Second District Court of Appeal Rejects Challenge to Los Angeles Oil Refinery EIR

April 22nd, 2020

By: Anne Baptiste



In
Communities for a
Better Environment v. South Coast Air Quality Management Dist.
(2020) 2020
Cal.App.LEXIS 285
, the Second District Court of Appeal denied a citizen
group’s appeal of the trial court’s judgment rejecting their challenge to
Tesoro’s oil refinery project in Los Angeles County.

The
Los Angeles Refinery Integration and Compliance Project (Project) involves improving
the integration of two adjacent Tesoro oil refining facilities in Carson and
Wilmington. The Project would increase Tesoro’s flexibility in altering the
ratio of outputs, such as gasoline and jet fuel, and would ensure compliance
with air quality regulations. Primarily, the Project would reduce pollutant
emissions from “burners” which heat petroleum during production. The Project
would also shut down the Wilmington Fluid Catalytic Cracking Unit, a major
pollution source which converts heavy hydrocarbons into lighter ones; install
new pipelines; modify equipment; install new storage tanks; and change the
thermal operating limit of a heater in the Wilmington facility. Additionally,
the Project upwardly adjusts operating heat limits and permit ranges to match
industry standards. Preliminarily, the Court noted that the heat limits and permit ranges would
result in no physical changes to the Wilmington heater or other hardware,
though it would potentially allow for the processing of a heavier blend of
crude oil or increase throughput by
6,000 barrels per day—but not both.

In
September 2014, the South Coast Air Quality Management District (SCAQMD) issued
an Initial Study and NOP on the Project. In March 2016, SCAQMD circulated an
approximately 1,700-page DEIR for public comment and extended the public review
period to 94 days (49 days over the statutorily required 45-day circulation
period). SCAQMD received over 2,000 comments on the report; the vast majority
of which were positive. Communities for a Better Environment (Petitioner)
submitted over a thousand pages of comments on the Project, to which SCAQMD
responded. Following certification of the EIR, Petitioner filed suit, alleging
that the Project EIR used the wrong baseline, failed to explain its estimated
barrel per day increase, and failed to disclose the existing volume of crude
oil the refinery processes as a whole or the refinery’s unused capacity. Petitioner
also alleged that SCAQMD failed to obtain information about the pre-Project
composition of crude oil that the refinery processes, merely finding the post-Project
input would remain within the refinery’s “operating envelope.” The trial court rejected these
arguments and denied the writ, and Petitioner timely appealed.

The Court found that the EIR used the
appropriate baseline. SCAQMD relied on a near-peak (98th percentile) method by
collecting information on the refinery’s worst air pollution emissions during a
two-year period and excluded the top 2% of the data to remove “extreme and
unrepresentative outliers.” The remaining data was used to compare actual pre-Project
near-peak emissions with projected peak emissions due to Project activities. Petitioner
argued for the use of an average-value baseline. SCAQMD rationalized that the
near-peak baseline would measure and control the most significant Project-related
health and pollution dangers. The Court held that substantial evidence supported
SCAQMD’s baseline approach because the near-peak baseline matches the EPA’s
baseline approach and because the baseline takes demand fluctuations into
account. Petitioner argued that relying on the federal approach was misguided
due to the differing purposes between federal regulations (which regulate air
pollution) and CEQA’s baseline requirement (which, “is meant to establish
pre-project conditions to compare with post-project operations”). The Court
rejected this argument, acknowledged the benefits of following the EPA methodologies,
and held that, because California’s environmental goals “to protect the public
health and welfare” were “identical” to those of the EPA, the EPA’s
methodologies were acceptable. The Court concluded that the EPA’s use of the
near-peak baseline was substantial evidence validating SCAQMD’s use of the
baseline here.

In analyzing air quality impacts,
the EIR noted that the Project could allow the refinery to process an
additional 6,000 barrels per day or process a slightly heavier crude oil blend.
SCAQMD determined the worst-case analysis would focus on increased production,
finding that the Project would not change the “fixed crude oil operating
envelope.” Petitioner argued that SCAQMD failed to obtain information about
pre-Project composition of crude oil refinery processes, instead focusing on
the fact that crude oil input would remain within the refinery’s “operating
envelope.” The Court rejected this argument, finding reliance on the crude oil
operating envelope was appropriate because only a specific range of crude
blends can be processed in the refinery. The Project would not change
facilities upstream or downstream of the Coker to allow the refinery to process
a different range of crude oil (in terms of hydrocarbon weight and sulfur
content). The agency extensively analyzed whether the crude oil composition
would change due to the Project, and the EIR disclosed why it was physically
impossible for it to do so. This obviated the need to disclose further detail
regarding crude oil composition. Since the EIR properly disclosed and analyzed
whether crude oil composition would change, the Court found the EIR provided a thorough,
consistent, stable, and logical explanation as to why the Coker would not
process a heavier slate of crude as a result of the Project and rejected
Petitioner’s claim.

Petitioner claimed that, without
knowing exactly how SCAQMD calculated their 6,000-barrels a day figure, CEQA’s
informational purpose would be undermined. The Court found Petitioner forfeited
this argument because it failed to raise the exact issue before the agency
during the administrative process.

Petitioner argued that the EIR
failed to disclose the existing volume of crude oil the refinery processes as a
whole and the refinery’s unused capacity. The Court held that the EIR
adequately explained why the Project would not increase the refinery’s overall
throughput due to physical limitations associated with upstream and downstream
facilities. The Court additionally noted that the assumed 6,000 barrels per day
increase would be offset by a 10,000 barrels per day decrease of vacuum gas oil
the refinery previously used as feedstock for the Wilmington Cracking
Unit—resulting in a net decrease in overall refinery throughput. The Court similarly
dismissed Petitioner’s unused capacity claim by summarily stating there was no
need for the EIR to include data on the difference between peak and average
capacities because substantial evidence supported the EIR’s analysis.

Dissent

The dissenting opinion on
the baseline issue found substantial evidence did not support SCAQMD’s use of
the 98th percentile “near peak” baseline. It cited Communities for a Better Environment v.
South Coast Air Quality Management Dist
. (2010) 48 Cal.4th 310, in
reiterating “that the impacts of a proposed project are ordinarily to be
compared to the actual environmental conditions existing at the time of CEQA analysis,
rather than to allowable conditions defined by a plan or regulatory framework.”
(Id. at p. 321.) It did not find the
EPA’s approach material to what is required under California law. The dissent
further stated that the near-peak baseline failed to provide a realistic
baseline of existing conditions as required by CEQA Guidelines section 15125
because it only reflected pollution levels occurring on the 15 worst days out
of a 730-day review period. As a result, the baseline provided an inaccurate or
diluted picture of the Project’s future impacts to the public and
decisionmakers. The dissent stated SCAQMD “should have analyzed environmental
conditions representing the entire period, or explained in the EIR why this was
not possible, realistic, or informative.”

Key Point

The opinion reinforces the deference
owed to agencies in selecting a baseline if supported by substantial evidence
and reiterates there is no such thing as a “normal” baseline.