BENICIA, Calif. (CN) — The City Council of a small city of 27,000 in California’s San Francisco Bay Area made a decision this week that may have huge ramifications for the nation’s energy infrastructure.
The five-person Benicia City Council voted unanimously to reject the Valero Crude Oil by Rail Project — a substantial setback for an oil and gas industry that operates several refineries nearby and setting an interesting precedent for local government’s assertion of jurisdiction over oil and gas routes.
The Valero Crude Oil by Rail Project would have allowed the oil company, which operates a large refinery in Benicia, to bring in crude oil by rail rather than exclusively by ship as the current arrangement dictates.
However, Benicia City Council ended a divisive community fight over the issue by finding the project is too dangerous for the community. The potential for contamination of the Sulphur Springs Creek and other watersheds in the event of a derailment proved too much for the council members to brook.
“I have seen stories piled on top of the other about what wasn’t working and what is particularly troubling is the lack of financial resources provided in the case of a catastrophic event,” Mayor Elizabeth Patterson said during deliberation on Wednesday night. “The money comes in too late, people have to go out of business and people have to move away.”
Leading up to the decision, several questions about whether the City Council even had jurisdiction hovered over the matter, with project proponents asserting that the federal government regulates rail and any decision made by the city government is preempted.
However, the Surface Transportation Board wrote the city on Wednesday before the meeting saying while the federal government does regulate interstate commerce and the railroad, the proposed $70 million rail depot was within the regulatory purview of the city.
While many local residents applauded the decision, environmental groups talked about its reverberations.
“This is a victory for the right of communities to say no to refineries’ dangerous oil train projects,” Ethan Buckner with the group Stand — formerly ForestEthics — said. “The federal government has said once and for all that there is nothing in federal law that prevents cities from denying these oil companies’ dangerous rail projects.”
In the series of meetings leading up to the decision, Valero touted its safety record and said the train project carried minimal risk and would bring jobs and economic activity to the region.
“After nearly four years of review and analysis by independent experts and the city, we are disappointed that the City Council members have chosen to reject the crude by rail project,” Valero said in a statement. “At this time we are considering our options moving forward.”
Valero is the largest employer in the city, according to a recent comprehensive financial report compiled by the city’s finance team.
However, Patterson said the city’s general plan calls for a more diversified economy that relies heavily on small businesses, many of which would be hampered by the crude oil by rail project, particularly if something went wrong.
“We have to be less dependent on the refinery as we pivot into an era of attracting different kinds of businesses,” she said.
In 2014, trains transporting crude oil spilled about 57,000 gallons of the environmentally hazardous substance, more than any other year since the Pipeline and Hazardous Materials Safety Administration began keeping track in 1975.
The Columbia River, one of America’s most scenic rivers as it carves out the border between Oregon and Washington state, was spoiled by 42,000 gallons of oil when a train derailed due to a defective bolt on the track.
While many celebrated the possibly precedent-setting decision undertaken by the small city body, Councilman Mark Hughes resigned himself to certain litigation and its associated expense.
“Regardless of the decision tonight, I believe a lawsuit will be filed,” Hughes said.
So whether Benicia’s decision will be the first in an onslaught of local entities attempting to regulate elements of the oil and gas industry out of their communities or whether that will be left to federal and state authorities may be a matter for the courts to decide.
There are five major refineries in the Bay Area including the Valero refinery in Benicia: Chevron in Richmond, Tesoro outside of Concord, Phillips 66 in Rodeo and Shell in Martinez also operate and contribute significantly to both the local economy and air pollution.
The five refineries process about 800,000 barrels of crude oil per day and along with other oil and gas companies generate about $4.3 billion in local tax revenue, according to a 2014 study performed by Los Angeles County Economic Development Corporation and commissioned by the Western States Petroleum Association.
But Ralph Borrmann, public information officer for the Bay Area Air Quality Management District, told Courthouse News recently that the refineries are responsible for anywhere from 4 to 41 percent of the pollutants in the area, depending on which pollutant is identified.
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