Story updated at 10 p.m. May 16:

The Phillips 66 proposal to expand its crude-by-rail project was continued until September.

The San Luis Obispo County Planning Commission rejected a motion to deny the project at its meeting on May 16. Phillips 66 plans to build a rail spur that would connect its refinery to Union Pacific’s major interstate railroad so it can import tar sands crude from Canada and other crude throughout North America.

The commission directed county staff to come back on Sept. 22 with conditions of approval and a statement of overriding considerations. After allowing additional time for more public comment, it would still need to clear the San Luis Obispo County Board of Supervisors and California Coastal Commission.

The discussion has been one of the most contentious in county history, drawing 400-plus public speakers from throughout the state to six planning commission meetings.

County staff recommended that the commission deny the project based on significant environmental impacts. In an attempt to allay those environmental concerns, Phillips 66 reduced its plan from five trains a week to three, eliminating all “Class 1” impacts or doing so through mitigation, the company claimed.

Supporters included Commissioner Don Campbell, who argued there is going to be increased crude-by-rail commerce throughout the state and country no matter what the commission decides. Commissioner Jim Harrison said the risk of hauling crude by truck or pipeline is greater than by train. Business Times research has shown that oil transportation by pipelines is far safer than trucks or trains.

The reduced project and minimized environmental impacts swayed Commissioner Jim Irving.

Commissioners Ken Topping and Eric Meyer voted against the project. Protecting the safety of the community and environment are of the utmost importance as spelled out by the General Plan, Topping said. Meyer said that the potential benefits do not outweigh the risks.

The decision will likely be appealed and deliberated in court. Some commissioners were concerned that the project and their conditions could be altered in the court process. The issue of federal preemption, among other issues surrounding federal commerce, is a heavily litigated gray area that has yet to play out.

“We are subject to the whims of our court … it is outside of the county’s control,” Meyer said.

Since Union Pacific owns the railroads that fall under the regulation of federal authorities per the Interstate Commerce Commission Termination Act of 1995, Phillips 66 argues that state and local jurisdictions do not have authority over elements of the interstate track operations that impact commerce routes and operations. County counsel says that interpretation is too broad.

County counsel brought up a potential “poison pill” clause that would either kill the project or send it back for review if a third party, like a court, changed the project. The counsel is reviewing the possibility of its implementation.

The city of Benicia Planning Commission denied a crude-by-rail expansion project that’s similar to the project proposed for Nipomo.

• Contact Alex Kacik at akacik@pacbiztimes.com.