Panel reviewing proposed oil terminal

Washington Energy Facility Site Evaluation Council plays crucial role in reviewing plan at Port of Vancouver

By Aaron Corvin and Erin Middlewood

Published:

 

Public meeting

■ What: The Energy Facility Site Evaluation Council will receive an update on the Tesoro-Savage oil transfer terminal proposal as part of the council’s process to decide what should be included in the examination of the project’s environmental impacts.

■ When: 1:30 p.m. Tuesday, Feb. 18.

■ Where: Conference room 206 at 1300 S. Evergreen Park Dr. S.W., in Olympia.

■ What’s next: Future EFSEC public hearings, yet to be determined, will be held in Vancouver.

Mark Leed took time off work to drive two hours from his Vancouver home for a meeting of the Washington Energy Facility Site Evaluation Council, only to get lost on the way.

When Leed finally buzzed through the locked doors of a dull brown building three miles from the state capitol building, he'd missed the few minutes the council spent on the matter he drove all that way to hear: an update on the proposal by Tesoro Corp. and Savage Companies to build an oil-by-rail transfer terminal at the Port of Vancouver.

ABOUT TESORO-SAVAGE

The plan for a Port of Vancouver oil transfer terminal calls for Utah-based Savage Companies — a privately held supply chain management company — to design and build the facility. Savage also would operate the rail unloading, pipeline and oil storage facilities. Tesoro Corp. would handle dock operations at the Port of Vancouver, receiving vessels arriving to take on crude and working with Savage to pump the crude to the dock.

Tesoro maintains a significant presence on the West Coast — including refineries in Washington, Alaska and California —and is one of the largest independent petroleum refiners and marketers in the U.S. Based in San Antonio, Texas, the publicly traded company posted net earnings of $743 million for the full year 2012.

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Leed would not have had an opportunity to speak to the council. Still, "I think it's important for Southwest Washington residents to show they're concerned about this facility," said Leed, a vice chairman of the Loo-Wit Group of the Sierra Club.

His odyssey shows just how far out of Vancouver's hands this decision is. The oil terminal siting is deemed by law to be of statewide significance, placing the decision solely in Gov. Jay Inslee's hands. But before deciding, Inslee must hear from EFSEC, an arcane state council created in 1970 to address controversy over the siting of nuclear power plants.

The council's task is to balance the need for energy with safety and protection of the environment -- and it does so within the protective bubble of courtlike proceedings. In its history, the council has never outright rejected proposed power facilities, nor have governors ever dismissed its recommendations. That's why activists like Leed pay close attention, and applicants like Tesoro and Savage work to present their strongest possible case.

The council, comprised of government workers -- two of whom have worked in the energy industry -- will weigh the Tesoro-Savage proposal to handle as many as 380,000 barrels of crude oil per day. It's perhaps the biggest, most complicated project the council has ever seen, having already generated 31,000 public comments as part of the council's process to decide the scope of the project's environmental impacts. In launching the public review, the council said the Tesoro-Savage proposal "is likely to have a significant adverse impact on the environment."

The companies say the oil terminal is critical to economic development and energy independence, and can coexist with a plan to redevelop Vancouver's waterfront. Opponents argue the terminal's polluting and potentially explosive crude oil would endanger Southwest Washington, as well as jeopardize the planned $1.3 billion Columbia River waterfront project.

The corporate partnership is banking on approval. During a recent conference for investors, Texas-based Tesoro said the Vancouver oil-handling facility is the linchpin of its strategy for West Coast expansion and for bolstering its bottom line.

Vancouver may not get to decide whether the Northwest's largest oil-handling facility sets up shop in its backyard, but its interests will be fully considered, according to experts.

Former EFSEC Chairman Jim Luce, a Vancouver attorney, has criticized the council for its limited jurisdiction and lengthy process, even telling then-Gov. Chris Gregoire that the EFSEC process is "dysfunctional." Still, he said the council does indeed thoroughly evaluate proposals against a "jigsaw puzzle" of laws and rules.

"There really is a balance at work," said Luce, chairman of EFSEC from 2001 until 2013.

Todd Coleman, the Port of Vancouver's executive director, said EFSEC will comprehensively inspect the oil terminal proposal and put the necessary precautions in place to ensure the oil-by-rail terminal operates safely. He recently described the council as a "board like no other" and as a "group of really smart people" who will pore over hours of public testimony and work through judicial hearings to arrive at the best decision.

At the end of EFSEC's rigorous process, Coleman said, "we'll know whether Tesoro-Savage can operate safely in our community."

Origins

The Legislature created EFSEC in 1970 to provide one-stop service for developers of large energy projects. It handles the environmental impact statement, as well as air and water quality permits.

The governor appoints the chairman, but isn't supposed to influence him.

When Inslee appointed current Chairman Bill Lynch late last year, "he didn't say, 'Do this or that,'" said Lynch, an attorney who has served on other state quasi-judicial environmental panels. "I was thoroughly vetted by his staff. I've been in state government for over 30 years. I have a reputation for holding hearings on complex issues and coming out with fair results."

Five other members are employees of state departments: ecology, commerce, fish and wildlife, natural resources and the Utilities and Transportation Commission. Representatives of jurisdictions that would be affected by a proposed energy facility serve on the council for those deliberations. For the Tesoro-Savage proposal, Vancouver, Clark County, and the state Department of Transportation have representatives, as does the Port of Vancouver, which approved a lease for the project. Council members cannot discuss proposals outside of EFSEC's public meetings.

Those who want to influence the process must do so through comment letters and testimony during hearings. Even though a group of opponents travels to Olympia for EFSEC's monthly meeting, council members can't talk with them about the proposed oil terminal.

"We want to let the commissioners know we're there watching how they make the decisions," said Marion Ward, who organizes a carpool for the half-dozen other Vancouver environmental activists who travel to the meetings.

How it works

EFSEC's hearings run along three tracks, as it attempts to explain in an inscrutable flowchart handed out at hearings. One, called the "adjudicative proceeding," addresses the siting of an energy facility. The second, under the State Environmental Policy Act, evaluates the land, air, water and other environmental impacts of a project. In the final phase, the council issues any necessary permits, which it continues to monitor after operations begin.

When proponents and opponents argue before EFSEC, they do so in an atmosphere not unlike that of a trial court. A state assistant attorney general is "counsel for the environment," and represents the public interest. Other parties can file paperwork to join the proceedings.

"It's less formal than a trial but similar in that the parties present evidence and argument, and present experts to give opinions and also submit written materials to the council," said Brett VandenHeuvel, executive director of Columbia Riverkeeper. He has argued before EFSEC, and his group opposes the oil-handling facility.

The council's process is designed to be immune from politics, but partisans can still work the system. The case of a $1.5 billion coal gasification plant proposed by Energy Northwest in 2006 is a good example.

The consortium of public power agencies wanted to build the facility at the Port of Kalama. In the midst of EFSEC's consideration of the proposal, then-state Sen. Craig Pridemore, D-Vancouver, spearheaded passage of a law requiring that utilities show how any future coal plant would capture or "sequester" carbon emissions by permanently injecting them deep underground, thus preventing them from entering the atmosphere. In November 2007, the council ruled that Energy Northwest had no plausible plan for sequestering carbon emissions. The council halted the permit-application process until the Richland-based consortium came up with such a plan.

In May 2009, Energy Northwest withdrew its application. At the time, a spokeswoman for the consortium told The Columbian that passage of a 2007 law was "the deciding factor" in its decision.

Instead, Energy Northwest revised its plans for the power plant so it would generate only 348 megawatts, just below the 350 megawatt level requiring state review, but later dropped the project altogether.

A case involving Clark Public Utilities provides yet another example of how state lawmakers may move the goalposts of an EFSEC review. The Vancouver-based public utility's gas-fired power plant, built in 1997, would have been subject to the EFSEC process. However, legislators passed a law raising the amount of power a plant must generate to fall under EFSEC's purview, letting the utility's project slip through.

"The reality is, EFSEC jurisdiction is so limited that it sites very few facilities," wrote Luce, the former chairman, in a report to Gregoire in 2012 . He wrote that EFSEC is "increasingly dysfunctional … with very limited jurisdiction and an unnecessarily lengthy and costly decision-making process."

When EFSEC has had jurisdiction, it has never turned down a project, although it has imposed restrictions.

The council initially recommended denial for a 660 megawatt natural-gas plant in the Whatcom County city of Sumas, proposed in 2000 at the height of an energy crisis, then changed its position after additional hearings. Proponents later abandoned the project after Canada's highest court blocked the transmission lines that would have carried energy from the plant.

EFSEC's handling of the Sumas proposal had lasting damage, Luce wrote in his 2012 report. "Developers designed projects to avoid EFSEC review," he wrote. "Of the eight thermal projects built between 1972 and 2008, only three sought EFSEC review. Of these three, two were never built."

In the case of a proposed wind farm in Skamania County, EFSEC approved Whistling Ridge Energy LLC's project, but reduced the number of turbines from 50 to 35 to protect the Columbia River Gorge Scenic Area. Gregoire signed off. Opponents appealed the decision, which was upheld by the state Supreme Court last summer. Even so, the project has languished.

Going forward

Given the environmental and economic stakes, the Tesoro-Savage proposal may end up ranking as the most complicated, intensely political permitting process that EFSEC has ever seen.

Certainly, it's unlike anything the council has handled.

"We have never had an oil storage project and exploding trains," said Luce, the former EFSEC chairman.

Meanwhile, the oil-terminal application marks Tesoro and Savage's first time before EFSEC. However, leaders of the companies' joint venture exude confidence that the council will recommend approval of the proposed oil terminal -- and relatively quickly.

Tesoro and Savage have hired the Vancouver office of BergerABAM, a consulting firm, to navigate the process.

The companies as of January had invested $100,000 in application fees. (Under state law, applicants must cover the cost of processing permit requests, starting with an initial deposit of $50,000.)

"We think Washington has established a fair and open process, and we're participating in it, and we're happy to go through it," said Kelly Flint, senior vice president and general counsel for Salt Lake City, Utah-based Savage Companies. "We're confident we'll demonstrate our compliance."

The Port of Vancouver looms large in Tesoro's plan to play a major role in expanding the West Coast's capacity to move, handle and refine crude oil, primarily for transportation fuels.

At a December conference for investors and analysts, Keith Casey, Tesoro's senior vice president of strategy and business development, said the Port of Vancouver is the "most cost-effective rail unloading destination for Bakken crude oil." He noted the port's rail and marine facilities, and its $275 million freight-rail expansion to attract businesses. The port, he said, "will be the premier West Coast advantaged crude oil facility."

"We will use this as a recipe for a Gulf Coast-like situation," Casey added, "where the West Coast crude should price more competitive."

When an analyst at the conference pressed Tesoro on the issue of permitting, Phillip Anderson, president of Tesoro Logistics GP, told investors that he expects no permitting delays. "Washington state has a very defined permitting process. It takes approximately 12 months," he said. "We entered that process and we are proceeding per schedule, and anticipate receiving approval in (the third quarter) of 2014."

But that's not likely to happen.

Although state law says EFSEC has one year to make its recommendation -- and gives the governor another 60 days to accept, reject or send a proposal back to the council for more work -- the law also provides for extensions.

"The one-year time frame for major projects doesn't appear realistic," said Lynch, the EFSEC chairman.

As confident as Tesoro and Savage are of approval of the Vancouver oil terminal, environmental groups are just as determined to defeat it. "We believe the climate and the public safety and environmental impacts are just too harmful for this to be approved," said VandenHeuvel of Columbia Riverkeeper. "This is an unprecedented project that, once the impacts are disclosed, (is) going to open a lot of eyes."

Environmental groups hope that whatever EFSEC recommends, Inslee will reject the oil terminal. But no governor has outright dismissed EFSEC's work.

If their arguments don't prevail with EFSEC, opponents hope political pressure will convince the governor to reject the proposal. Inslee "is a champion for clean energy and fighting the impacts of climate change, and we hope that he takes a very hard look at this," VandenHeuvel said.

After all, Inslee recently signed a pact with West Coast governors to rein in greenhouse gas emissions. The 2008 book he co-authored, "Apollo's Fire: Igniting America's Clean Energy Economy," states, "Oil survives, thrives and dominates because it is the beneficiary of the biggest protection racket and the biggest subsidy in the solar system."

The governor won't say anything about the proposed Vancouver oil terminal until EFSEC makes its recommendation. Through a spokesman, he declined The Columbian's request to interview him.

If the governor approves the Tesoro-Savage terminal, opponents can appeal the decision, a process that can take years. But if he rejects the proposal, that's it.

The project's two sponsors have not publicly offered up a Plan B.


Members of the Washington Energy Facility Site Evaluation Council

photoEFSEC board member Bill Lynch.

(/The Columbian)

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Chairman Bill Lynch: Appointed by the governor in 2013; background in land use and environmental law; served on the Pollution Control Hearings Board and the Shorelines Hearings Board; former director, state Environmental Hearings Office; former legislative staffer; law degree from Gonzaga University.

Dennis Moss: Senior review judge for Washington Utilities and Transportation Commission since 1997; started legal career at Baker & Botts in Washington, D.C., representing national and international energy companies. Earlier, a professional geographer and Florida State University instructor.

photoEFSEC board member Cullen Stephenson.

(/The Columbian)

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Cullen Stephenson: 26 years in state government, most with the Department of Ecology; deputy director of Puget Sound Partnership, the state agency leading Puget Sound cleanup, from 2007 to 2009; worked for Exxon Co.’s Benicia Refinery in California from 1978-1987; bachelor’s in chemical engineering, University of Washington.

photoEFSEC board member Liz Green Taylor.

(/The Columbian)

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Liz Green-Taylor: Department of Commerce bond-cap allocation program research project manager; has worked for various state departments since 1998; post-graduate degree in secondary education, University of Puget Sound.

photoEFSEC board member Joe Stohr.

(/The Columbian)

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Joe Stohr: Deputy director of the state Department of Fish and Wildlife; 13 years working for Health and Ecology departments on Hanford nuclear waste issues; managed Ecology’s spill response and prevention program; master’s degree in radiological science, University of Washington.

photoEFSEC board member Andrew Hayes.

(/The Columbian)

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Andrew Hayes: executive policy adviser for the Commissioner of Public Lands; has worked for the state since 2001; training and outreach coordinator for People for Salmon from 2000-2001; U.S. Peace Corps volunteer in the Slovak Republic from 1995-1997; master’s in natural resource policy, University of Michigan.

Temporary members

These council members are serving only during evaluation of the Tesoro-Savage oil terminal proposal:

Bryan Snodgrass: Principal planner for the city of Vancouver, where he has worked since 1998; planner for Clark County from 1991 to 1997; master’s in planning from Portland State University.

Jeff Swanson: Oversees a 33-mile short-line railroad for Clark County; 15 years of experience in transportation and supply chain management; former logistics manager for Schnitzer Steel Industries; master’s in economics from Portland State University, where he is a systems science doctoral candidate.

Christina Martinez: Compliance branch manager for the Washington Department of Transportation, where she has worked since 1998; bachelor’s in environmental science from Western Washington University.

Larry Paulson: Retired as Port of Vancouver executive director in 2012 after 13 years; Port of Vancouver deputy executive director from 1997 to 1999; past member of Gov. Chris Gregoire’s Climate Advisory Team; attorney for both government and private practices; retired brigadier general for the Oregon Air National Guard; law degree from Willamette University. Nonvoting member representing the port.