Ass'n of Irritated Residents v. Kern Cnty. Bd. of Supervisors

• Decision Date: 21 November 2017
• Docket Number: F073892
• Court: California Court of Appeals Court of Appeals
• Parties: ASSOCIATION OF IRRITATED RESIDENTS et al., Plaintiffs and Appellants, v. KERN COUNTY BOARD OF SUPERVISORS et al., Defendants and Respondents; Alon USA Energy, Inc., et al., Real Parties in Interest and Respondents.

17 Cal.App.5th 708

225 Cal.Rptr.3d 463

ASSOCIATION OF IRRITATED RESIDENTS et al., Plaintiffs and Appellants,

v. KERN COUNTY BOARD OF SUPERVISORS et al., Defendants and Respondents;Alon USA Energy, Inc., et al., Real Parties in Interest and Respondents.

F073892

Court of Appeal, Fifth District, California.

Filed November 21, 2017

Certified for Partial Publication.^*

Earthjustice, Elizabeth B. Forsyth, Angela Johnson Meszaros, South Pasadena, and Oscar Espino-Padron for Plaintiffs and Appellants.

Mark L. Nations, Interim County Counsel, Charles F. Collins, Deputy County Counsel, for Defendants and Respondents.

Alston & Bird, Jocelyn Thompson, Roger A. Cerda and Maya L. Grasse, Los Angeles, for Real Parties in Interest and Respondents.

FRANSON, J.

Plaintiffs challenge the County of Kern's certification of an environmental impact report (EIR) and approval of a project to modify an oil refinery in Bakersfield so it can unload two unit trains (104 cars) of crude oil per day, equating to 150,000 barrels. The refinery is authorized to process 70,000 barrels of crude oil per day and the balance of unloaded crude (80,000 barrels per day) would be sent to other refineries by pipeline. A controversial aspect of the proposed project is the transportation of crude oil from the Bakken formation in North Dakota. Compared to heavier crudes, Bakken crude may be more volatile and likely to explode in the event of a rail accident.

Plaintiffs contend the California Environmental Quality Act (CEQA; Pub. Resources Code, § 21000 et seq.¹ ) was violated because the EIR (1) erroneously used the refinery's operational volume from 2007 as the baseline instead of the conditions existing in 2013 when the notice of preparation of the EIR was published; (2) incorrectly relied upon the refinery's participation in California's cap-and-trade program to conclude the project's greenhouse gas emissions would be less than significant; and (3) underestimated and failed to fully describe the project's rail transport impacts, including the risk of a rail accident causing a release of hazardous materials and the environmental impacts of off-site rail activity.

First, we conclude the EIR's choice of 2007 as the measure of an existing conditions baseline for an operating refinery (1) was supported by substantial evidence; (2) appropriately deviated from the normal baseline identified in Guidelines section 15125,² subdivision (a) because of the refinery's history of fluctuating operations; and (3) conformed to the principles set forth by the California Supreme Court in Communities for a Better Environment v. South Coast Air Quality Management Dist. (2010) 48 Cal.4th 310, 106 Cal.Rptr.3d 502, 226 P.3d 985 ( Communities for a Better Environment ), a case that addressed the appropriate baseline for an oil refinery. Thus, the baseline complies with CEQA.

Second, we interpret the reference in Guidelines section 15064.4, subdivision (b)(3) to "regulations ... adopted to implement a statewide ... plan for the reduction of mitigation of greenhouse gas emissions" to include California's cap-and-trade program. We also interpret Guidelines section 15064.4 as authorizing a lead agency to determine that a project's greenhouse gas emissions will have a less than significant effect on the environment based on the project's compliance with the cap-and-trade program. Accordingly, we conclude the EIR's discussion of greenhouse gas emissions contains no prejudicial error.

Third, the EIR contains factual error in its description of federal railroad safety data. It erroneously used the total number of "accident/incidents" reported for a 10-year period as the number of "train accidents" (both are terms of art under the federal regulation). This error tainted the EIR's calculations of the risk of a release of hazardous materials due to a mishap during the rail transportation of crude oil to the refinery. The error caused the EIR to underestimate the risk of a release by fivefold.

Fourth, the EIR erroneously stated federal law preempted CEQA review of certain environmental impacts of off-site rail activities. We conclude federal law did not prevent the EIR from disclosing and analyzing the reasonably foreseeable environmental impacts associated with off-site rail activities. Consequently, the EIR must be corrected to include a disclosure and analysis of those indirect effects of the project.

We therefore reverse the judgment and remand for further proceedings.

FACTS

Parties

Plaintiff Association of Irritated Residents alleges it is a California nonprofit corporation formed in 1991 and based in Kern County, where some of its members reside. It alleges it was formed to advocate for clean air and environmental justice in San Joaquin Valley communities.

Plaintiff Center for Biological Diversity alleges it is a nonprofit corporation with offices throughout California and the United States. It alleges it is actively involved in environmental protection issues throughout North America and has 50,000 members, some of whom reside in Kern County.

Plaintiff Sierra Club alleges it is a national nonprofit organization of approximately 600,000 members. Sierra Club alleges it has approximately 600 members in Kern County and many more along the railway used to transport crude oil to the project site in Bakersfield.

Defendant Kern County Planning and Community Development Department is the lead agency that conducted the environmental review of the project. Defendant Kern County Board of Supervisors is the decision-making body that certified the EIR and approved the project. The defendants are referred to collectively as "County."

Real party in interest Alon USA Energy, Inc. is a Delaware corporation headquartered in Texas. It is an independent refiner and marketer of petroleum products and the parent company of real party in interest Paramount Petroleum Corporation, a Delaware corporation. Paramount Petroleum Corporation is the applicant for, and the recipient of, the approvals that are the subject of this litigation. The real parties in interest are referred to collectively as "Alon USA."

The Refinery

Alon USA named its proposal the "Alon Bakersfield Refinery Crude Flexibility Project" and its purpose is to allow greater flexibility for the existing refinery to process a variety of crude oils on-site. The refinery is located at 6451 Rosedale Highway, northwest of the City of Bakersfield. The site has been the location of a petroleum refinery since 1932. The refinery is capable of producing gas oil, gasoline, diesel fuel and petroleum coke. The existing refinery includes units for crude distillation, delayed cooking, hydrocracking, catalytic reforming, and ancillary and support facilities. Those facilities include steam boilers, process heaters, cooling towers, storage tanks, interconnecting pipelines, and a terminal with truck and rail loading facilities.

The refinery has current environmental permits, including permits to operate from the San Joaquin Valley Air Pollution Control District (Air District). The refinery has a maximum rated crude processing capacity of 70,000 barrels per day. The proposed project would not increase that capacity.

Various companies have owned and operated the refinery since 1932. In the 1980's Texaco acquired the refinery and two neighboring facilities, integrated them into a single plant, and brought the refining capacity up to 70,000 barrels per day. In 2000, Shell Oil became the sole owner of the refinery. In November 2003, Shell Oil announced it planned to close the refinery. In March 2005, Shell Oil sold the plant to Flying J Inc., which operated the refinery through a subsidiary. As a result of financial issues unrelated to the refinery, Flying J Inc. and its subsidiary declared bankruptcy on December 21, 2008, and, a week later, the refinery was shut down.

In June 2010, Alon USA purchased the refinery through the bankruptcy. Twelve months later, Alon USA resumed some refining operations, processing gas oil transported via rail and truck from its refinery located in Paramount, California. When the Paramount refinery suspended production, the refinery in Bakersfield stopped its refining operations, but continued other operations and activities. Those continuing activities included managing inventory, blending and marketing fuels, and functioning as a terminal for crude oil and finished petroleum products. The foregoing history is relevant to the issue of the project's baseline and what level of refining operations, if any, may be included in the baseline used to analyze the project's environmental effects.

The Project

The project involves: (1) the expansion of existing rail, transfer and storage facilities; (2) the construction of process unit upgrades and modifications; (3) repurposing existing storage tanks; and (4) the relocation and modernization of an existing liquid propane gas truck rack and upgrades to a sales rack. The expansion includes construction of a double rail loop from a new on-site spur connected to the BNSF Railway and the addition of up to three new boilers. The EIR estimates the construction phase of the project would last approximately 10 months.

The new unloading facilities would allow offloading of crude oil from rail cars. The new facilities would receive and unload two unit trains (104 cars) within a 24-hour period under normal operating conditions. Based on the maximum capacity for tank cars, the modified facility would be able to offload an average of 150,000 barrels per day. The crude oil delivered by unit train would be transferred into the refinery for processing (up to 70,000 barrels per day) or into the existing pipeline network for transfer to other refineries.

The expanded train facilities would increase the plant's potential to receive crude oil from the Bakken formation in northwestern North Dakota. Bakken crude oil generally is more volatile than other crude oils. The draft EIR described the safety concerns raised by transporting Bakken crude by...