Legal Victory for Friends of the San Juans against Phillips 66 Refinery’s proposal to construct new storage tanks

Friends of the San Juans scored a decisive legal victory against fossil-fuel giant Phillips 66, representing an important win for critically endangered Southern Resident killer whales and the Salish Sea ecosystem. On February 28th, 2022 the Washington State Court of Appeals ruled in favor of Friends in a lawsuit regarding Phillips 66’s expansion of its Ferndale, WA, refinery.

The legal action has been ongoing for several years. In the most recent proceeding, an appeal by a team of Phillips 66 attorneys, Friends of the San Juans was represented by Earthjustice attorney Shana Emile.

As a result of the Court of Appeals decision, if the expansion project is permitted, ongoing vessel traffic monitoring will be required to ensure that the project does not increase vessel traffic, and that it does not increase impacts on the Southern Residents and the Salish Sea.

Check out these local news features, highlighting this important victory!

Bellingham Herald:
“Environmental nonprofit claims legal victory over Whatcom refinery, says it will help orca”

GoSkagit:
“Nonprofit scores court victory in bid to protect Southern Resident orca whales”

KGMI Radio:
“Lovel Pratt: Phillips 66 and Orcas”

Graphic credit: San Juan Islanders for Safe Shipping

background

The Phillips 66 Ferndale Refinery applied to Whatcom County for permits to install a 300,000-barrel crude oil storage tank and an 80,000-barrel fuel oil storage tank which would have increased the refinery’s operational storage capacity by 9.6% (from 3,969,000 to 4,349,000 barrels). The stated purpose of the proposed project is to manufacture low-sulfur marine fuels in compliance with regulatory requirements from the International Maritime Association (“IMO”), which went into effect in 2020. This proposed project requires the Refinery to be able to completely segregate low-sulfur fuel oil (and the low-sulfur crude oil used in its production) from higher sulfur fuel oil and crude oil.

In filling out the required State Environmental Policy Act (“SEPA”) checklist, the Refinery did not quantify the amount or types of vessel traffic associated with this project, and thus Whatcom County was unable to assess the potential impacts of project-related vessel traffic on the Salish Sea ecosystem, including potential impacts to the region’s critically endangered Southern Resident Killer Whales, prior to issuing a revised Mitigated Determination of Nonsignificance (“MDNS”) for the project.

At a minimum, this project would involve transporting 300,000 barrels of crude oil through the waters of the Salish Sea to initially fill the refinery’s new 300,000-barrel external floating roof crude oil storage tank. This is equivalent to 12,600,000 gallons of crude oil—roughly 1,600,000 more gallons than what spilled into Alaska’s Prince William Sound during the 1989 Exxon Valdez oil spill. The potential environmental impacts of shipping 12,600,000 gallons of crude oil through the Salish Sea is not insignificant by any stretch of the imagination—and this is only accounting for an initial single filling of one of the brand-new tanks.

The new IMO regulatory requirements would reduce the sulfur content in and pollution from marine fuels. However, this project cannot take place at the expense of the critically endangered Southern Resident Killer Whales and their Designated Critical Habitat where project-related vessel traffic would occur. Without addressing the potential impacts to the Southern Residents, this project is inconsistent with the policy goals of Washington’s Southern Resident Killer Whale Recovery Task Force, as well as federal Endangered Species Act protections for the critically endangered Southern Resident Killer Whales.

As of July 1, 2019, there are only 73 living Southern Resident Killer Whales in existence on the planet. The plight of this iconic species has become so important to our state that, in March 2018, Governor Jay Inslee issued an Executive Order establishing the Southern Resident Killer Whale Recovery and Task Force (“Task Force”) to “identify, prioritize, and support the implementation of a longer-term action plan needed for the recovery of Southern Residents and necessary to secure a healthy and sustained population for the future.” Governor Inslee went on to declare: “…if Southern Residents were to become extinct, we would suffer an unacceptable loss to our environment, economy, and way of life.”

The 49-member Task Force has held 11 day-long public meetings attended by hundreds of members of the public. In response to Task Force recommendations, the 2019 Regular Session of the Washington State Legislature’s enacted budget included $1.1 billion in support of Southern Resident Killer Whale protection and recovery. [1] The November 2018 Southern Resident Orca Task Force Report includes Recommendation 27 (Determine how permit applications in Washington State that could increase traffic and vessel impacts could be required to explicitly address potential impacts to orcas) and identifies the threat that vessel traffic impacts, and oil spills in particular, play in the overall vulnerability of the Southern Resident Killer Whale population.

Friends of the San Juans Appeals the Revised State Environmental Protection Act (SEPA) Mitigated Determination of Non-Significance (MDNS) that Whatcom County Issued to Phillips 66

SEPA-APL 2019-0011, revised MDNS 2019-0033

Friends of the San Juans chose to appeal the August 20, 2019 revised MDNS, arguing that Whatcom County acted in a clearly erroneous manner in issuing a revised MDNS for this project without requiring the Refinery to provide adequate data on project-related vessel traffic and, concurrently, evaluating and mandating adequate mitigation measures for any and all impacts to the critically endangered Southern Resident Killer Whales.

Friends of the San Juans appealed Whatcom County’s conditional approval of this project on August 29, 2019 and presented arguments before the Whatcom County Hearing Examiner on November 1, 2019, with support from multiple expert witnesses. The Hearing Examiner issued a (revised) final decision in this matter on November 26, 2019.

our impact

In response to Friends’ appeal, the Whatcom County Hearing Examiner ultimately issued a final decision in the matter that revised several of the mitigating conditions previously required by Whatcom County’s Planning Department. These revised mitigating conditions will help to ensure that this project will not likely result in significant adverse impacts to our Southern Resident Killer Whales.

According to the Hearing Examiner, “[t]his appeal brought forward valid and reasonable concerns on the part of the Appellant, and has resulted in revised MDNS conditions. It is appropriate for government agencies to be specific and direct in both language and requirements.”

Here are the revised mitigating conditions that were issued to Phillips 66 by the Hearing Examiner in his November 26, 2019 revised final decision. We’ve underlined the Hearing Examiner’s additions and used strikeout to show his deletions:

Condition E:

The two new storage tanks to be permitted under SEPA 2019-00033 shall be utilized ~~primarily~~ only for the separation and storage of low sulfur crude oil intended for production of IMO compliant low sulfur marine fuels and the resultant low sulfur fuel-oil. ~~To ensure compliance with Ordinance 2019-049, t~~The tanks shall not be utilized for storage of crude oil ~~to be exported, unrefined, from the marine terminal~~ for any other purpose except for the refining of that crude oil on site; crude oil shall not be exported or removed for other purposes.

Condition F:

According to the SEPA checklist prepared by the applicant, there is no material increase in marine vessel traffic expected as a consequence of the proposed project. Therefore, there are no likely significant adverse impacts to the habitat of the southern resident killer whale. To ensure there is no significant increase in marine vessel traffic resulting from the proposed project and, therefore, no likely significant adverse impacts to the habitat of endangered southern resident killer whales, their environment, the economy, human usage, or other negative environmental effects, the applicant shall monitor and report annually to PDS on the vessel trip activity at the marine terminal for inbound and outbound transport of inputs/outputs for processing marine fuel oils.

The applicant shall utilize the Department of Ecology Advanced Notice of Transfer System (ANTS) to track and report marine fuel oil shipments by vessel. If Vvessel trips to/from the marine terminal ~~that~~ cumulatively exceed the ~~range~~ highest of the average annual marine fuel oil vessel activity identified in ~~the~~ any calendar year from2017 to 2019 ~~period~~ (as identified in ANTS) ~~may~~ this project shall be subject to additional SEPA review. As part of their annual reporting to PDS, the applicant shall arrange for PDS to receive ANTS data.

Condition H:

The applicant shall arrange for the vessel that initially fills the new crude oil tank to be large enough to fill the entire crude tank including the heel, and in fact fill the entire crude oil tank including the heel on its initial import of fuel to the crude oil tank.

Phillips 66 Appeals the Hearing Examiner’s Decision

Phillips 66 Company vs Whatcom County Washington and Friends of the San Juans, Case no. 19-2-02360-37

On December 23, 2019, Phillips 66 filed an appeal of the Hearing Examiner’s decision in Whatcom County Superior Court under the Land Use Petition Act (LUPA).

The matter was initially heard on June 4, 2020. The Court gave a verbal ruling on September 11, 2020 and an entry of orders on March 19, 2021. On April 6, 2021, Whatcom County Superior Court Judge David Freeman issued a final decision on Phillips 66’s appeal of a November 2019 Hearing Examiner (HEX) decision, in which Whatcom County and Friends of the San Juans prevailed as Co-Respondents in the case.

With Judge Freeman’s final decision, the 2019 HEX decision has largely been upheld, which is what Friends and Whatcom County requested during the Superior Court hearing on June 4, 2020. Friends and Whatcom County jointly prevailed on the majority of the issues under review in the case—including an interpretation of Whatcom County Code that grants broad authority to the Hearing Examiner in determining permitting conditions under SEPA.

There is one HEX finding that the judge is going to reverse (the Hearing Examiner modifications to Condition E, which were ruled to be “overly broad” by Judge Freeman), but the judge is only reversing this back to the original permit condition, as defined by Whatcom County in its revised MDNS from August 2019. Phillips 66 had requested that this condition be removed entirely, but Judge Freeman found that Phillips 66 did not have standing to make that request at this stage of the process.

According to Judge Freeman, “the Court concludes that the hearings examiner did not exceed his authority in modifying the conditions in his final order” noting that “the record is significant with respect to environmental impacts of increased vessel traffic on resident killer whales.”

The case has been remanded back to the Whatcom County Hearing Examiner to issue a final decision in this matter that is consistent with Judge Freeman’s ruling.

This decision is a victory for Friends, the critically endangered Southern Resident killer whales, and the Salish Sea ecosystem.

Phillips 66 Appeals the Whatcom County Superior Court Decision

Phillips 66 Company vs Whatcom County Washington and Friends of the San Juans, Case no. 82599-2-I

On April 20, 2021, Phillips 66 filed a notice of appeal with the Washington State Court of Appeals, Division One, with Whatcom County and Friends of the San Juans listed as defendants.

Earthjustice represented Friends in this appeal. Earthjustice is the premier nonprofit public interest environmental law organization that wields the power of the law to protect marine ecosystems and fight oil and gas development. This case aligns with Earthjustice’s longtime efforts to protect threatened and endangered species and curb oil and gas expansion.

On January 12, 2022, oral arguments were heard in the Court of Appeals, Division One.

On February 28, 2022, the Court of Appeals, Division One, affirmed the Superior Court’s decision and agreed with every argument made by Friends of the San Juans and Whatcom County.

In addition to the important ruling on Whatcom County’s Hearing Examiner’s authority to make a final decision for appeals of SEPA determinations, including the authority to modify permit conditions, the court ruling affirmed an agency’s ability to issue monitoring conditions to ensure protections for the critically endangered Southern Residents and everyone in the Pacific Northwest who cares about the health of the Salish Sea:

1) A project that would increase vessel traffic would “pose a threat to” Southern Residents – even Phillips 66 conceded this point. See page 10:

“Phillips 66 has conceded that environmental concerns in the Court of Appeals, Division One, including harm to killer whales, could arise if vessel traffic increases. Phillips 66 “does not dispute that Southern Resident Killer Whales are endangered, or that increased vessel traffic poses a threat to that species.” Expert opinions corroborated that increased vessel traffic would harm the whales.”

2) A project application with a “probable increase in vessel traffic” would require an EIS. See page 10:

“Clearly, if the evidence showed a probable increase in vessel traffic attributable to the project, an EIS would have been triggered. An MDNS would not have been an option.”

3) The decision reinforces permit agencies’ ability to use monitoring conditions to hold permit applicants accountable to their claims. See page 12:

“Whether these assurances [that there will be no increase in vessel traffic] prove true is solely within Phillips 66’s control. The County could have included a condition in the MDNS commanding that no increase would occur. But, in the record before us, the County was also entitled to rely on Phillips 66’s representations as essential details of the project application.

Under either of its options, the County is entitled to monitor the project to make sure it complies with the application and any conditions imposed. WAC 197-11-350(7) (“Agencies may specify procedures for enforcement of mitigation measures in their agency SEPA procedures.”); WAC 197-11-768(6) (“‘Mitigation’ means . . . [m]onitoring the impact and taking appropriate corrective measures.”).”

Thank you to our members, the Northwest Fund for the Environment, the Bullitt Foundation, and the Stand Up to Oil coalition for supporting this legal work.

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For more information, please contact Lovel Pratt.

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