Refinery Firm Backs Off Bill to Limit City’s Permit Power

Union Pacific Resources Co. is no longer pushing for state legislation that would reduce government control over coastal development permits for the company’s Wilmington refinery.

“That’s a dead thing,” a Union Pacific lobbyist said in an interview this week. “We’re not pursuing it.”

Company officials say they are unhappy with the current language of a bill introduced in February by Sen. Ralph C. Dills (D-Gardena).

In its original form, the measure called for changing the boundary of the coastal zone to exclude the company’s Wilmington land, thus removing it from the jurisdiction of the state Coastal Commission.

Set a Bad Precedent

When the commission objected, the bill was rewritten to restore the commission’s control but eliminate the authority of Los Angeles officials to issue permits for the refinery. That prompted objections from city officials, who said it would set a bad precedent.

The bill passed the Senate in its amended form. But it is stalled in the Assembly because company officials have asked Dills not to promote it.

The company is now trying to negotiate a solution with the Coastal Commission.

Union Pacific has complained that because the refinery is in a “dual-permit zone”--governed by both the city and the commission--projects take too long to pass through the bureaucracy.

For example, the company is planning a $100-million modernization of its Wilmington oil production facilities and must appear July 7 for a hearing before a Los Angeles zoning administrator. After the project moves through the city bureaucracy, Union Pacific must obtain permission from the Coastal Commission. Company spokesman Ed Gladish said Union Pacific has already submitted its application for state approval.

The project, which is expected to take 1 1/2 years to complete, involves installing a “gas oil hydrotreater” that will enable the refinery to process California crude oil while still meeting air quality standards.

Fully Process Oil

During the refining process, California crude can emit large amounts of sulfur into the air. In order to meet air quality regulations, Union Pacific now partially refines the oil and then sells it to another refinery for further processing. The new equipment will allow Union Pacific to fully process the oil.

Regional air quality officials said they expect to approve the project this month.

Although the proposed legislation would reduce government control over this type of project, company officials say the modernization has nothing to do with Union Pacific’s legislative agenda.

Gladish said that even if the bill were passed, it would not take effect until January--after Union Pacific expects to receive its state and local permits for the hydrotreater.

But Bill Allayaud, legislative liaison for the Coastal Commission, is not convinced there is no connection.

“The oil company has repeatedly said they have nothing up their sleeves--no big plans,” Allayaud complained. “Real questions should be raised (about the legislation). Why are they trying to do this?”

A spokeswoman for Los Angeles Councilwoman Joan Milke Flores, who led the push in the City Council to oppose the amended bill, said, “This is exactly why we opposed that legislation--so nothing like this (project) could be pushed through without city input.”

Allayaud, Flores spokeswoman Julie Mantrom and city lobbyist Karen Mills-Alston all said they knew nothing about the hydrotreater project until informed of it by a reporter.

Gladish, however, said the project was no secret. He cited company literature distributed at a Senate committee hearing on the bill in March that listed the hydrotreater among “potential or conceivable future projects.”

In arguing for the bill’s passage, Union Pacific said the company is entitled to be exempt from commission control under a 1973 ruling made by the commission’s predecessor, the South Coast Regional Coastal Zone Conservation Commission. The exemption says oil production activities at the Wilmington site do not require permits from the commission.

Since receiving the exemption, Union Pacific has applied for, and received, six permits from the Coastal Commission.

However, both the commission and the company agree that the language of the exemption is vague and needs clarification so that Union Pacific knows when its projects require permits.

The company argued that “removing the property from the coastal zone will implement the spirit of the exemption.”

But Coastal Commission officials argued that the land falls naturally within the coastal zone, and said the commission must retain control of the land in case its use changes.

Naida West, lobbyist for Union Pacific, said the company is now hoping for an administrative solution because it is clear the bill, as originally proposed, will not pass. She said Union Pacific is “looking for a little bit of less government red tape.”