Analysis: Oil plan: Could city gain upper hand?

By Aaron Corvin, July 14, 2014, The Columbian

Could the city of Vancouver, which opposes having the Northwest’s largest oil-by-rail terminal built in its backyard, wrest control of the project’s fate from state regulators?


You could be forgiven for dismissing the question as crazy.


After all, Gov. Jay Inslee — not the city — is in line to decide the proposal after he receives a recommendation from the state Energy Facility Site Evaluation Council, which is conducting an environmental-impact inspection of the project proposed at the Port of Vancouver.


Or so conventional wisdom would have it.


The prospect of Vancouver getting the final say may be a long shot. Yet the city appears to be laying the groundwork to try to turn the long shot into a reality. And EFSEC will consider the matter at a meeting Tuesday.


The issue at hand seems simple: Does the oil terminal proposed by Tesoro Corp. and Savage Companies comply with local zoning and land-use rules?


That’s a question EFSEC must answer as part of its larger review of the companies’ proposal to handle as much as 380,000 barrels of crude per day. The companies have argued publicly that land-use approval is a housekeeping matter. The project obviously fits the heavy industrial zone, they argue, so EFSEC should answer “yes.” That would allow the project’s state-level review to move forward, eventually producing a recommendation to the governor.


“We’re anxious, probably as anxious as the public, to get on with the (environmental impact statement) so we can really get the facts of this project out and we can engage the project on its issues, on its facts, on the scientific analysis that gets done,” Jay Derr, an attorney for Tesoro and Savage, told EFSEC during its May 28 hearing.


Not so fast, the city argues. The proposed rail-and-river oil transfer operation doesn’t automatically comply with the city’s land-use rules, the city argues. It contends that EFSEC ought to put off an answer until the environmental-impact review of the Tesoro-Savage proposal is finished.


“We believe that it’s simply not possible for the city or EFSEC to make a determination on land-use consistency in compliance with the (city’s) comprehensive plan and zoning regulations without knowing the full extent of the environmental impacts of the project and if, or how, those impacts might be mitigated,” Bronson Potter, city attorney for Vancouver, told EFSEC during the same hearing.


EFSEC may decide the matter at 1:30 p.m. Tuesday during its public meeting in conference room 206 at 1300 S. Evergreen Park Drive S.W. in Olympia.


It’s no minor decision. The larger battle is between the city and the companies over who gets the most influence over the oil terminal’s fate. And the fresh twist on the never-ending struggle between local control and state authority isn’t hard to miss. If — and this is an enormous “if” — EFSEC sides with the city, the project’s fate could end up where Tesoro and Savage likely don’t want it: in Vancouver’s hands. As they’ve publicly made clear before, the companies are prepared to go through the EFSEC process and expect their permit application to be judged impartially by Inslee.


‘Clearly yes’

Not surprisingly, the companies, joined by the Port of Vancouver, are arguing that EFSEC should decide the oil terminal conforms to current zoning on the port-owned property.


Derr, the attorney for Tesoro-Savage, said that at this early stage EFSEC must answer only this question: “Is the site in a zone where this use is permitted? And we think the answer to that is clearly yes. We think you could enter that determination at this point, and we can then get on with the (environmental impact statement).”


Todd Coleman, the port’s executive director, also weighed in during EFSEC’s May 28 hearing. The proposed oil terminal “complies with all development standards for heavy industrial zoning,” he said, “and fully supports the city’s comprehensive plan goals of economic development, redevelopment, job growth, and enhancing public revenue.”


Vancouver officials acknowledge the city’s heavy industrial zone “allows for working terminals,” said Jon Wagner, senior planner for the city. But, Wagner said, the city’s land-use code incorporates additional rules and policies that must be considered before a permitting decision is made. Those include gathering more information from permit applicants, collecting public comments and analyzing projects under the state’s Environmental Policy Act, or SEPA.


But no such SEPA analysis has been produced, Wagner said, and no public comments have been gathered.


Potter, the city attorney, urged EFSEC to delay a decision on the question of land-use compatibility until after the state energy panel finishes its environmental-impact review. “And as our (state) Supreme Court has stated, the purpose of the SEPA environmental review is to assist and inform the decision maker before a decision is made,” Potter said. “Not after.”


A big ‘if’

It’s anybody’s guess as to how EFSEC will come down on all this.


The arcane state council, created in 1970 by the state Legislature to provide one-stop service for developers of large energy projects, could side with the companies.


That would settle one doubt about the project and give Tesoro-Savage momentum in moving it forward.


Nevertheless, the city could still hammer away later against the project, including resurrecting arguments that it doesn’t fit the city’s land-use rules and policies. For example, it could ask EFSEC to reconsider signing off on the oil terminal’s compatibility with land-use rules, in light of the draft environmental impact statement. And it could present other evidence against the Tesoro-Savage proposal during EFSEC’s adjudicative hearings, when pro and con arguments fly in an atmosphere not unlike that of a trial court.


Conversely, EFSEC could, per the city’s suggestion, put off deciding whether the oil terminal complies with local land-use rules. That would leave a cloud of doubt over the Tesoro-Savage proposal. The city’s achievement wouldn’t be so much in the delay as it would be in getting to see the environmental impact statement first, before EFSEC decides the land-use consistency issue. With that crucial information in hand, the city could then proceed to argue that the oil terminal doesn’t comply with local land-use rules.


To be sure, the companies could still press on with their case that the project should win approval, presenting their own evidence to EFSEC.


But here’s where that big “if” comes back into play. If EFSEC eventually decides the oil terminal conflicts with Vancouver’s local land-use rules, it could have a potentially game-changing impact.


Under that scenario — long shot though it may be — EFSEC could recommend that Inslee stay out of any decisions until the land-use incompatibility issues are settled.


It’s possible that Inslee will end up supporting the project. If so, his support would likely come with many conditions. At that point, though, opponents could still appeal the governor’s decision to the state Supreme Court.


But the governor’s record suggests he’s no friend to Big Oil and perhaps wouldn’t mind saying no to Tesoro-Savage. Still, publicly scuttling a large energy project could come with major political downsides.


Enter the escape hatch: an EFSEC recommendation that he stay on the sidelines until the local land-use hiccups are put to rest.


It would allow the governor to be seen as deferring to the city of Vancouver, casting him as a champion of local government control rather than as a usurper of it.


It would also put the Tesoro-Savage application to EFSEC on hold, forcing the companies to work with the city to iron out any land-use wrinkles — a city whose influence over their project just got bigger.


Presumably, the companies could still return to EFSEC and the governor after working with the city to smooth out those wrinkles.


In processing permit applications, cities are staffed by professionals who follow defined rules and procedures in making judgments. But to believe that any given project will eventually clear all the necessary local land-use hurdles on its supposed merits — or that politics aren’t part of the decision-making process — is naive.


If Tesoro and Savage found themselves asking the city for help in eliminating any land-use inconsistencies, the companies would have to be worried about the response from Vancouver, where the city council last month voted 5-2 to oppose the oil terminal.

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