Cherry Point Policy Update - the Good, the Bad, and the Ugly

Cherry Point Policy Update - the Good, the Bad, and the Ugly

Monday July 22, 2019

By Alex Ramel, Stand.earth

 

UPDATE: on July 23 County Council members discussed the proposed land use code and voted on a series of amendments to the proposed policy. They improved the State Environmental Policy Act checklist, and eliminated the complicated exemptions for some fossil fuel facility expansion and the unnecessary exemption for biofuels.

These are all great steps in the right direction. Minutes from the meeting are here.

 

For more than two years now, the small community of Whatcom County, in Northwest Washington state has been working with local leaders to take bold action that would restrict growth of dirty fossil fuel projects in our community — all while safeguarding industry workers, the climate, and the economy. If they get the details right, this policy will be an example of a smart path forward for local governments across the U.S. 

Starting in 2016, the Whatcom County Council smartly recognized gaps in existing policies and regulations and put a temporary moratorium on any new proposals for unrefined fossil fuel transhipment projects. 

Since then, the seven-member Whatcom County Council has been exploring options for permanent land use regulations that would require a more careful review of the fossil fuel industry’s heavy impact on the local environment, even consulting outside legal advice to ensure they get this right. The policy is justified by growing understanding of the serious health impacts, water pollution, threats to the Salish Sea, and damage to the climate caused by fossil fuels. 

The focus of these land use regulations is Cherry Point, the county’s primary heavy industrial area, which includes two oil refineries, a propane export facility, heavy rail lines, oil and gas pipelines, and a deepwater port. It has also been the proposed site of what would have been North America’s largest coal export facility, and has been eyed by industry as a potential site for both oil and fracked gas pipeline terminals. 

Every time a public hearing is held, dozens and dozens of people will pack the room because the public knows that there is a real opportunity to make a big difference. There is growing common ground between labor and environment on issues like greenhouse gas mitigation and preventing crude oil transhipment. The County Council and the community have become deeply invested in this, but there is more to do. 

Council is likely to vote to send the draft land use ordinance for Planning Commission review, perhaps even this week. I know the policy details are not always the most exciting news story, but right now the details matter a lot. So I’ve broken it down into the good, the bad, and the ugly. 

 

THE GOOD: prohibiting the worst kinds of projects, changes of use, greenhouse gas mitigation and insurance requirements

Let’s start off with what the County Council has gotten right, because they’ve gotten a lot right. 

The proposed policy ends new piers and wharves at Cherry Point.The so-called fourth pier at Cherry Point (which was never built, but has long been allowed for in local regulations and was most recently part of the proposed coal terminal) is already functionally disallowed by both the US Army Corps of Engineers and the Washington State Department of Ecology. It’s a good idea to bring the county’s rules into alignment.  

No new fossil fuel refineries or new transhipment facilities.=20px> While a new facility seems unlikely without a new pier, making this explicit it is still a good idea. Our community has more than a fair share of the risks associated with being one a major refining centers; but this part of the regulation doesn’t impact the two existing refineries. 

Better regulation of the existing and potentially new facilities. Requirements have been included for more conditional use permits and a better list of requirements in the Environmental Impact Statement (EIS); this is a great start. As it stands today, too few projects get a thorough review of their impacts on human and environmental health, and this part of the land use ordinances helps us better understand if we should permit new projects The final policy needs more substance here as I discuss below, but the changes already in the draft are important. 

Mandatory greenhouse gas mitigation. The draft policy requires that any sizable increases in carbon footprint of fossil fuel facilities must be offset. This is a great policy. Right now, Washington’s refineries are cruising by without paying for their carbon pollution while their competitors all along the rest of the west coast (in BC and California) are under carbon taxes or cap and trade systems. 

This is a step in the right direction. Under the new proposed land use regulations, whenever a fossil fuel company creates a new source of pollution, they would be required to offset that pollution locally — this has already happened at least once with the BP Refinery’s ultra low sulphur diesel project paying for offsets that resulted in energy efficiency upgrades for small businesses and homes in the Whatcom County area. 

This policy could and should be strengthened with a couple of improvements. The mitigation projects should require prevailing wages. We need to be clear that the move toward a clean energy economy will mean well-paying jobs. Additionally, offsets should not be allowed to be from forestry or agricultural sequestration. These kinds of programs are complex and, especially if administered by an inexperienced local government, ripe for abuse. 

Change of Use. Right now the rules are unclear about how a facility that has an existing permit would be required to get a new permit if they are repurposing that facility to do something else. A new use should mean a new permit and these rules help to clarify that. 

Insurance. The current policy requires fossil fuel companies to show $50 million in insurance coverage. There is discussion that it should be higher, up to $100 million. I remain unclear about whether there are significant gaps in the industry’s coverage related to the risks and the kinds of accidents that they experience. The County Council asked industry to answer a series of questions about this issue last year, and the responses were completely unhelpful. If there is a gap in coverage, then it’s good to require this. If there isn’t a gap in coverage, then evidence of adequate insurance should be easy enough to demonstrate. 

I would note that $50 million does not address a true worst case disaster for the types of industrial activities currently active at Cherry Point. For example, BP and Phillips 66 both receive crude oil from areas like the Bakken formation in North Dakota, a notoriously volatile crude. This same crude carried in very similar trains created the  2013 Lac-Megantic oil train disaster in Quebec, with property damage, cleanup, and human life claims now exceeding $4 billion.  

 

THE BAD: Not Enough Impact Assessment

The most serious flaws in the current draft ordinance is that it does not really address the biggest lesson from the past: Whatcom County just hasn’t required environmental impact statements when they should have. Under the State Environmental Policy Act (SEPA), projects are evaluated based on the likeliness of significant impacts. As I noted above, if an EIS is required, the current draft ordinance would add improved scrutiny of key issues like climate impacts, transportation impacts, and the impacts on fisheries and marine mammals (including the endangered Southern Resident Killer Whales).

But the question we need to ask isn’t just “if completed, how rigorous should the EIS be?” We also need to address whether there will be an EIS in the first place. If the “responsible official” determines that a project is likely to be non-significant (or can be mitigated to be non-significant) then an EIS isn’t required at all; it doesn’t matter how rigorous the EIS would have been. 

Both Phillips 66 and British Petroleum built oil train loops about 7 years ago and were each determined to be non-significant. There are now about 10 trains per week coming through Bellingham, each up to 100 cars long, each presenting a real risk of derailment and explosion. 
There are other oil train terminals proposed in Washington and in every community where an EIS was done, the project was denied (or withdrawn before it could be denied) because the impacts are so significant.

The decision that those oil trains didn’t require an EIS was a real failure by Whatcom County, and we should be addressing that issue in this code update. The Council should amend the draft to enhance the conditions under which an EIS should be required for fossil fuel projects, and to require that staff rigorously document their examination of those risks. 

 

THE UGLY: Conditional Use Permits, Exemptions, and Biofuels

One of the most important changes that can be made is to require fossil fuel and related projects to have a Conditional Use Permit (CUP) for large projects, rather than allow those things as an outright permitted use. Whether and when there are conditional use permits required, is one of the biggest questions in the discussion of this policy up to this point. This stuff is particularly complicated and messy, but I’ll do my best to lay it out simply. 

Think about a single-family zoned neighborhood: a house is a permitted use. If you have an empty lot, the city will let you build a house on it, you just have to follow building codes. But if you want to put in a daycare, that would probably require a conditional use permit. That means you can do it, but they want to know what the hours of operation will be, whether there is sufficient parking, how many children it will serve, etc. And when the city issues a conditional use permit, those conditions will apply even if you sell the daycare to another operator. 

I maintain that most fossil fuel projects that are allowed should require conditional use permits. Projects are reviewed and approved by the county only once, and then the permitted facility can operate for decades. That initial permitting process is an important chance for the county to weigh the impacts of the project, and put conditions in place to enhance safety, protect jobs, and safeguard the environment. 

For example, new fuel or crude oil storage tanks should be conditioned so that they can only be used for storage for on-site processing, not transhipment. This would protect local jobs by preventing refineries from becoming partial or complete crude oil export facilities (this condition could be tailored to allow reasonable and limited transhipment for short term operational needs like maintenance turnarounds). 

The current draft of the land use regulations requires a conditional use permit (CUP) for fossil fuel expansion projects with a couple of significant exceptions. And the exceptions are what matters. 

  1. Safety upgrades and basic maintenance are excluded — The main thing defining these projects is that they would not expand refinery production capacity. There is a specific list that includes accessory buildings, office space, parking lots, safety upgrades, and others. This makes sense and I agree. We should be open to suggestions from leaders in the labor community about reasonable additions to that list. 

  2. Expansions of the refineries that are either less than 1% per year or that are below the regional population growth are permitted without a CUP. — This is a serious mistake. As best as I can tell, this is a proposal that was suggested by just one council member. It was included in the January Resolution 2019-04 which was introduced with only a few hours notice, never amended and barely discussed before passage. The provision has been kept in the current draft because the Cascadia Law Group understood this as their marching orders. But the formula is confusing, the goal is unnecessary, and the policy is wrong. 
    • Tying fossil fuel production capacity to regional population growth doesn’t make sense in a region where per-capita consumption is declining. Moreover, we have a commitment as a community to decrease greenhouse gas pollution; any increase in production should be, at minimum, conditioned to mitigate emissions.  
    • The formula is also super confusing. I have no idea how it would be accurately implemented and I suspect that it will lead to differences in interpretation that will result in court battles. 
    • Finally, the formula would mean that industry might be required to undergo a different permitting process for identical projects depending on the population growth in the area in the years before they apply for a permit. Any process we apply should be clear and easy to implement. And this fails on those counts. 
    • County Council should amend the draft ordinance to eliminate the exemptions based on growth rate or population. They should also eliminate the 1% expansion threshold. Any process that expands fossil fuel production or storage should require a conditional use permit.    
  3. Expansions for biofuels are specifically excluded in the current draft — This means that facilities proposed to refine vegetable oil, ethanol, etc would not be required to get a conditional use permit. This seems to be a well meaning nod to the need to reduce carbon emissions. But it’s a mistake. 
    • I don’t think that we want to give renewable fuels a leg up by exempting them from the standards we need to protect the health of the Salish Sea and the safety of the community. We wouldn’t exempt them from labor standards or building codes. Rather, we should work statewide to implement a low carbon fuel standard, which would be a more effective way to incentivize the transition to cleaner energy without sacrificing health and safety. 
    • It is also critical to understand that the equipment to refine renewable fuels is much the same as what’s used to refine and move fossil fuels. The Columbia Pacific Bio-Refinery, owned by Global Partners, in Port Westward on the Columbia River, received a permit to build an ethanol refinery in 2013, was bought out and now, without any new permit requirements, is using that equipment to unload trains full of tar sands oil onto ships headed to Asia. Ongoing use as a renewable fuel refinery should be one of the conditions, and is why we need conditional use permits. 
    • (One question that has come up frequently is how these changes would affect a proposed renewable diesel project that is anticipated as a collaboration between Phillips 66 and the Renewable Energy Group. My guess is that that project will be submitted under the existing rules, and so these changes likely won’t apply.) 
    • County Council should make changes to the ordinance to make sure that renewable fuels are held to the same high standards as fossil fuels. Truly renewable fuels will be better able to meet those standards, and shouldn’t fear a thoughtful review process. 

 

A GOOD PATH FORWARD

With these changes, Whatcom County could give local decision makers the tools needed to require polluters to quantify their pollution so that the community can make a fully informed decision about the risks. They could protect local jobs while putting us on a path to a prosperous clean energy future. 

Big business will almost certainly oppose this ordinance, and will oppose it even more strongly with these changes. They want to protect the the ease of permitting they have enjoyed since the 1950s. But we can win. In today’s era of climate change, bold leaders in Whatcom County and across the U.S. are ready to stand up and protect their communities.