Judge Halts Major Bay Area Refinery Project for State Environmental Review

by Natalie Hanson (Courthouse News Service) Phillips 66 cannot begin operations at a new California biofuel refinery until Contra Costa County fixes flaws in an environmental analysis of the project. -- Phillips 66 must halt a plan to start operating a new biofuel refinery in Rodeo, California, after a San Francisco Bay Area judge said the county that approved it must fix legal issues with the project's environmental report card.

Contra Costa County Superior Court Judge Edward Weil ordered Phillips 66 to put on hold what would be one of the world’s largest biofuel refineries, to produce some 800 million gallons of biofuel products per year. The county must show that the project fully complies with environmental review requirements which he found had been violated when authorities first approved it.

Petitioners Communities for a Better Environment and the Center for Biological Diversity asked Weil to vacate his prior judgment and prohibit operations while the county works on the known legal flaws in its environmental analysis of the project. They said Weil’s prior judgment allowed the project’s land use permit to remain in place and failed to enjoin operations while the county proved its compliance with the California Environmental Quality Act — the state’s bedrock environmental protection and community right-to-know law.

The judge said in a tentative order that his prior judgment’s purpose was to allow for construction, not operations, while environmental legal issues are considered. He said that he must consider whether there is any conflict between the statement of decision and the judgment.

“There is, however, a potential conflict between the statement of decision and the judgment because the court allowed the land use permit to remain in place but did not specifically enjoin project operations,” Weil said. “Therefore, the court grants petitioners’ motion to vacate the judgment and to issue a new judgment that specifically enjoins project operations until further order of the court.”

Weil ruled from the bench Thursday to execute the tentative order as his official judgment.

Attorney Kurtis Keller, representing Contra Costa County, declined to comment on the ruling Thursday.

“Counties are required to evaluate, disclose and reduce the environmental harms of a project before approving it,” Kretzmann said. “Communities long suffering from refinery pollution have every right to demand maximum protections against toxic emissions and foul odors, and the county needs to secure them.”

The planned refinery is near the Marathon-Tesoro biofuel refinery in Martinez, which itself could eventually produce more than 700,000 gallons per year of biofuel products and become one of the largest biofuel refineries in California. The petitioners say that the two projects would require at least 82,000 truck trips, nearly 29,000 railcars and more than 760 ship and barge visits annually.

That increases pollution, traffic and the risk of spills and accidents from the projects, while generating and processing biofuels that would worsen existing impacts on communities nearby fossil fuel processing plants. The state considers people who live near the refineries to be “disadvantaged” because of their high exposure to pollution from existing industries. The proposed refineries would cement ongoing or increased air and odor pollution for these residents for decades, the petitioners say.

“This is a huge victory for nearby residents who’ve raised serious concerns about pollution that will come from this giant refinery,” said Shana Lazerow, legal director of Communities for a Better Environment. “Allowing this project to operate before the environmental review process is complete would’ve rigged the whole decision in favor of the refinery operator.”

Stephanie Safdi, clinical supervising attorney for the petitioners, said the ball is now in the county's court to properly disclose and analyze the project and its environmental impacts, and whether those impacts necessitate selecting alternatives to the project or adding mitigation measures to avoid or minimize environmental impacts.

"The county must also provide the public an opportunity to review and comment on a new and valid environmental impact report before it makes a final decision," Safdi said. "It will further need to demonstrate to the court that it has complied with the court’s directions before Phillips 66 will be allowed to start operating the converted refinery."

Sara Evall, a student attorney at the Stanford Environmental Law Clinic, said Thursday: “The county is obligated to reassess the project based on community members’ input and an unbiased record. Rights of the public to informed democratic decision-making come before Phillips 66’s bottom line.”

The judge’s prior order, which found that the county had violated the California Environmental Quality Act by approving the biofuel refinery without properly assessing major components or adopting mitigation for odor impacts on local communities, came down this past July. READ MORE

Excerpt from SAF Magazine: Phillips 66 on Oct. 27 confirmed the renewables conversion of its refinery in Rodeo, California, is progressing on schedule with startup expected during the first quarter of 2024. Once fully operational, the facility will have the capacity to produce more than 50,000 barrels per day (800 MMgy) of renewable fuels.

The company made a final investment decision to move forward with the conversion project in May 2022. At that time Phillips 66 explained that the scope of the project includes the construction of pre-treatment units and the repurposing of existing hydrocracking units to enable production of renewable fuels. Once fully operational, the facility is expected to produce renewable diesel, renewable gasoline and sustainable aviation fuel (SAF).

The conversion project has been opposed by two environmental groups, which in June 2022 filed a lawsuit challenging Contra Costa County’s certification the project’s 2022 environmental impact report (EIR) and approval of the project. A Contra Costa County Superior Court judge in July 2023 remanded to the county for reconsideration three issues with the 2022 EIR and earlier this month reaffirmed that decision, allowing the land use permit to remain in place and allowing project construction activities to continue. On Oct. 24, the Contra Costa County Board of Supervisors issued a revised EIR, which is subject to a comment period that is open through Dec. 8.

Rich Harbison, executive vice president of refining at Phillips 66, provided an update on the EIR during a third quarter earnings call held Oct. 27. Noting that the comment period on the revised EIR is already underway, Harbison said Contra Costa County will respond to comments following the Dec. 8 deadline and is likely to issue a final EIR in early 2024. “So right now, our project construction remains on track to complete in the first quarter, and we’re committed to that timeline,” he said, but added the company has options and would have the flexibility to continue to process crude oil at the facility in the event that circumstances beyond the company’s control prevent startup of the biorefinery. READ MORE