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Budget Slashing Leaves Air and Land Despite Governor's Cutting, Money Going to Cleanup, Farms and Sierra Nevada

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Budget Slashing Leaves Air and Land Despite Governor's Cutting, Money Going to Cleanup, Farms and Sierra Nevada Budget slashing leaves air and land Despite governor's cutting, money going to cleanup, farms and Sierra Nevada By ERIC STERN - BEE CAPITOL BUREAU Tuesday, Jan. 11, Modesto Bee SACRAMENTO — Gov. Schwarzenegger said his budget proposal "doesn't have that much in it that I want." He took his knife Monday to schools, health care programs and road construction projects. But Schwarzenegger also got started on a broader vision to shield farmland from urban growth, clean the San Joaquin Valley air and protect the Sierra Nevada. Many of these initiatives won't hinder efforts to fill the state's $8.1 billion budget hole. In some cases, Schwarzenegger is directing leftover funds, raised by voter-approved bond sales, for environmental projects, such as preserving the Sacramento-San Joaquin Delta and setting aside land in the Sierra. Other plans steer small pockets of money to get big results. He's adding extra dollars to state firefighting efforts in the mountains, and he wants to increase funding for a subsidy program that helps farmers replace dirty diesel engines — a plan that earned praise from the Farm Bureau to the Sierra Club. "He means business when it comes to cleaning California's air," said Bill Allayud, state director of the California Sierra Club. "He understands from being in the L.A. area how bad air can be and how much more we can do." The Legislature placed a host of clean-air regulations on farmers last year that has stretched funds for the engine-replacement program. "You've got to find incentives or ways to get that burden off the farmer," said Assembly Dave Cogdill, R-Modesto. Another low-cost plan Schwarzenegger pushed Monday is to lessen the impact of sprawling growth on "valuable habitat and productive farmland," according to a summary report of the budget plan. Schwarzenegger said during his State of the State address last week that Californians are spending too much time in cars commuting to jobs from faraway homes. He wants to squeeze more homes closer to urban areas by reducing regulations and changing planning laws. 'Housing where the jobs are' Secretary of Business, Transportation and Housing Sunne Wright McPeak, who grew up on a Livingston farm, said a more detailed plan will be rolled out in coming weeks that addresses the state's housing crisis. She said communities need to "take care of their own" by planning for population growth and work force needs for 20 years. "We need to have housing where the jobs are," she said. Schwarzenegger also signaled his interest in building a proposed $35 billion high-speed rail line from San Francisco to Los Angeles. He called for $2.7 million to study the environmental consequences of running the tracks over Pacheco Pass versus the Altamont Pass. Cutting for today But while Schwarzenegger's budget also looks ahead, lawmakers are focused more on the immediacy of balancing the books to get through another year. Sen. Jeff Denham, R-Merced, was frustrated that Schwarz-enegger proposed cutting $500,000 grants to rural sheriffs departments, including Merced and Tuolumne counties. The grant is a small part of the budget — just $18.5 million of the $111.7 billion budget — but "huge in small counties," Denham said. "There will be objections raised over virtually every line item in this plan and no one will be pleased with all of it, but dire circumstances compel tough choices," said Sen. Chuck Poochigian, R-Fresno, whose district stretches into Modesto. "Lawmakers … should have the courage to challenge politics-as-usual for the greater good." Shell says it has buyer for refinery More fuel may flow from Bakersfield plant By Craig D. Rose, STAFF WRITER Tuesday, January 11, San Diego Union Tribune Just one month after declaring that prospects for a sale of its Bakersfield refinery had dimmed, Shell Oil Co. said yesterday it has reached tentative agreement to sell the plant to a Utah company that is the nation's largest retailer of diesel fuel. Shell's proposed sale of the refinery to a unit of Flying J Inc. could keep open the 73-year-old facility, which provides about 6 percent of the diesel and about 2 percent of the gasoline burned by the state's truckers and motorists. Not only would the sale keep that supply flowing, but Flying J said it would double production of gasoline at the plant and more modestly increase its diesel output. Based in Ogden, Utah, Flying J is a privately held company that reported sales of more than $5.6 billion in 2003. The company operates 165 travel plazas - filling stations that include restaurants or mini-marts - in 41 states and three Canadian provinces. Flying J, which has 12,500 employees, owns a refinery in Utah and is involved in oil exploration. With California's refineries straining to keep up with growing demand, and with fuel prices hitting record levels last year, consumer groups and California Attorney General Bill Lockyer had made it a goal to keep the Bakersfield plant open. Lockyer last year launched an antitrust investigation of Shell after the company said it would shutter the refinery rather than seek a buyer. It planned to close the plant by Oct. 1. The company said the supply of locally produced crude oil was declining and the plant could not be kept in operation economically. Lockyer hired a consultant, who concluded the plant could be operated profitably. Shell later agreed to delay the shutdown and pursue a sale. In December, prospects for a sale dimmed when Shell said negotiations with its leading bidder had broken down. Yesterday, the attorney general cautioned that hurdles remain for keeping the refinery open. "Our goal is to keep products flowing from the plant and have a new participant in the market to help make California more competitive," Lockyer said. "What we've heard about the sale is positive, but we need to learn more about the details." Terms of the sale were not announced by either company. Platt's Oilgram News reported that the sale price would be about $130 million. Flying J has agreed to abide by a collective bargaining agreement with unionized workers at the plant, which has about 210 employees and 150 contractors. A significant hurdle to completing the sale could be whether Flying J can obtain a waiver from new state air pollution requirements at the facility. The more stringent pollution requirement go into effect June 1. Flying J did not respond to a question regarding the length of the waiver it was seeking. The San Joaquin Valley Air Pollution Control District's variance board has the authority to issue a waiver. Shell had estimated the cost of meeting new pollution regulations would be $30 million to $50 million, spokesman Stan Mays said. The Foundation for Taxpayer and Consumer Rights in Santa Monica last year made public what it said were internal Shell documents indicating that the refinery was profitable. The consumer group, which said the documents came from whistle-blowers within Shell, alleged that the oil company planned to close the refinery to further tighten gasoline supplies in the state and drive up prices, which hit record levels last year and were among the highest in the nation. "This is a national model for how whistle-blowers, consumer groups and elected leaders can work together to protect motorists from market manipulation," said Jamie Court, president of the foundation. "It's also testament to the anti-competitive nature of the domestic refining industry that Shell had to be forced to collect a $130 million check for this sale instead of detonate a perfectly viable refinery." William Keese, chairman of California Energy Commission, said the state was in a gasoline bind because demand is growing at 2 percent annually but refinery capacity is growing at 0.6 percent. Not all refineries outside the state can produce the fuel blends required by California pollution regulations. With more refineries unlikely to be built, the state's primary hope for boosting production is expansion of existing plants. Some operators have ruled that out because of difficulties in acquiring permits, Keese said. But he added that a proposed pipeline from Texas to Arizona could satisfy some of that market's demand for fuel and eliminate the need for supplies from California, increasing the amount of locally produced fuel available for consumption in the state. Refinery finds buyer in Flying J Shell accepts reported offer of $130 million to avert plant's closure By ERIN WALDNER, Californian staff writer Bakersfield Californian, Tuesday, Jan. 11, 2005 Flying J Inc. has big plans for the Shell Bakersfield Refinery. The Ogden, Utah-based company has signed an agreement with Shell Oil to purchase the refinery, reportedly for $130 million. Flying J plans to "modernize" the circa-1932 plant so it can produce twice as much gasoline and slightly more diesel fuel, according to Flying J spokeswoman Virginia Parker. The refinery, on both sides of Rosedale Highway, makes 2 percent of the state's gasoline supply and 6 percent of the diesel. Oil experts have warned that shuttering the refinery would lead to even higher fuel prices. William Keese, chairman of the California Energy Commission, said Monday that any additional fuel supply is a good thing, particularly for the valley. "Clearly, when you have a shortage of supply, prices go up," Keese said. Any upgrades will need regulatory approval and, according to Jeff Utley, senior vice president of refinery operations at Flying J, will take two years to complete. In the meantime, he said, refinery operations should continue as normal. Just two months shy of the deadline Shell gave for closing the refinery, Shell announced Monday it had signed an agreement with Big West Oil LLC, a subsidiary of Flying J, to sell the Bakersfield refinery.
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