Please See Attached for BP Cherry Point Refinery Comments on Whatcom County Comprehensive Plan Draft, Chapter 2 – Land Use

From: Brady, Pamela To: Barbara Brenner; Rud Browne; Barry Buchanan; Todd Donovan; Ken Mann; Satpal Sidhu; Carl Weimer Cc: Council; Jack Louws; Karen Frakes Subject: BP comments on Chapter 2 - Land Use Date: Monday, July 04, 2016 5:12:54 PM Attachments: 07-05-2016 BP Comment Letter.pdf

Please see attached for BP Cherry Point Refinery comments on Whatcom County Comprehensive Plan draft, Chapter 2 – Land Use. Thank you for your consideration.

Pam Brady ______Associate Director NW Government and Public Affairs Communications and External Affairs BP America Desk: 360.371.1519 Mobile: 360.920.1171 Pamela.Brady@bp.com

BP Cherry Point Refinery 4519 Grandview Road Blaine, Washington 98230 Telephone 360 371-1500

July 5, 2016

Whatcom County Council 311 Grand Avenue, Suite #105 Bellingham, WA 98225-4038

Via First-Class U.S. Mail and hand-delivery

RE: Whatcom County Comprehensive Plan Update July 5, 2016 Study Draft – Chapter 2, Land Use

Honorable Council Members:

Please accept these preliminary comments by BP Cherry Point Refinery as part of the official Whatcom County Comprehensive Plan Update record. These comments were prepared with input by BP’s legal counsel. BP reserves the right to supplement these comments.

Let me preface these comments by expressing BP’s deep dismay regarding the very short notice – three business days – given to the public to prepare comments on the draft Chapter 2: Land Use materials set for discussion and preliminary Council direction at 9:30 a.m. on Tuesday, July 5. The draft Chapter 2 language contained in the June 29, 2016 agenda packet reflects a 180-degree change in position regarding the Cherry Point UGA. After your stakeholders spent 15 months engaging with Whatcom County regarding its previous Chapter 2 draft materials, giving the public a mere three business days (pointedly in advance of the long July 4th weekend) to digest a diametrically opposite position for the future of land use in Cherry Point is stunning.

BP is the largest private employer in Whatcom County with approximately 1,600 BP employees and on-site contractors. The company has actively been following the comprehensive plan update process for the past 15 months, since scoping for the plan’s Environmental Impact Statement (EIS) was initiated on March 3, 2015. We reviewed the 2015 draft comprehensive plan update materials, commented on the Draft EIS (which studied four alternatives), and reviewed the Final EIS published on November 12, 2015, which studied a final preferred alternative.

Until this draft Chapter 2 language was publicly disclosed less than one week ago, the county had consistently presented draft text that recognized the significance and

preserved the viability of the Cherry Point UGA industrial area. That earlier language also took into consideration other county planning documents, including the Land Capacity Analysis and the Population Employment Projections. The new draft to be reviewed on July 5, 2016 envisions plans for the Cherry Point UGA that are entirely opposite to those under review for the past 15 months.

BP Cherry Point Refinery is one of the newest refining facilities in the US and uses best available technology to ensure our products are made in a safe and environmentally responsible manner. BP employees are rightfully proud of our refinery, and we take seriously our commitment to excellence through the systematic and disciplined management of our operations. Under the proposed language, BP cannot be assured that permitting applications for refinery maintenance and improvements will be processed fairly and objectively according to the law, thus jeopardizing their approval and ultimately the viability of the business. The proposal threatens long-term sustainable employment in the region and distinctly disadvantages the two Whatcom County refineries by limiting our future growth and expansion, while the four other refineries in the region would not be similarly restricted.

BP fully understands that the County is under a deadline to complete and take action on a final updated comprehensive plan. However, delayed approval of Comprehensive Plans is not unusual for communities across Washington State and the minor consequences to the County, if any, resulting from a missed deadline pale in comparison to the potential for destruction of Whatcom County jobs should this newly revealed draft be rushed to a final decision ‘to meet a deadline.’

The abbreviated public notice provided in this instance takes advantage of the County’s lack of prescribed notice periods for public hearings for Committees of the Whole work sessions. Whatcom County citizens deserve an opportunity to be informed and fully participate in this process. The newly unveiled Chapter 2 amendments include major policy changes that will affect the County economy and present important legal issues (some of which are outlined in these comments). The need for transparency in government and the public engagement principles embedded in state law, as well as the Public Participation Plan adopted by Whatcom County for the overall Comprehensive Plan Update, mandate a meaningful opportunity for the public to submit comments and for the Council to consider them.

For these reasons, as well as the substantive points below, we strongly request that the County Council decline to give preliminary direction regarding this draft and we ask that the Council dismiss these amendments outright. Should the Council wish to consider a drastic shift in the land use at Cherry Point, we respectfully request that the County follow the prescribed process for such revisions, beginning with the Planning Commission and allowing for meaningful engagement by stakeholders, only after which the public hearing process should re-commence in order to formulate preliminary direction to Council on a proposed final draft for public hearing.

THE PROPOSED AMENDMENTS

New Policy 2CC-15 at 13) p. 2-78 (page 6 of the Proposed Council Changes to Comprehensive Plan), would direct the County to “undertake a study to be completed by December of 2017 to . . . develop recommendations for legal ways the County can work to limit fossil fuel exports.”

BP Cherry Point Refinery has been in the petroleum product export business since we opened our doors 44 years ago. We ship our products all around the world, including ultra-low sulfur diesel to South America and jet fuel to Canada, and we are one of the largest suppliers of calcined coke to the world’s aluminum industry. BP’s refinery supplies most of the jet fuel to the Seattle, Portland, and Vancouver, B.C. international airports and is a major supplier of transportation fuels in California as well as Oregon, which has no refinery of its own. Efforts to restrict “fossil fuel exports” would not change consumer demand for the products we make; rather, it would apply artificial pressure on the market, increasing costs for the entire supply chain, and ultimately harming consumers who need the products we make.

Regulatory changes arising out of a Council initiative to “limit fossil fuel exports” would undermine the competitiveness of the Cherry Point Refinery, and that ultimately means our jobs are threatened. The Cherry Point industrial zone supports 9,000 direct, indirect, and induced jobs; approximately 800 of which are BP employees. Furthermore, the total loss of jobs in Whatcom County would be 270 for every 50 jobs lost at the Cherry Point Refinery.1 Whatcom County simply cannot afford this catastrophic loss of industry.

The language in 6) pg. 2—76; lines 32-43 (page 4 of the Proposed Council Changes to Comprehensive Plan) rightly acknowledges the role of Cherry Point industries in providing a strong economic base for the county and region and the industry’s ability to continue to flourish and expand as opportunities present themselves. This section pertains to protecting the Cherry Point UGA from incompatible uses, such as residential development, but then inserts language that completely contradicts the section’s original intent. Existing businesses should be allowed to flourish and expand in ways that are dictated by market demands and that are within the regulatory constraints established by state and federal law. The insertion of the word “appropriately” in reference to expansion is detrimental when considered in the context of the next section that suggests that “expansion of these industries needs to be done in ways that do not significantly impact the ecology of Salish Sea or encourage the expanded use of fossil fuels.” This language is a complete departure from the last 50 years of development policy in Whatcom County and is adverse to the existing industries’ ability to flourish, expand, and meet the ever changing energy needs of the public within an increasingly complex regulatory framework.

The notion that Cherry Point is unique as an area for the existing major industrial development and that rail service is important to waterborne commerce of the existing users suggests that Cherry Point is closed for business for any new development. This will potentially harm the existing businesses if future companies are unable to develop

1 Cherry Point Employment Study 2014, Prepared by Hart Hodges, Western Washington University and Bill Beyers, University of Washington

properties compatible or complimentary to the existing energy or aluminum infrastructure. The edits suggest the only suitable development in the future is “major sustainable, clean-energy manufacturing or production of other commercial or industrial products” without recognizing that future development in the area may well be suited to supporting existing businesses. In addition, the phrase “sustainable, clean-energy” is subjective and open to varied interpretations. Reference 4) p. 2-74; lines 47 – ps.2-75, Line 14 (page 3 of the Proposed Council Changes to Comprehensive Plan).

Refinery operations are by nature a water-intensive activity, and the refinery has contractually worked with PUD #1 to ensure water supply for refining activities. New language in 5) p. 2-76; lines 9-16 (page 4 of the Proposed Council Changes to Comprehensive Plan) and also in New Policy 2CC-2 stating “water-intensive uses are prohibited and any new development shall utilize state of the art water recycling manufacturing technology to minimize water use” suggest that continuing existing refining activities would make BP’s refinery a non-conforming use, which would add considerable cost, complexity, and risk in permitting future construction and maintenance. BP’s wastewater system is heavily regulated by the State of Washington, and the company has a discharge permit granted under the authority of the state. The County does not need to regulate in this area and it is out of its jurisdictional remit to do so. The refinery has made a number of technological advancements to its wastewater system over the years, including reducing VOCs, installation of a floating cover on the final effluent holding pond to discourage algae growth, and eliminating diurnal highs and lows in pH during the summer as the algae cycle through photosynthesis and respiration. Through increased efficiency and internal reuse, BP has reduced our wastewater discharge per barrel of finished product by 10% (1999 base year). These improvements were completed without the interdiction of the County, and the County’s assertion in this area could complicate the refinery’s regulatory relationship with the state.

As further discussed below, the July 5, 2016 Chapter 2: Land Use draft violates and is non-compliant with a variety of procedural and substantive legal mandates.

CONSTITUTIONAL ISSUES

The proposed Chapter 2 amendments raise serious legal concerns related to the Commerce Clause of the United States Constitution.2 While the Commerce Clause expressly authorizes Congress to regulate interstate and foreign commerce, it limits the power of state and local governments to legislate in those areas.3 This limitation, known as the dormant Commerce Clause, prohibits state and local governments from taking action that either (1) discriminates against interstate or foreign commerce, (2) regulates extraterritorially, or (3) unduly burdens interstate or foreign commerce.

Actions that discriminate or regulate extraterritorially are “virtually” always invalid and must withstand the “strictest scrutiny.”4 Surviving this scrutiny requires a showing that

2 U.S. Const., art. I, § 8, cl. 3. 3 Healy v. Beer Inst., Inc., 491 U.S. 324, 326 n.1 (1989). 4 See Or. Waste Sys., Inc. v. Dep’t of Envtl. Quality of State of Or., 511 U.S. 93, 99, 101 (1994); Healy, 491 U.S. at 336.

there is no other means to achieve a legitimate local need.5 “Discrimination” in this context exists where there is “differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.”6 An action regulates extraterritorially when, regardless of intention, the practical effect of the regulation is to control conduct beyond the boundary of the state.7 Finally, an action is unduly burdensome if its incidental burdens on interstate or foreign commerce are “clearly excessive” in relation to the putative local benefits.8

The BP Cherry Point Refinery is an interstate and foreign commerce hub.9 The Cherry Point dock receives crude oil for processing from all over the world. As described in more detail above, BP ships products and intermediate feedstocks by water to California, to British Columbia, and to Washington state terminals. In addition to its marine terminal, Cherry Point receives crude oil for processing from other states and countries by rail and pipeline.

Because Cherry Point relies heavily on interstate and foreign commerce to receive raw materials and to distribute products, local regulatory schemes that burden the refinery’s access to those markets present serious problems under the dormant Commerce Clause.

A. Discriminating Against Interstate or Foreign Commerce. Proposed Policy 2CC- 14 may amount to a per se violation of the Commerce Clause because of its differential treatment of in-state and out-of-state economic interests. Under this policy, any future terminal expansion or renovation to increase efficiency would have to be linked to serving Washington’s interests. This policy would prohibit any capacity increase at a crude oil transfer terminal in the County, unless the oil is being refined “for consumption in the State of Washington.” “A State may not accord its own inhabitants a preferred right of access over consumers in other States.”10 By expressly favoring in- state consumption interests, this proposed amendment epitomizes the kind of protectionism the Commerce Clause traditionally prohibits.11 Because this policy discriminates on its face, it would be subject to the “strictest scrutiny.”12

5 See C & A Carbone v. Town of Clarkstown, N.Y., 511 U.S. 383, 392 (1993); Wyoming v. Oklahoma, 502 U.S. 437, 456 (1992). 6 Or. Waste Sys., 511 U.S. at 99. 7 Healy, 491 U.S. at 336. 8 See Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970). 9 The Comprehensive Plan recognizes Cherry Point’s competitive advantages for interstate and foreign shipping given its proximity to Canada, Alaska and foreign ports, and its available deep water access in adjacent marine waters. At Bates No. 370 – 4) p. 2-74, lines 27 – p. 2-75, line 14. 10 See City of Phila. v. New Jersey, 437 U.S. 617, 627 (1978). 11 City of Phila., 437 U.S. at 626 (“[T]he evil of protectionism can reside in legislative means as well as legislative ends.”); Ben Oehrleins & Sons & Daughter, Inc. v. Hennepin Cty., 115 F.3d 1372, 1377, 1384-85 (8th Cir. 1997) (invalidating county ordinance intended, in part, to fulfill state goal to protect the environment and public health because its effect limited the export of waste to out-of-state processing facilities). 12 See, e.g., City of Phila., 437 U.S. at 627-28 (1978) (concluding that a state may not “isolate itself from a problem common to many by erecting a barrier” that seeks to “slow or freeze the flow of commerce”); see also Hughes v. Okla., 441 U.S. 322, 337-38 (1979) (holding unlawful a state law prohibiting the transportation of a commercially significant number of minnows out of state).

B. Regulating Extraterritorially. Policy 2CC-10 and Policy 2CC-14 may be regulating extraterritorially by controlling conduct beyond the County’s borders. By limiting crude oil imports and product exports through existing terminals, the County would be, in effect, unilaterally redirecting the traditional flows of interstate and foreign commerce. Exacerbating this problem is the proposed ban on new terminal developments, and the County’s unabashed goal to curb out-of-state fossil fuel consumption. In sum, the County may be impermissibly projecting its policy into other states and nations.13

C. Unduly Burdening Interstate or Foreign Commerce. The proposed amendments may also place an excessive burden on interstate and foreign commerce in relation to the County’s putative environmental and public health goals. At the outset, the nexus between these goals and the proposed amendments appears tenuous. Preventing imports and exports from passing through the most efficient point of access would not necessarily reduce the amount of crude oil being refined at Cherry Point. Indeed, the amendments may actually undermine the County’s goals by creating unnecessarily longer trips via ocean and rail, and thereby increasing pollution and spill risk.

As stated above, the amendments would burden both imports and exports. They would harm not only Whatcom County’s two refineries, but also out-of-state and foreign companies seeking to market their crude to the Whatcom refineries or to obtain products from them. The fact that the amendments would affect foreign commerce makes them especially vulnerable to Commerce Clause scrutiny.14

II. STATE ENVIRONMENTAL POLICY ACT, CH. 43.21C RCW

The EIS prepared under the State Environmental Policy Act (SEPA) for the updated comprehensive plan studied five alternatives. Those alternatives contemplated a range of jobs to be created and various population growth allocations described as (a) No Action; (b) Historical Figures; (c) Multi-Jurisdictional Resolution allocation; (d) Targeted Land Use Changes promoting more population but allocated similarly to the Multi- Jurisdictional Resolution method; and (e) the Preferred Alternative. The Preferred Alternative is a conglomerate of (b), (c), and (d). These alternatives reflect both adopted growth population targets and the Land Capacity Analysis prepared for Whatcom County (Draft, Nov. 2015). The analysis contained in the EIS studied the environmental effects of these alternatives based on the land use language proposed for the updated comprehensive plan.

The effects of the newly introduced Chapter 2 language do not fall under any of the five alternatives studied. A supplemental EIS is required when a proposal has changed and is likely to cause new or increased significant adverse impacts that were either not evaluated in the original EIS or new information becomes available indicating such impacts are likely. WAC 197-11-600(4)(d)(i), (ii).

13 See, e.g., Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 582-83 (1986).

14 South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 100 (1984) (“It is a well-accepted rule that state restrictions burdening foreign commerce are subjected to a more rigorous and searching scrutiny.”).

SEPA analysis of the Chapter 2 language under review on July 5, 2016 has not been conducted. The County may not adopt this language until it reopens and supplements its EIS.

III. GROWTH MANAGEMENT ACT, CH. 36.70A RCW

A. Urban Density - WAC 365-196-300. Under RCW 36.70A.070(1) and RCW 36.70A.110(2), the Growth Management Act requires that the land use element identify areas and assumed densities sufficient to accommodate the twenty-year population allocation. The Chapter 2 material to be discussed on July 5 does not disclose how the language will change the adequacy of the already adopted twenty-year population allocations studied in the EIS and what its effects will be on urban densities.

B. County-wide Planning Policies - WAC 365-196-305. Whatcom County’s Comprehensive Plan must comply with adopted county-wide planning policies. The radical departure made by the draft Chapter 2 language under review has not been subject to any evaluation for consistency with the county-wide planning policies. Until that review is complete and revised as appropriate, this language is not suitable for action.

C. Internal Consistency – WAC 365-196-500. The new language in Chapter 2 is internally inconsistent with various other provisions of the Whatcom County Comprehensive Plan, including, at minimum, Economics, Housing, and other Land Use provisions. Given that the newly-proposed language moves in a direction entirely different from that which has been studied in all previous drafts, neither the county planning staff nor the public has had an opportunity to adequately assess all of the inconsistences and make recommendations as to how to rectify them. Until that is complete, this language is non-compliant with the Growth Management Act.

D. Interjurisdictional Consistency – WAC 365-196-510, -520. Whatcom County’s comprehensive plan must not only be coordinated with, but also must be consistent with, the comprehensive plans of other counties and cities that share common borders. Additionally, the County’s plan must be consistent and coordinated with related regional issues in those other counties and cities. The net effect of the new language proposed in Chapter 2 is to eliminate Cherry Point water-dependent industrial uses in Whatcom County, without consideration of, for example, the effects this may have on Skagit County and its cities immediately to the south. There is no evidence in the record that Whatcom County has performed any required coordination, and there is no indication that these newly proposed policies are consistent with relevant multicounty planning policies.

E. State Siting Statutes – WAC 365-196-560. As provided in this regulation, “[c]comprehensive plans and development regulations adopted under the [GMA] should accommodate situations where the state has explicitly preempted all local land use regulations, as for example, in the siting of major energy facilities under RCW 80.50.110” (Energy Facility Site Location Act or EFSLA). The new language proposed does not accommodate Washington’s Energy Facility Site Evaluation Council, whose

authority is not pre-empted by the later-in-time Growth Management Act. Accord, ROKT v. EFSEC, 165 Wn.2d 275; 197 P.3d 1153 (2008).

F. Integration with the Shoreline Management Act – WAC 365-196-580. The GMA expressly includes, as one of its 14 goals, the goals and policies of the Shoreline Management Act (SMA), Ch. 90.58 RCW. In turn, the SMA establishes three goals: shoreline use, environmental protection, and shoreline access. RCW 90.58.020. Under the SMA, water-dependent uses must be prioritized, not banned. Nevertheless, this is precisely what the newly-drafted language attempts to do – prioritize environmental protection at the absolute and complete expense of water-dependent shoreline uses. This is, quite simply, unlawful.

Whatcom County’s Comprehensive Plan must be consistent with both the SMA and the Whatcom County Shoreline Master Program. At present, the language before the council is transparent in its objective of denying the rights created under the SMA for a certain class – those who do and would prospectively operate hydrocarbon-related water-dependent uses such as petroleum import and export facilities. The GMA does not authorize an end-run around the SMA and does not support the circumvention and taking of long-recognized legal rights to shoreline properties and businesses.

G. Public Participation – WAC 365-196-600. The county’s duties to encourage and enable robust and meaningful public participation in comprehensive plan amendment processes are well-established under the GMA and are further articulated in the county’s Public Participation Plan for this update planning process.

The approach now being taken by Whatcom County regarding Chapter 2 is deeply troubling in a material way. When a county is developing a significant update to an existing comprehensive plan, counties “should consider using a visioning process. The public should be involved, because the purpose of a visioning process is to gain public input on the desired features of the community. The comprehensive plan can then be designed to achieve these features.” WAC 365-196-600(3)(b).

When a county is contemplating a drastic move in a significantly different direction, the public’s input should be sought well before that “vision” becomes adopted policy. That has simply not occurred here. For 15 months now, the county and stakeholders have been focused on the continued well-being of the Cherry Point UGA and its role in Whatcom County’s future – economically, environmentally, and in regard to land use consistency. The newly proposed language of Chapter 2 in no way reflects the path envisioned throughout this entire planning exercise. Instead, the abrupt change is intended to eliminate major existing uses and prohibit future uses by a certain industry present in our county for over fifty years, jeopardizing the jobs and well-being of generations of residents. This reversal of course was done under a veil of secrecy lifted only three business days before the public meeting to consider it, and less than a month before action is scheduled to be taken – adoption of a new comprehensive plan – that ends a 16-month planning process. The GMA calls for more than technical lip-service to public notice and engagement, which is the only thing being provided here.

H. Constitutional Provisions – WAC 365-196-725. The GMA demands that counties evaluate their comprehensive plans to ensure that they do not conflict with state or federal constitutional standards and that they do not infringe upon private property rights:

(1) Comprehensive plans and development regulations adopted under the act are subject to the supremacy principle of Article VI, United States Constitution and of Article XI, Section 11, Washington state Constitution.

(2) Counties and cities planning under the act are required to use a process established by the state attorney general to assure that proposed regulatory or administrative actions do not unconstitutionally infringe upon private property rights.

For reasons set forth above, the County needs to perform such an evaluation on the proposed Chapter 2 amendments prior to their consideration by the Council.

IV. OTHER CONSIDERATIONS

There is no analysis in the newly proposed language, or elsewhere in the vast planning file for this comprehensive plan update, that attempts to analyze its fiscal effects on Whatcom County. The proposed amendments to Chapter 2 would cause severe economic effects – loss of thousands of jobs, elimination of hundreds of millions of dollars in tax revenues, and a permanent reduction of the taxable base for future levy purposes – as a result of what appears to be an attempt to drive out hydrocarbon-based industry in favor of aspirations of industry that simply does not exist here. Such costs are not acknowledged, let alone analyzed.

Whatcom County lacks the legal authority to appropriate, for itself, the regulatory and enforcement powers of the Magnuson Amendment, as well as the human and financial resources necessary to duplicate the regulatory and enforcement functions already performed by federal agencies with jurisdiction to do so.

Page 2-74 of the plan currently states that existing industries that operate consistent with applicable federal, state, and local laws and regulations do not conflict with the Cherry Point Aquatic Reserve. The proposed language erodes the good-faith effort made by the refining industry on the Aquatic Reserve and edits inserted suggest the refineries may be in conflict with the Aquatic Reserve simply by complying with all applicable laws. The proposed language further suggests that refineries may continue to serve the Aquatic Reserve’s objectives in contrast to the more definitive existing language that acknowledges that BP actively works support the goals of the Aquatic Reserve. Elsewhere, however, it appears that it is the County’s intention to assume a de facto conflict that must be rectified. The proposed amendments to Policy 2CC-10 would invite the County to reopen hearings on existing approvals:

This policy shall be implemented as of the date of adoption of this Plan, including but not limited to: . . . as a Council declaration of changed conditions affecting public health and safety concerning impacts of shoreline use at Cherry Point, in the reopening of any hearing on existing approvals….

This language is unclear, unlawful, and unconstitutional:

 The purpose of the Shoreline Management Act is to protect shoreline natural resources, not public health and safety. RCW 90.58.020.  Existing projects built under exiting approvals are vested, and nothing in the GMA (or any other law) authorizes such policies and subsequent actions.  Whatcom County lacks the power to reopen hearings on existing approvals for the purpose of then denying them based on a pre-determined factual finding of “changed condition affecting public health and safety concerning impacts of shoreline use at Cherry Point.”

In conclusion, the three business days given to prepare these comments necessarily limits our ability to provide more in-depth and broader comments. For all the reasons articulated above and the many more that time simply does not allow us to address, we urge the County Council to place the interests of all its citizens first and allow adequate time to meaningfully understand and comment on new policy that has the potential to irrevocably alter our way of life forever.

Best regards,

Robert K. Allendorfer Refinery Manager Cherry Point BP Refinery

cc: Jack Louws Karen Frakes Carl Weimer

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