VMT Tells It Like It Is
A Significantly Different Project
Yes, Mr. Fettig, you nailed it - the Vallejo Marine Terminal is now a significantly different project.  Let's take a trip down memory lane and recall what this project looked like in that draft Environmental Impact Report that many of us spent long hours reviewing, and members of the public and agencies relied on as the basis for their 2,600 submitted comments.  The draft EIR provides a set of project objectives which serve as a foundation for discussing ways to lessen the environmental impacts through mitigations or alternatives to the project as proposed.  Here we find the justifications for a project claiming not only economic viability, but a transformative impact on the regional economy as well.
The project description of the major VMT component calls for "construction of a modern deep-water terminal, including wharf improvements, laydown area, and trucking and rail connections, primarily servicing the import and export of bulk and break-bulk commodities within approximately 10.5 acres referred to as the VMT Terminal Site."  Section 6.2 of the draft EIR lays out the VMT project objectives.  Some highlights:

"Establishment of the VMT Terminal as a key site of multi-modal and intermodal transportation and logistics, thereby enhancing Vallejo’s role in the regional and international trade economy and providing a means for locally manufactured products to be transported and distributed, increasing the viability of and the potential for attracting further manufacturing operations to Vallejo."

"To maximize accommodations for shipping and receiving of a wide range of products through the VMT Terminal, including loading and unloading of vessels of up to 70,000 metric tons in size with draft of up to 38 feet through the Phase 1 Wharf, along with a combination of barge and other smaller vessels through the Phase 2 rock dike.  The improvements would help to further develop Vallejo’s capabilities for water-based shipping in connection with the Port of Oakland."

"To maximize throughput capacity through the implementation of intermodal upgrades designed  to optimize cargo handling operations as well as modern design initiatives enabling the most efficient use of the ground area and taking advantage of existing truck, rail, and shipping access for import and export of raw materials and finished products."

"To establish the VMT Terminal as a key site of multi-modal and intermodal transportation and logistics, thereby enhancing Vallejo’s role in the regional and international trade economy."  (It sounds so impressive we just have to say it twice).
Gosh, this kind of break bulk port operation must really be the wave of the future!  Well - maybe not so much.  All of the project components would need a permit from the Bay Conservation and Development Commission.  The BCDC was definitely not feeling the enthusiasm when they  commented on the draft EIR on November 2, 2015, at the end of the circulation window:
“The Seaport Plan assists the Commission to minimize fill in the Bay by determining where and when fill might be needed for port uses. In the Commission's 2014 Bay Area Maritime Cargo Monitoring Report, issued October 23, 2015, the Commission found that no break bulk cargo was handled in 2014, and that no break bulk has been handled by areas within BCDC Port Priority Use Areas since 2006.   Furthermore, neo-bulk, dry bulk, and liquid bulk cargo were below capacity. As a result, there are likely alternative existing upland port facilities in other parts of the Bay available for break bulk and other bulk cargo activities. The fill proposed for this project may have an alternative upland location and, therefore, may not meet the requirements of Section 66605 of the McAteer-Petris Act.  Furthermore, the project proposes a significant amount of fill for a use for which there appears to be little demand.”

Bottom line: "based on our review of the draft EIR, BCDC staff believes that this project, as currently proposed, is inconsistent with the requirements of the McAteer-Petris Act and the San Francisco Bay Plan, and that the staff would have difficulty recommending approval of the application for this project before the Commission.”
The Bay Conservation and Development Commission issues permits for ports and water-related industries in the coastal zone.  The Vallejo Marine Terminal project proposed for the south Vallejo waterfront requires a BCDC permit
Whoops - to discover after spending millions on consultants and experts that you've produced an elaborate EIR based on a business plan with so little demand that it can't even be permitted, must have come as a shock.  How they managed that one is a bit of a head scratcher, since they knew from the start that they would need a consistency review with the BCDC.  The VMT consultant writes that they did have at least one initial meeting with the BCDC before applying for the major use permit. 
BCDC staff met with City staff seeking clarification in February of  2016, and the BCDC summed up their responses to what they heard in a March 25 letter.  Phase 2 of the project, a barge docking component devoted exclusively to cargo, was already looking pretty precarious.  The news wasn't getting better with the followup letter to the February meeting:
"At the meeting, BCDC staff learned that the use of the wharf proposed for reconstruction in Phase 1 of the project would not be limited to transporting material related to the Orcem California, Inc. ("Orcem") project.  As a result, Phase 1 of the project may not be consistent with the San Francisco Bay Plan ("Bay Plan") Map designation of the site as a "water-related industry" priority use area."  "The proposal to use the Phase 1 terminal for break bulk activities, separate from the Orcem activities, was not clearly described in the draft EIR, nor was it clearly stated in pre-application meetings with VMT developer."  While the two groups may have been meeting and talking, it would seem they weren't really communicating.
By March 25, the BCDC staff had run the numbers in the DEIR and realized that the cement plant would only use 25% of the developed Phase 1 docking terminal capacity and the rest would be devoted to cargo.  They go on at length about the distinction in the Bay Plan between sites reserved for marine terminal ports that just pass through cargo, and marine terminals that service industrial processing facilities.  They quote the Bay Plan:  "The kinds of industry that
require a waterfront location — petroleum refining, chemical processing, and steel mills, for
example — are the basic industries upon which other industries...depend."  The Bay Plan generally reflects local zoning and land uses, and the VMT site was long occupied by flour milling operations, which is a water-related industry - but not a port.
The lofty language in the VMT project application and the draft Environmental Impact Report about the transformative economic impact of a break bulk shipping facility was always a Field of Dreams fantasy - 'if you build it they will come.'  Too late they discovered they had misinterpreted distinctions in the Bay Plan use classifications and based the entire project on a use that would not be permitted.  The draft EIR says of Orcem, which would only use a quarter of the terminal capacity, that  “elimination of this key project component would eliminate a substantial portion of the shipping volume currently relied upon in determining the feasibility of the VMT operations.”   What does it say about the feasibility of the project presented for public comment when we find out that three quarters of the anticipated shipping volume won’t be permitted?
A container ship docks at the Port of Oakland.  The demand for the break bulk cargo operation planned for the Vallejo Marine Terminal has evaporated, with the last recorded movement through a Bay area port in 2006.
Having spent so much time and money on an infeasible project application, the development team is desperate to find some way to simply change the final EIR without making it seem significantly different from the draft version.  Mr. Fettig apparently didn’t get the memo.  One of the tests for whether a new or revised EIR will be required to circulate again for public comment under CEQA is if  “A new significant environmental impact would result from the project or from a new mitigation measure proposed to be implemented.”  Since stripping out the parts of the project that focus on cargo handling would lessen the project impacts in the short term, the applicant’s team has grasped at that straw to justify a decision to modify and revise the final version without circulating a new document.  
But causing new short term impacts is not the only circumstance cited in the statute that would require an additional round of draft circulation for comment.  Recirculation is also required when “A feasible project alternative or mitigation measure considerably different from others previously analyzed would clearly lessen the significant environmental impacts of the project, but the project's proponents decline to adopt it.”  When the cargo handling function is stripped out of the long term project operation a number of project alternatives that were not considered or dismissed in the draft EIR require a fresh feasibility analysis. 
For example, a remaining significant impact in the final version is the demolition of historic structures on the site.  The draft EIR contains a Preservation Alternative that would keep those buildings, but which is rejected based on the need for space to fulfill the long term project objectives related to cargo handling.  Without that long term need for room to lay down cargo, alternate site plans that preserve the structures must be considered for feasibility.  The reasons for rejecting the Preservation Alternative no longer apply in the same way to the significantly different project.
Interior of a structure on the VMT site planned for preservation and repurposing by the previous owners.
Another test for requiring a new round of circulation is whether “The draft EIR was so fundamentally and basically inadequate and conclusory in nature that meaningful public review and comment were precluded."  A subtle yet fundamental difference exists between the draft and final versions in the long term operation of the project, although both continue to talk about moving cargo.  It is a significant difference, and one that robs the public of the opportunity for meaningful review and comment.  So why does the draft final and "significantly different" version of the project continue to refer to the cargo handling function for the marine terminal described in the draft EIR, as though nothing happened behind the scenes?  After more talks with BCDC, the new revised project that we see in the draft final EIR began to take shape.  In a letter dated April 29, 2016 the BCDC staff sum up their understanding of the situation:
  "On April 11, 2016, representatives from VMT and Orcem met with Commission staff and provided further clarity about the potential uses related to Phase 1 of the project.  Based on additional information provided by the project developer, Commission staff now believes that
the Commission could potentially find that the interim uses of Phase 1 would be consistent with
the "water-related industry" designation in the Bay Plan.  The intent of the wharf reconstruction is to provide Orcem with the means to receive raw materials and distribute finished products that have been processed on-site, a use that is consistent with the "water-related industry" designation in the Bay Plan."  Sounds like they talked BCDC staff out of  a little more wiggle room, but notice the key phrase "interim uses" when referring to the Phase 1 terminal development. 

The letter goes on to explain why we're still talking about cargo at all.  "At the meeting on April 11, 2016, VMT expressed an interest in attracting more water-related industry to the site, but acknowledged that additional water-related industry use would take time to attract and develop. In the interim period, VMT proposed to use the wharf to move some cargo, primarily raw materials, to and from the site.  While the draft environmental impact report states that the VMT Terminal is anticipated to handle a wide range of commodities, at the April 11 meeting, VMT informed Commission staff that, at this time, VMT has not secured contracts or tenants for any Phase I cargo users."
They go on to elaborate on the temporary use aspect:  "Based on the description of anticipated activities presented by representatives of VMT and Orcem at our April 11, 2016 meeting, the use of the site for cargo would be consistent with the Bay Plan, provided that the use is interim in nature and does not preclude future use of the site for water-related industry.  The Commission has allowed some limited interim uses at sites, which the Bay Plan and Seaport Plan designate for port priority uses, pursuant to specific standards.  Interim uses are allowed for a limited period typically ranging from five years to ten years, depending on the proposed use and conditions of the site."  "Ultimately, however, the Commission will determine whether or not the project is consistent with BCDC's laws and policies at such time that it considers a BCDC permit application.
What is now foreseeable, but barely mentioned, is that the temporary nature of the port operations also means more unknown industrial tenants down the road with new long term impacts.   In the draft EIR, the public was presented a finite project subject to a comprehensive  impact analysis.  The applicants now face the need to replace the major operational component of the project and admit they intend to recruit additional industrial processing tenants that can be permitted under the Bay Plan and will require further environmental review.  In a communication to the City in October of 2016, nearly a year after the draft comment period ended, the VMT consultant makes that plain:  “VMT will lease 4.83 acres of the project site to Orcem, and (in the Project Alternative) will also lease the Terminal to other “operators” who are expected to need BAAQMD permits."  

How did the draft EIR provide the public with meaningful information about the cumulative impacts of these future industrial processing tenants?  There’s not even a mention of the possibility there would be additional industrial tenants coming in the circulated draft project description.  Where is the Master EIR that would inform the public about the nature and possible cumulative impacts of a project intended to be developed in stages?  The CEQA Guidelines note: "The state court of appeal declared that an accurate, stable, finite project description is an essential element of an informative and legally sufficient EIR under CEQA."  The lack of any new or an increased level of impacts in the short term is far from the only consideration here, and the significant changes to the draft final EIR unquestionably deprived the public of an opportunity for meaningful public review and comment.
The site plans and communications from the development team signal that the VMT site at the entrance to Mare Island Strait and the Napa River would soon be decorated with open piles of slag, clinker, and gravel, "enhancing Vallejo's role in the regional and international trade economy" if we are to believe the draft Environment report.
So there we have it.  In the modified and revised "significantly different" version of the project, the break bulk cargo operation that was going to transform the regional economy has morphed into a temporary use to be replaced over time with more industrial tenants like Orcem.  Mr. Fettig was right on target when he says this is a significantly different project.  While confirming the intention to lease to other operators, the VMT consultant clarified in October  that "the VMT Terminal is expected to primarily accommodate movement of bulk (such as aggregate) and break bulk (such as large transformers) goods."
What it appears we have in the Vallejo Marine Terminal is a few well connected individuals in the marine construction business who saw an opportunity during the financial crisis to pick up property with a derelict docking facility dirt cheap.  Being in the business, they quite naturally want to build a marine terminal.  They never had a viable business plan for using it.  We need to ask ourselves - is this how we’re going to make planning decisions  that will impact development patterns in our City for more than sixty years?
The opportunity to allow public access along a south Vallejo waterfront connected to downtown as envisioned in the general plan update would be lost for generations.  Historic structures would be demolished to make room to lay down transformers and piles of slag and gravel for a temporary period of five to ten years.  Doesn't really sound like it's going to do much in the way of  "enhancing Vallejo’s role in the regional and international trade economy."  We all reviewed and commented on a defined, finite project in the draft version.  Now we're expected to consider an open-ended project with additional "operators" to be added later that we have heard nothing about before showing up in the form of vague references to Bay Plan inconsistencies in a draft Final EIR. 
All of this is meaningful information that the public was deprived of in the draft EIR.  A significantly different project indeed.  A totally different project - and one requiring a new major use application with an accurate project description and a new Environmental Impact Report.  This proposal amounts to a transparent attempt to jam an industrial foot in the door that opens onto the future of our waterfront.  The applicants have wasted a lot of everyone's time along with their money.
The sun sets on a container ship arriving at the port of Oakland and on the dream of a break bulk cargo-fueled economic renaissance in south Vallejo.