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Judge rules against Phillips 66 motion to stop SLO County hearings on oil-by-rail plan

A crowd gathers Feb. 4, 2016, at a San Luis Obispo County Planning Commission hearing about a Phillips 66 Co. proposal to build a rail spur.
A crowd gathers Feb. 4, 2016, at a San Luis Obispo County Planning Commission hearing about a Phillips 66 Co. proposal to build a rail spur. dmiddlecamp@thetribunenews.com

A judge ruled against Phillips 66 Co. this week in a decision that will allow the San Luis Obispo County Board of Supervisors to proceed with a public hearing next week about the company’s controversial oil-by-rail proposal.

“The court will not interfere with the proceedings pending before the board,” San Luis Obispo Superior Court Judge Barry LaBarbera said in a final ruling issued Tuesday afternoon.

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In the ruling that the Environmental Defense Center called “a win,” the judge threw out a lawsuit that Phillips 66 brought against the county in October.

The lawsuit was filed in response to a county Planning Commission decision in October to reject a Phillips 66 land-use proposal to build a 1.3-mile rail spur connecting its refinery on the Nipomo Mesa to the main rail line in order for the company to import crude oil by train. Phillips 66 has proposed bringing in three trains per week, each carrying up to 2.2 million gallons of crude.

“(The company’s) argument that the Planning Commission’s denial of the project was based on an invalid finding ... is an issue that is pending before the board and should be addressed at the administrative level before it is brought to this court,” LaBarbera wrote in his decision.

County supervisors are scheduled to hold a hearing on the project beginning Monday that could continue through the week.

“We are very pleased with the court’s ruling,” county counsel Rita Neal said Thursday. “We believe the Board of Supervisors should have the opportunity to proceed with the hearings and that Phillips 66 is required to exhaust all of their administrative remedies before they proceed to court.”

Alicia Roessler, a staff attorney with the Environmental Defense Center in Santa Barbara, said the company’s lawsuit was “ridiculous.”

“What they were trying to do was ask the court to intervene and circumvent the county’s public process in order to prevent evidence that revealed 20 acres of sensitive habitats and species would be destroyed by this project,” Roessler said.

Dennis Nuss, a spokesman for Houston-based Phillips 66, said the company won’t be commenting on the ruling.

“We look forward to addressing the Board of Supervisors at next week’s hearing,” Nuss said.

Before the Planning Commission voted 3-2 to to reject the company’s land-use application, hundreds of supporters and opponents from around the state spoke at hearings before the commission. Proponents stressed the jobs created by the refinery, and critics warned that a derailment could be catastrophic.

The company appealed the Planning Commission’s decision both to the county and to the court, and it argued that the court should prohibit the county from proceeding with its appeal process until the court ruled whether the commission inappropriately applied an ordinance about environmentally sensitive habitat area, or ESHA.

The crux of the legal argument centered on a Coastal Zone Land Use Ordinance that says property in the coastal zone may be designated as environmentally sensitive habitat area and is therefore undevelopable.

Phillips 66 contends that planning commissioners missed a deadline and designated 20 acres as ESHA property only after the application was accepted as complete, wasting the company’s time and resources.

The judge last week asked for more information about whether the time frame in the ordinance was mandatory. But the point is moot. The county, along with six environmental organizations that intervened in the suit, including the Environmental Defense Center, asked the judge to throw out the entire case on procedural grounds and allow the county to proceed with the appeals process.

On Tuesday, the judge mostly agreed with the county — except on one point.

The company in its original filing argued that the ordinance the Planning Commission used to reject the Phillips 66 project was unconstitutional because it was vague. That is a matter the county can’t rule on because they are barred from doing so by the state Constitution, LaBarbera said.

On that issue alone, the company can file an amended complaint with the court.

Monica Vaughan: 805-781-7930, @MonicaLVaughan

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