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Communities for a Better Environment v. City of Richmond

April 26, 2010

COMMUNITIES FOR A BETTER ENVIRONMENT ET AL., PLAINTIFFS AND RESPONDENTS,
v.
CITY OF RICHMOND, DEFENDANT AND APPELLANT; CHEVRON PRODUCTS COMPANY ET AL., REAL PARTIES IN INTEREST AND APPELLANTS.



(Contra Costa County Super. Ct. No. MSN08-1429). Hon. Barbara A. Zuniga.

The opinion of the court was delivered by: Ruvolo, P. J.

CERTIFIED FOR PUBLICATION

I. INTRODUCTION

On April 6, 2005, Chevron Products Company (Chevron) submitted an application to the City of Richmond (City) for the necessary permits to proceed with construction of the Chevron Energy and Hydrogen Renewal Project (the Project). The Project was designed to replace and upgrade certain manufacturing facilities at the Chevron Richmond Refinery (the Refinery), with the objective of improving the Refinery's ability to process a more varied mix of crude oil types from a wider variety of sources than it currently processes. Approximately three years later, on July 17, 2008, by a 5-to-4 vote, the Richmond City Council (City Council) issued Chevron the necessary permits to proceed with construction of the Project after finding that the final Environmental Impact Report (EIR) had been completed in compliance with the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq. (CEQA)).*fn1

Communities for a Better Environment, West County Toxics Coalition, and the Asian Pacific Environmental Network (collectively, respondents) filed a petition for writ of mandate against the City and Chevron, arguing that the environmental review of the Project was flawed because the EIR failed to disclose, analyze and mitigate all the potential environmental impacts of the Project. The trial court granted the writ, holding that the EIR violated CEQA based on its failure to provide an adequate project description, its failure to consider the whole project, and its failure to define mitigation measures for greenhouse gas emissions. Chevron appeals, arguing the trial court's decision was "based on erroneous factual assumptions regarding the nature of the Project, application of the incorrect standard of review, and clear legal error." We affirm in part and reverse in part.*fn2

II. FACTS AND PROCEDURAL HISTORY

Chevron is an oil refiner based in California, whose parent corporation is Chevron Corporation, a Delaware corporation based in San Ramon, California. The Refinery is located on approximately 2,900 acres along the western edge of the City in Contra Costa County, occupying most of the Point San Pablo Peninsula. The Refinery is situated near a populated area--portions of five residential neighborhoods are within a one-mile radius of the Refinery. The Refinery processes crude oil into a variety of fuel and oil products, such as gasoline for passenger cars; jet fuel for aircraft; diesel fuel for trucks, trains and buses; and lubricating oils for motor vehicles and other uses.

This case involves a project proposed by Chevron which would allow the Refinery to increase production of gasoline by approximately 6 percent (300,000 gallons per day) that would meet California Air Resources Board (CARB) standards, and which could be sold in California. However, there would be an equivalent decrease in production of that portion of total Refinery gasoline that does not meet CARB standards. Therefore, the Project would not increase the Refinery's consumption of crude oil, although it is repeatedly acknowledged that the "upgrades would expand the Refinery's options for using a wider range of crude oils."

It was anticipated that the "future crude and gas oil supplies" to be processed in the post-Project Refinery would contain higher amounts of sulfur and associated contaminants. The sulfur content of incoming crude varies, with a typical content being around 1.7 percent. The Refinery currently can process a crude mix of approximately 2 percent sulfur with existing equipment. However, new equipment installed under the Project will increase this capability to 3 percent sulfur.

The record indicates that the "Project involves expenditure of hundreds of millions of dollars...." There are four major components of the Project designed primarily to replace and upgrade existing equipment and units at the Refinery. They are (1) the Hydrogen Plant Replacement, (2) the Power Plant Replacement, (3) the Catalytic Reformer Replacement, and (4) the Hydrogen Purity Improvements. The Hydrogen Plant Replacement is identified as a "key element" of the Project which, when combined with the new Power Plant and Catalytic Reformer replacements, will allow Chevron to replace older, less efficient equipment with new equipment and facilities that provide improved reliability, energy efficiency, better environmental controls, and will enable "the production of a larger portion of clean California gasoline." Other components of the Project include replacing 10 existing tanks, constructing 8 new storage tanks, and constructing a new central control room and a new maintenance facility. The Project will also involve modifying, replacing, and installing refinery equipment including piping, heat exchangers, instrumentation, catalytic reactors, fractionation equipment, pumps, compressors, furnaces, and tanks. All of the new equipment and facilities will be located within the boundaries of the existing Refinery, and will generally be placed among similar existing equipment.

On June 15, 2005, the City issued a Notice of Preparation (NOP) that an EIR would be prepared for the Project. The draft EIR was published on May 11, 2007, with a 45-day public review period. The draft EIR was reviewed by various governmental agencies, as well as numerous interested individuals and organizations. At the request of members of the public, the City extended the review period until July 9, 2007, for a total review period of 59 days. A public hearing was held on June 7, 2007, and 24 members of the public commented.

The final EIR, consisting of six volumes, was published on January 25, 2008.*fn3 The EIR identified numerous significant or potentially significant impacts associated with the Project, including emission of pollutants, greenhouse gas emissions, noise levels during construction, and Project-generated increases in traffic. The EIR concluded that all impacts associated with the Project would be eliminated or reduced to less than significant level by mitigation measures that would be made a condition of Project approval.

On June 5, 2008, the Richmond Planning Commission (Planning Commission) certified that the final EIR was completed in compliance with CEQA. Respondents then appealed the Planning Commission's certification of the final EIR to the City Council. Chevron filed a separate appeal to the City Council challenging certain mitigation measures adopted by the Planning Commission.

The City Council heard public comment during a hearing beginning on July 15, 2008, and continuing into the early morning hours of July 17, 2008. On the first night of the hearing, Chevron presented the City with a "community benefits agreement," which was a $61 million package to fund various civic improvements. In return, among other things, the City was obligated to create a fast track for additional future permitting for the Project, if it was approved.

On July 17, 2008, by a 5-to-4 vote, the necessary permits for the Project were approved by the City Council, subject to numerous conditions addressing Project construction, air quality, greenhouse gas emissions, refinery gases, and water quality. It was determined that all significant environmental effects due to the Project's approval "have been eliminated or substantially lessened where feasible." The City Council also certified that the final EIR for the Project had been completed in compliance with CEQA. Both Chevron's and respondents' appeals from the Planning Commission's decision were denied.

On September 4, 2008, respondents filed a petition for writ of mandate and complaint for injunctive relief requesting the superior court to set aside the City Council's certification of the EIR and approval of the Project permits. Primarily, respondents argued that the EIR was inadequate based on its alleged failure: (1) to disclose and analyze the likelihood that the Project would increase the Refinery's ability to process heavier, lower quality, and more contaminated crude; (2) to analyze and provide adequate mitigation for greenhouse gas emissions from the Project; (3) to include a proposed new pipeline for the transport and sale of excess hydrogen as part of the Project, thus improperly "piecemealing" the pipeline from the Project; and (4) to properly analyze cumulative impacts. In addition, respondents claimed the City should have revised and recirculated the EIR when significant new information arose during the approval process.

The matter was argued on May 20, 2009. On July 1, 2009, the trial court entered a judgment in favor of respondents on three issues. The court found that the EIR was deficient because it was "unclear and inconsistent as to whether [the] [P]roject will or will not enable Chevron to process a heavier crude slate than it is currently processing." The court further held that the City had "improperly deferred the formulation of greenhouse gas mitigation measures" by allowing Chevron to prepare a mitigation plan for submission to City staff up to a year after the Project's approval. The court also declared that Chevron had improperly " `piece-mealed' " the Project, by failing to include and analyze a hydrogen pipeline as part of the Project. The court then concluded that it was not "necessary to reach the other issues... because the above violations require revision of the EIR." Accordingly, the trial court entered judgment granting the writ and setting aside the Project's EIR, invalidating all of the Project permits, and suspending all Project-related construction activities.

Chevron filed a notice of appeal on July 20, 2009. The City filed a separate appeal, raising no challenge to the trial court's resolution of the issues, but requesting solely that this court decide the issues left undecided by the trial court. On August 4, 2009, this court granted Chevron's motion for calendar preference and for an expedited briefing schedule. (Cal. Rules of Court, rule 8.240.)

III. DISCUSSION

A. CEQA Overview

Among other requirements, an EIR must describe the proposed project and its environmental setting, state the objectives sought to be achieved, identify and analyze the significant effects on the environment, state how those impacts can be mitigated or avoided, and identify and analyze alternatives to the project. (§§ 21100, subd. (b), 21151; Cal. Code Regs., tit. 14, §§ 15124, 15125, 15126.6.)*fn4 As our Supreme Court has recently emphasized, "The preparation and circulation of an EIR is more than a set of technical hurdles for agencies and developers to overcome. The EIR's function is to ensure that government officials who decide to build or approve a project do so with a full understanding of the environmental consequences and, equally important, that the public is assured those consequences have been taken into account. [Citation.] For the EIR to serve these goals it must present information in such a manner that the foreseeable impacts of pursuing the project can actually be understood and weighed, and the public must be given an adequate opportunity to comment on that presentation before the decision to go forward is made." (Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40 Cal.4th 412, 449-450 (Vineyard Area Citizens).)

In reviewing compliance with CEQA, we review the agency's action, not the trial court's decision. (Vineyard Area Citizens, supra, 40 Cal.4th at p. 427.) In doing so, our "inquiry `shall extend only to whether there was a prejudicial abuse of discretion.' [Citation.]" Abuse of discretion is established "if the agency has not proceeded in a manner required by law or if the determination or decision is not supported by substantial evidence...." (§ 21168.5.) Substantial evidence in this context means "enough relevant information and reasonable inferences from this information that a fair argument can be made to support a conclusion, even though other conclusions might also be reached." (Guidelines, § 15384, subd. (a).)

B. The Project Description Is Unclear and Inconsistent As To the Specific Gravity of the Crude Oil that Could Be Processed

A stated objective of the Project is "to improve the Refinery's ability to process a more varied proportional mix of crude oil types than it currently processes, including crude oil with higher sulfur content." (Fn. omitted.) Respondents argued, and the trial court found, that the EIR's discussion of the types of crude that the Refinery currently processes, as compared to the types of crude the Refinery would be able to process after the Project was implemented, was so "unclear and inconsistent" that the EIR failed to provide an "accurate, stable, and finite project description."

Crude is described in the EIR as "the basic feedstock for the Refinery." It is a composite of oils that vary in weight and levels of contaminants. Refining crude involves, among other things, separating out the differing weighted oils and using hydrogen to remove contaminants such as sulfur. The heaviness of the crude (i.e., its specific gravity) is related to the abundance of the larger, heavier hydrocarbons it contains and is determined by the American Petroleum Institute (API) scale. API gravity is on a reverse scale--the lower the density of crude oil, the higher the degree of API gravity and the greater the value. Crude oil ranges from "light" crude (above API 36) to "intermediate" crude (between API 18-36), to "heavy" crude (between API 1-18).

As the EIR explains, the Refinery does not and cannot process "heavy" crude (meaning crude with an API gravity of 18 or below) because it lacks an essential piece of equipment, a coker. There is no indication that Chevron has any plans to acquire a coker, which would allow the Refinery to process heavy crude. Instead, the Refinery is configured to process light-to-intermediate crude, and the EIR maintains "[i]t is reasonably foreseeable that" after the Project "Chevron would run a crude slate similar to that which is currently processed at the Refinery--but in a mixture that has higher sulfur levels."

Throughout the environmental review process, respondents and others expressed concern that Chevron was obscuring the fact that the changes in Refinery equipment proposed by the Project, while not allowing the processing of heavy crude, would nevertheless significantly increase Chevron's ability to process lower quality, heavier crude as compared with the crude the Refinery currently processes. They maintained that heavier, lower-quality crude requires more intensive processing and is inherently more polluting, creating serious public health risks, including increased releases of selenium, mercury, sulfur flare gas, greenhouse gases, particulate matter, and the greater likelihood of upsets, which lead to emergencies and flaring.

For example, the City's mayor, Gayle McLaughlin, submitted a letter dated July 9, 2007, indicating her concern that the community would be adversely impacted if heavier crude were processed at the Refinery. She indicated that the "surrounding community to the [R]efinery already suffers from high rates of asthma and other respiratory diseases, as well as cancer." She wrote, "Higher refining temperatures and a heavier crude slate will most definitely lead to poorer air quality and a greater risk ...


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