Phillips 66 rail plan returns to SLO County Planning Commission

San Luis Obispo County planning staff is recommending that the Planning Commission make a decision Thursday to approve or deny Phillips 66 Co.’s oil-by-rail plan, which has drawn a deluge of public comments, rallies and debate since the oil company submitted its proposal in 2013.

Phillips 66 had asked for a six-month continuance to March to wait for a ruling by the federal Surface Transportation Board on an oil-by-rail project by Valero Refining Co. in the Bay Area city of Benicia.

Phillips 66 officials said they believed it was unlikely the federal board would rule before Thursday’s hearing — but the board issued a decision Tuesday that could provide some additional direction to decision-makers in San Luis Obispo County in clarifying how much authority the county has in deciding the rail spur project.

“Phillips 66 is looking forward to the Sept. 22 Planning Commission meeting,” said Dennis Nuss, spokesman for Phillips 66. “We expect that the federal pre-emption issue will be one of the issues raised at the hearing and look forward to those discussions.”

Phillips 66 wants to build a 1.3-mile rail spur connecting to the main line as a way to expand its sources of crude oil and continue to support the 200 employees who work at the Nipomo refinery.

The proposal calls for deliveries from three trains per week; each train would have three locomotives and 80 rail cars to haul 2.2 million gallons of crude oil. The refinery now receives crude oil by pipeline.

Earlier this year, the Planning Commission held five days of hearings on the rail spur project that drew thousands of people from around the state, many opposing the project.

County planning staff has recommended that the Planning Commission deny Phillips 66’s request for a continuance and take action on the project. If the commission takes action to deny the proposal, it would not have to reopen public comment.

But if commissioners move toward approval — a motion to deny the project failed in a 3-2 vote in May — they would need to open public comment to allow people a chance to weigh in on the conditions of approval that planning staff has drafted at the commission’s request, according to a staff report by supervising planner Ryan Hostetter.

“The first thing is they have to decide what direction they want to go for the day,” she said Wednesday. In addition, any decision by the Planning Commission is likely to be appealed to the county Board of Supervisors.

In the Benicia project, Valero had asked the Surface Transportation Board to issue a ruling that the city’s Planning Commission does not have the ability to reject the company’s permit for a rail transfer station on its refinery grounds because it is pre-empted by federal law.

Valero argued that federal interstate commerce regulations pre-empt cities from saying yes or no on rail-related projects, The Sacramento Bee reported. But the Surface Transportation Board disagreed, saying that federal pre-emption does not apply in this case because Valero is not a rail carrier.

However, the Surface Transportation Board cautioned that any attempt to regulate Union Pacific’s rail operations on its lines would be pre-empted, although state and local regulation is permissible where it does not unreasonably interfere with rail transportation.

The Benicia City Council voted unanimously Tuesday night to reject Valero’s proposal.

This story was originally published September 21, 2016 at 9:13 PM with the headline "Phillips 66 rail plan returns to SLO County Planning Commission."