The Phillips 66 Ferndale Refinery applied to Whatcom County for permits to install a 300,000-barrel external floating roof crude oil storage tank and an 80,000-barrel external floating roof fuel oil storage tank in a tank farm located within the Refinery. 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.  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 Appeal of 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.
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:
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, tThe 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.
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.
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 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.
UPDATE: On April 20, 2021, Phillips 66 filed a Notice of Appeal to Court of Appeals, Division 1, with Whatcom County and Friends of the San Juans listed as defendants. We’re exploring next steps. Click here to access the Notice of Appeal document.
You can download and view key case documents below.
Thank you to the Northwest Fund for the Environment and the Bullitt Foundation for supporting this legal work.
For more information about this appeal, please contact Lovel Pratt.
SUPPORT OUR WORK
Your tax-deductible donation helps us appeal projects like this, which threaten our critically endangered Southern Resident Killer Whales and Salish Sea ecosystem.
KEY TIMELINE & DOCUMENTS
✔️Friends of the San Juans Public Comments on the Phillips 66 Logistics Flexibility Project
✔️White Paper: Southern Resident Killer Whale Task Force Recommendation 27
✔️ Whatcom County Revised MDNS (August 20, 2019)
✔️ Friends of the San Juans appeal of Whatcom County’s Revised MDNS for the project (August 29, 2019)
✔️ Friends of the San Juans Pre-Hearing Brief
✔️ Whatcom County Final Hearing Examiner Decision (November 17, 2019)
✔️ Phillips 66 Administrative Appeal of the November 17, 2019 Hearing Examiner Decision
✔️ Friends of the San Juans’ Response to Phillips 66 Administrative Appeal (November 23, 2019)
✔️ Hearing Examiner Order on Motion for Reconsideration (November 26, 2019)
✔️ Whatcom County REVISED Final Hearing Examiner Decision (November 26, 2019)
✔️ Phillips 66 Appeal of HEX Decision to Whatcom County Superior Court (December 23, 2019)
✔️ Respondents’ (Friends’ and Whatcom County’s) Opening Brief (April 24, 2020)
✔️ Petitioner’s (Phillips 66’s) Reply Brief (May 15, 2020)
✔️ Superior Court Judge’s Final Order (April 6, 2021)
 June 3, 2019 presentation at the Southern Resident Orca Task Force meeting.