer said.

Phillips 66 will likely appeal the decision to the SLO County Board of Supervisors. The Planning Commission still verified conditions for approval that the board will review if the project is appealed.

The city of Benicia recently denied a similar project that would’ve expanded Valero’s crude-by-rail operations. The federal Surface Transportation Board concluded that the train offloading facility in Benicia wasn’t going to be operated by a rail carrier and, therefore, the city would have ultimate jurisdiction over the project.

• Contact Alex Kacik at akacik@pacbiztimes.com.