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Official says Vancouver oil terminal plan deeply flawed

Memo raises issues about preliminary environmental impact statement

By Aaron Corvin, Columbian Port & Economy Reporter
Published: October 18, 2015, 6:03am
3 Photos
During a media event at the Port of Vancouver last month, Tesoro Corp. and Savage Cos. unveiled oil tank cars that are part of 210 enhanced rail cars that exceed standards set by the U.S. Department of Transportation.
During a media event at the Port of Vancouver last month, Tesoro Corp. and Savage Cos. unveiled oil tank cars that are part of 210 enhanced rail cars that exceed standards set by the U.S. Department of Transportation. (AMANDA COWAN/Columbian files) Photo Gallery

A key state official’s internal review last December of the proposed oil transfer terminal at the Port of Vancouver reveals deep concern from regulators about the project’s potential negative impacts on public safety, the local environment and global climate change. Washington state Assistant Attorney General Ann Essko also said in her confidential review that the joint venture’s preliminary draft environmental impact statement, submitted to support its application for state approval, “fails to demonstrate full compliance” with the state Environmental Policy Act.

The analysis by Essko, a central component of the state’s regulatory review of the highly controversial project, questioned whether Vancouver Energy, the partnership of applicants Tesoro Corp. and Savage Cos., had seriously considered alternatives, including transporting the oil by truck or choosing another location for the terminal. And it challenged statements by the companies that the project will reduce U.S. reliance on foreign energy sources. The repeated statement in the companies’ initial draft impact analysis “that Tesoro will ship crude to refineries on the West Coast appears to be misleading, as is its attempt to invoke the nation’s energy independence as a justification for the project,” wrote Essko in her 12-page review of the companies’ draft analysis that was sent to the state Energy Facility Site Evaluation Council.

The memo was linked to a document released to The Columbian in response to a public records request. It reveals a scathing legal examination of the draft impact analysis submitted by Tesoro, a petroleum refiner, and Savage, a transportation company. The companies want to receive by rail about 360,000 barrels of crude per day at the port. They say the oil would then be transferred to marine vessels and sent down the Columbia River en route to West Coast refineries.

The companies’ initial draft environmental impact study provided the basis for the evaluation council to develop its own inspection of the oil terminal’s impacts on air, land and water.

The council began its review more than two years ago, and the analysis of the oil terminal’s impacts has undergone revisions. The evaluation council is expected to release its draft environmental impact statement — an influential document in the state’s decision-making process — in late November for public review and comment. Washington Gov. Jay Inslee will ultimately decide whether or not to approve the project.

In an email to spokespeople for Tesoro and Savage, The Columbian shared a summarized list of the concerns raised in Essko’s memo, including questions about the memo, and requested an interview about it.

In an email to the newspaper, Jeff Hymas, a spokesman for Savage, said “it would be inappropriate to comment on a memo we haven’t seen and without proper context.” He also said the companies “remain committed” to the evaluation council process. “The concerns we’ve expressed are specific to the management of the process and the continued need for a schedule, which we believe is in everyone’s best interest,” Hymas said. (See full response in the box.)

Sharon Wallace, a spokeswoman for the evaluation council, questioned the newsworthiness of publishing a story about Essko’s memo and related documents. She said the records were “provided to you inadvertently” and their release “does not waive” attorney-client privilege.

In a statement responding to Wallace’s remarks, Lou Brancaccio, editor of The Columbian, said: “Inadvertent or not, once the document is released it becomes public record, and we believe the information is both important and germane to the topic.”

Stephen Posner, manager for the evaluation council, said the council has “been working for several months” to address the concerns raised by Essko.

Jim Luce, a Vancouver resident who served as chairman of the evaluation council from 2001 until 2013, said Essko’s memo “indicates the level of professional excellence that I have known (her) to bring to legal work when I was energy siting council chair.” Luce, who opposes the oil terminal, obtained the memo as part of a separate public records request he filed with the state.

He said the memo and later revisions of the companies’ preliminary impact analysis show that the evaluation council is “paying very careful attention to the issues raised by the public.” At the same time, Luce said, the “apparent slipshod” initial draft impact statement submitted by the companies demonstrates that “they were trying to slide one by on (the evaluation council) and on our community.”

The Dec. 30, 2014, memo written by Essko, the evaluation council’s assigned attorney, provides the public an unprecedented glimpse of the state’s concerns about the legality, comprehensiveness and credibility of the initial draft impact analysis submitted by the companies.

However, Essko’s concerns didn’t stop with her memo in December 2014, according to documents obtained by The Columbian through a public disclosure request. In June of this year, for example, she wrote an email to evaluation council staff saying “many of the problems I see in Chapter 2” of the draft environmental impact statement “are carried over from” the companies’ preliminary draft impact study.

And the memo and subsequent emails aren’t the first marks of discord between the state and Tesoro and Savage. This summer, the companies sent a letter complaining about the lengthiness of the state’s review and calling the state’s permitting process “broken.”

Likewise, the Port of Vancouver, which unanimously approved a lease with Tesoro and Savage for the oil terminal in 2013, also complained this summer about “continued delays” in the project’s review. The port’s letter, sent to Inslee and another top state decision-maker, prompted a rebuke from the evaluation council’s administrative law judge, who said the port had engaged in apparent “improper” communications.

In a letter of its own replying to the companies’ complaint about delays, the evaluation council said the companies had submitted a lackluster initial draft impact analysis, triggering the need for its consultant, Cardno, to undertake a “major rewrite” of the document.

Yet, Essko’s memo sheds far more light on the depth of the problems the state found with the draft analysis turned in by the companies. And it further expands the public’s understanding of the high-stakes, behind-the-scenes environmental, legal and decision-making issues surrounding the oil terminal. It’s a project proposal that an administrator for the evaluation council has described as being “unprecedented in the permitting of proposed energy projects in the state of Washington” and that “must be fully analyzed before making a legally defensible recommendation to the governor.”

‘To the contrary’

Tesoro and Savage have said that proper controls, equipment and practices will ensure the oil-handling facility, which would be the largest of its kind in the nation, is operated in a safe and environmentally sound manner. In an October 2014 story in The Columbian, Hymas, the spokesman for Savage, said the companies “believe the materials we’ve submitted … contain an accurate and adequate analysis of the environmental impacts discussed. A substantial amount of time, investigation and analysis went into the preparation of the preliminary draft (environmental impact statement).”

Essko found that not to be the case — on multiple grounds. Instead, the companies’ draft impact study “appears to ignore a number of (state Environmental Policy Act) requirements and several elements of the (evaluation council’s) scoping decision,” according to her memo. Essko’s remark about the “scoping decision” was in reference to what the council decided to study, based on public input, in its review of the oil terminal’s environmental impacts.

The council’s scoping decision “required ‘a qualitative analysis of project data related to crude oil extraction and refining,’ ” Essko wrote. But the companies’ preliminary draft analysis “appears to omit any analysis at all of this subject. Essko wrote that she also “could not find a full discussion of ‘safety, hazards and risk’ and climate, which are expressly included in the (state Environmental Policy Act) rule and the council’s scoping decision.”

In her discussion of whether the project will increase U.S. energy independence, Essko stated: “Tesoro has not actually committed to ship its crude only to West Coast refineries. To the contrary, it appears to me that Tesoro is preserving its ability to ship Canadian bitumen to foreign refineries and, if the export ban is eliminated, to do the same with U.S. crude.”

She added, “My understanding is that industry is asking Congress to eliminate the export ban for U.S. crude and that the export ban does not apply to tar sands crude from Canada.”

The source and nature of the crude oil also concerned Essko.

“It appears to me that Tesoro is not actually committing to transport only crude sourced in the U.S.,” she wrote. “To the contrary, Tesoro specifically references Canadian crude.” This raises concerns not only about the companies’ assertions about boosting U.S. energy independence, Essko wrote, but also could require more analysis of the impacts of Bakken crude and Canadian bitumen.

‘Legally problematic’

Essko also raised concerns that Tesoro’s description of its needs, including a site that’s already developed for unit train circulation, able to serve multiple clients and have room for up to six storage tanks, is “legally problematic.”

That’s because state environmental rules suggest “that proposals be defined in ways that encourage consideration of alternatives and that public projects be described in terms of objectives, not preferred solutions.”

Essko’s memo also called out missing information, inaccuracies and “unsupported assumptions,” including that the oil terminal proposal does not require rail line construction. Although the state may not be able to order a railroad to improve its tracks, the analysis by Tesoro and Savage “provides no factual support” for the idea that the rail lines “are in fact entirely safe,” according to Essko. As written, the companies’ take on rail lines “waives the state’s defenses and could preclude actions that the governor may wish to take.” Essko also blistered the companies’ analysis of other oil facilities that could be built instead of the oil terminal, as well as their study of alternative locations for the oil terminal, saying they were “unpersuasive.” She wrote: “I did not see any discussion of the trade-off between more air impacts from trucks but lower risk of a catastrophic spill, and I found the justification for rejection of the alternative to be not credible.”

As to potential other locations for the oil terminal, Essko wrote, “the discussion of the facility site selection option appeared to lack key pieces of information and to include a number of unsupported assumptions.” She added, “I was not persuaded that Kalama, Longview, Anacortes, Bellingham, Everett or Tacoma are truly infeasible.”

Moreover, Essko wrote, the companies’ analysis “seems to unjustifiably exclude a variety of other possible alternatives,” including “treating the crude in North Dakota to reduce its flammability, tank pressure, etc.” and “reducing the size of the project, etc.”

Essko’s concerns about the oil terminal proposal have continued into this year, as evidenced by documents obtained by The Columbian through a public disclosure request.

In an April 15 email to evaluation council staff, Essko, commenting on the council’s draft environmental impact statement, criticized one of its chapters as being “inconsistent about two of the most essential elements of the required analysis: the sources and destinations of the crude.”

She went on: “The document can’t properly address — as it must — the impacts of extraction and refining when the document demonstrates that it doesn’t know the geographic location of sources and refineries.”

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In another email, dated June 3, Essko made clear that problems she pointed out less than a year ago had yet to be addressed. Commenting on “the latest draft of Chapter 2” of the draft impact analysis, Essko wrote that many of its problems had “carried over” from the draft analysis the companies submitted. Descriptions of the proposed oil terminal “inexplicably contain a high level of detail about some relatively unimportant features and a low level (or no) information about other critical features such as tank cars, tracks, track maintenance, and response capability along the tracks.”

Essko also wrote in her June email:

“Please refer to my December 30, 2014, memorandum, which I attach again for your ease of reference.”

Columbian Port & Economy Reporter