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The Well-Oiled Deal 

Taking away local control of refineries is a family matter

Thursday, Apr 1 2004
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A sickening odor of gasoline hung along Wilmington’s waterfront as people filed out of last week’s meeting with California Energy Commission officials on a state proposal to minimize local say over construction of oil-industry facilities. Vapors from a nearby refinery or tanker ship were a pungent reminder of why residents of Wilmington, Carson and other refinery communities had come to oppose the state’s power grab. They argued that because their neighborhoods are home to the state’s major oil port and refining center, they and their local governments should have a say when petroleum facilities are expanded.

Little did they know that the proposal is backed by a powerful husband-wife team: commission member James D. Boyd and his wife, Catherine Reheis-Boyd, chief of staff for the Western States Petroleum Association and the industry’s registered lobbyist in Sacramento.

“I’ve built a firewall between myself and that proposal,” said Commissioner Boyd. “I am basically not participating in that proceeding.” The commissioner said he was proud of his 25 years with the state in working to clean California’s air and move toward alternative fuels, but that demand for gasoline is quickly outstripping supply, so the commission had an obligation to examine ways to increase supply. “The economy is going to be hurt by not making enough fuel available as soon as possible.”

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Reheis-Boyd would not grant an interview. Western States spokesman Dave Fogarty said association attorneys have helped her to avoid any conflicts. For instance, he said, she has stopped testifying at commission meetings.

The plan being pushed in Wilmington by commission staff members last week would grant power to the Energy Commission to issue permits for new or expanded oil refineries, pipelines, storage facilities and port terminals. The commission contends that “inefficient and overlapping” layers of government permits for land use, air and water pollution, and construction issued by cities and regional agencies — such as the South Coast Air Quality Management District and the Los Angeles Regional Water Quality Control Board — have prevented oil-facility expansions and have left the state facing a gasoline shortage and rising prices.

The plan also would eliminate the right of cities and community groups to sue over state approvals of petroleum facilities, except in the state Supreme Court. Unlike lower courts, which generally must hear any valid case, the Supreme Court can simply deny a hearing.

AB 1991, a bill introduced by Assemblyman Alan Lowenthal (D–Long Beach), would make the commission’s plan state law. “They came to us and asked him to carry the bill,” said the legislator’s chief of staff, John Casey. However, the negative community reaction to the commission’s plan has Lowenthal reconsidering whether to push for passage of the bill, Casey said.

The so-called one-stop permitting plan for California’s oil industry grew out of the state’s integrated-energy-policy report, explained commission spokesperson Susanne Garfield. She said Commissioner Boyd helped write that report, which calls for increased use of alternative fuels and a 15 percent reduction in use of petroleum, but also includes the oil industry–supported one-stop permit plan.

The one-stop process would cover expansions of 13 major refineries that process 1.9 million barrels of oil a day — and the associated shipping terminals, pipelines and storage tanks that serve them — making California the third biggest petroleum-refining state in the nation.

 

Former Governor Gray Davis appointed the 64-year-old Boyd to the $114,000 post early in 2002. He formerly served as chief of staff of the California Resources Agency and as executive officer of the California Air Resources Board. Boyd is credited with having a hand in several innovative environmental programs, including alternative fuels and development of electric vehicles.

At the Energy Commission, Boyd presided over development of the energy plan, moved approval of the plan, and voted for it.

That plan came to fruition last year when the commission considered how to deal with the growing imbalance between gasoline demand and supply and outlined a series of options to reduce demand by increasing the use of alternative automotive fuels, such as natural gas, and encouraging more fuel-efficient cars. Action on those options is moving slowly, and gasoline demand is continuing to increase.

Meanwhile, the commission also examined expanding the facilities needed to import, store and refine more oil and gasoline in California, including a consultant’s report concluding that land-use, building and air-pollution-control permits from cities and California’s local air-pollution-control districts were the biggest obstacles to constructing new oil facilities.

“The Energy Commission should recommend to the governor and Legislature that the state develop a state-mandated licensing authority for the permitting of petroleum infrastructure,” Joe Sparano, president of the Western States Petroleum Association and Reheis-Boyd’s boss, told Commissioner Boyd last August at a meeting he presided over in developing the state energy report.

Within a couple of months, commission staff had inserted that suggestion into the report. In an October meeting in Bakersfield held at the behest of the Western States Petroleum Association, Sparano congratulated Boyd and the commission for including one-stop permitting for new petroleum facilities in its energy report, but asked that the commission go one step further by centralizing at the state level approval of any modifications to existing oil-industry facilities.

On November 12, Boyd moved approval of the report, which recommended “a one-stop licensing process for petroleum infrastructure” and joined his fellow commissioners in a unanimous yes vote on the document.

Following that approval, Chandler said, Energy Commissioner John Geesman took over the commission’s work to carry out the report’s recommendations, and Boyd took a back seat.

By February, the staff had suggested the bill introduced by Lowenthal, who since 2000 has taken some $31,000 in campaign contributions from oil companies.

City officials maintain that one-stop permitting is unneeded because the industry has been able to expand and upgrade its facilities under the existing locally based permit process. “We generally have a fairly good relationship,” said Sheri Repp, planning manager for the city of Carson, which opposes the commission plan. “We have our fair share of petroleum facilities compared to other California communities.”

For example, last month the city’s Planning Commission approved permits for Kinder Morgan Inc. to expand its oil-storage facility by installing enough tanks to store nearly another 1.5 million gallons of oil products, although in the next month the full City Council is expected to reconsider the decision due to community concern.

Fogarty said that while the Western States Petroleum Association has not endorsed the Lowenthal bill and the commission’s plan, it believes that unless steps are taken to speed construction of new petroleum refineries and facilities, gas prices may stay high. The association believes that government agencies can quickly approve such facilities without compromising environmental safeguards, he said.

The Energy Commission’s plan for licensing oil facilities is modeled after state rules for approving construction of electric-power plants. Under those rules, the commission coordinates with local and regional agencies, but has the sole authority to approve construction — unlike almost all other construction, which requires local approval.

“The nature of the oil industry does make it different than the power industry,” said Agustin Cheno Eichwald, Wilmington organizer for Communities for a Better Environment. “If you know the history of the refineries, there’s a lot more volatility. There’ve been explosions in Wilmington.” Refineries, he said, have had numerous fires and accidents where clouds of smoke and oil have blanketed neighborhoods. They often release sulfurous odors.

Even storage facilities can present a problem. Last fall, for instance, the South Coast Air Quality Management District issued three notices of violation to Kinder Morgan for causing objectionable odors in Carson.

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