A new U.S. refinery inches a little closer

Some good news on the latest court challenge to the effort by Arizona Clean Fuels to build a new refinery in southwestern Arizona.

From the Yuma Sun:

A federal judge has denied the Quechan Tribe’s application for a preliminary injunction against a transfer of land for the proposed oil refinery in eastern Yuma County.

The tribe had sought the injunction, claiming that the defendants had violated federal laws by failing to adequately analyze the transfer’s potential impact on environmental and cultural resources.

On March 26, in accordance with a 2000 law authorizing the action, the U.S. Bureau of Reclamation transferred 39,000 acres to the Wellton/Mohawk Irrigation and Drainage District. That included land and facilities for the district’s operation, as well as 1,400 acres that the district then sold to Arizona Clean Fuels for its proposed oil refinery site.

The Quechans filed their suit March 30, alleging the Bureau of Reclamation violated the Wellton-Mohawk Transfer Act by transferring land for the development of an oil refinery, failed to properly address the impact of future uses of the land such as the refinery and violated the National Environmental Policy Act and National Historic Preservation Act.

While waiting for the court to rule, all parties had voluntarily agreed to a “standstill” of any activity on the land in question.

Judge James A. Teilborg of the U.S. District Court in Arizona issued the ruling Friday.

In the ruling, Teilborg stated: “The court concludes that plaintiff has failed to show a strong likelihood of success on the merits because (the Bureau of Reclamation) has taken the requisite hard look at the environmental and cultural consequences of the title transfer. Further, the court concludes that plaintiff has failed to demonstrate that it will suffer irreparable harm or that there is a possibility of irreparable harm in this matter.”

Teilborg also concluded that the Bureau of Reclamation “has no authority over the existence, location or construction of the refinery.” Furthermore, he noted that the oil refinery would be subject to a separate permitting process to ensure it complies with all federal laws regarding the protection of sensitive areas.

Frank R. Jozwiak, the attorney representing the Quechan in the case, said, “(Teilborg’s ruling) is under review. We have not had an opportunity to study the ruling or consult with the tribe.”

The ruling came as a relief to Glenn McGinnis, CEO of Arizona Clean Fuels. “I think the judge reviewed the facts and determined that the federal government, (the Bureau of Reclamation) and the district acted in good faith to make sure all the requirements were complied with.”

According to the court document, an outside archaeological consulting firm, Statistical Research Inc., had conducted a survey of the land to be transferred to identify culturally sensitive sites. As a result, Wellton/Mohawk Irrigation and Drainage District and the Bureau of Reclamation removed 2,124 acres with 19 known eligible sites from the transfer. Those acres will remain under federal ownership until further processing is completed.

“We will do what we need to as part of the process,” McGinnis said. “We knew the project would be under the microscope to be sure we complied with all regulations. We’ve always made a commitment to comply with everything required.” McGinnis said Arizona Clean Fuels will conduct additional surveying of the land it bought for potential historical sites. However, he added, all the land that Arizona Clean Fuels purchased is “disturbed land. All 1,400 acres had been previously farmed.”

Just when you might have lost all faith in our judicial process, somebody shows some common sense.


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19 thoughts on “A new U.S. refinery inches a little closer

  1. DickF

    Professor,
    A similar situation has hampered rebuilding in New Orleans. Federal flood maps were not released until April 2007. Most major construction has been held up pending the definition of the floodplain. Consider that Katrina passed through New Orleans August 29, 2005. It took almost 2 years for the government to give builders and financial institutions critical information for rebuilding.
    And some want government to run our health care?

  2. kharris

    Nicely on topic Dick. And a nice “Bushism” with the “some want” business too.
    Most health care proposals entail some sort of public private mix, which is what we have now. Scare mongers like to say that government will dictate to doctors what health care they are allowed to give, but scare mongers cannot know that to be true, because we don’t actually have draft legislation to consider. What we do know, however, is that private insurance companies already decide what treatments will be paid for with insurance money, and that goes a long way toward dictating what services will be provided.
    The other good news is that the “government” that has so badly screwed up federal services to Katrina victims will be a thing of the past soon after the next presidential inauguration. Given that the current administration is in strong contention for the worst ever, it is hardly realistic to use an example from this administration to characterized government in general.

  3. tinbox

    Nobody has built a textile mill in New England in 100 years, that’s why we’re all walking around naked. Oh, wait a second…maybe given that US production of crude has been dropping for 35 years, new refineries are best located in places where production is rising. The push to build new US refineries sooo 2001, like the whole Cheney energy task force.

  4. DickF

    kharris,
    Can you give me an example of a government program that you believe health care should emmulate? You can even go back to Clinton or FDR, for that matter you can choose a Fascist or old Soviet Union program.

  5. Buzzcut

    Considering that a lot of air pollution on the west coast is being found to come from China, maybe we should want to build industry in the US, under our clean air laws, rather than in lawless third world countries.

  6. tinbox

    Set-up: The federal gov’t transfers land to a water district which sells the land to a start-up company which hopes to build a large refinery.
    Punchline A: Move along, nothing to see here, happens every day folks. Just “common sense.”
    Punchline B: Oh no, those darn Natives are holding up the development of the West! Again!
    I’ll let Buzzcut offer Punchline C.

  7. spencer

    dickF — if you take as a basis for judgment the views of the users, one would have to conclude that Medicare is a very good program for health care to emulate.
    Now you may have problems with how expensive it is, but no one I know of makes a serious claim that it does not do a very good job of delivering medical services to those who are covered. I sure their must be, but I have never heard of anyone who is eligible refusing to sign up for Medicare.

  8. Buzzcut

    I sure their must be, but I have never heard of anyone who is eligible refusing to sign up for Medicare.
    Which proves… what? That it is “good” at providing medical services? Under what definition of good? Good meaning nothing more than paying for anything that a doctor prescribes, no matter what cost or benefit?
    Just because I like free lunches doesn’t mean that the free lunch is really free, good for society, or even good for me.

  9. Buzzcut

    I’ll let Buzzcut offer Punchline C.
    How are these Indians, who live 40 miles away from the refinery, going to be affected by it in any way? Why on earth should the be able to sue? What damage is being done to them?
    As for the political process that the land was obtained, I’m not defending that. If you don’t like it, take it up with your Congressional representative (I would, but he’s too busy running for President).

  10. tinbox

    I believe most traders see problems with capacity utilization causing high gasoline prices this summer. But as you look out the futures curve, the markets don’t see a capacity problem. Is the market wrong? If so, why?

  11. M1EK

    “How are these Indians, who live 40 miles away from the refinery, going to be affected by it in any way?”
    You can smell Beaumont 40 miles away. Houston’s air is almost as bad as LA’s most years (and worse occasionally) despite having climatological conditions which are an order of magnitude more favorable for pollution dispersion.
    Where do you guys live? Do you have refineries near you? Only a complete zealot, or somebody who has never lived near one, could possibly post this nonsense.

  12. Buzzcut

    Chicago has the second largest refinery in the country right on its southeast border (the old Standard Oil of Indiana refinery in Whiting, Indiana).
    Being in downtown Chicago, you’d never know that it was there.
    Now, you wouldn’t want to live in Whiting, I’ll grant you that. But a couple of miles in any direction is more than enough to dissipate the stench (and it does still smell, despite the Clean Air Act).

  13. matt wilbert

    I think this is good news in terms of getting past what seems to be frivolous legal maneuvering.
    However, whether we need additional refinery capacity now, I doubt we will need this refinery by the time it comes on line. I think that the US share of global crude oil consumption will fall by then, and I don’t think global production will make up for it.
    That is to say, I expect US consumption of refined products to fall within the next ten years or so.

  14. cb

    JDH,
    I think the US has enough refining capacity for defense and emergency purposes. The oil majors, despite swimming in record profits have not committed to major expansion of US refining capacity.
    Why?
    First, it is cheaper to build a refinery in India and elsewhere since welders cost $2000/year to hire.
    Secondly,
    Petroleum Economist’s annual refinery-construction survey indicates that 9mbpd of new refining compacity is in the pipeline. This will lead to a future glut.
    thirdly,
    Most of this new capacity is strategically located near the source and routes that allow multiple trade partners.
    Given that Mexican oil production is likely to decline, building a refinery in Arizona strikes me as an economically stupid move.

  15. DickF

    I think that the US share of global crude oil consumption will fall by then, and I don’t think global production will make up for it.
    That is to say, I expect US consumption of refined products to fall within the next ten years or so.
    Matt,
    Why do you think this? Do you discount China’s demand?

  16. matt wilbert

    No. I must not have been clear.
    I expect increases in consumption in Eastern and Central Europe and the developing world, including China. I think this will make it impossible for the US to continue to consume its current share of world petroleum production. Since I don’t expect production to increase much, I expect the US to have less available to refine.
    So I don’t think the US is likely to need another refinery in that time frame. If I am wrong and petroleum production increases substantially, then my conclusion will be invalid. However, I don’t think the chances of that are very high.

  17. jamzo

    i think i am in wonderland with alice
    a group calling itself “clean fuels arizona” wants to build an oil refinery in the desert
    on land the government took away from the indians and gave to them!
    wow!
    truth is indeed stranger than fiction
    How doth the little crocodile
    Improve his shining tail,
    And pour the waters of the Nile
    On every golden scale!
    How cheerfully he seems to grin,
    How neatly spread his claws,
    And welcomes little fishes in,
    With gently smiling jaws!

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