Benicia News: $5M Valero imports agreement, Data Center rules

Two hot topics at tonight’s City Council meeting: A proposal to ban big data centers, and a new $5 million settlement between the city, the state, and Valero. (City staff reports are available below, for more information.)

Here’s what you need to know. 

Since Valero closed the Benicia refinery in April, the company has continued to import, store and distribute refined petroleum products, including gasoline. 

The city argues that fuel import operations are not permitted under existing city regulations and permits and would require zoning clearance, according to a staff report. Valero disagrees.

To settle this issue, city staff, state officials and Valero representatives talked for months and came up with a Standstill Agreement. The state will give the city payments in order to allow Valero to continue its operations. 

The State of California committed $5,250,000 to Benicia this year in its recently adopted budget (AB 113) in support of the Standstill Agreement. For fiscal year 2027-28, the city will seek another $7 million from the state as community benefit payments. This money will be unrestricted funding for the city. Read City Manager Mario Giuliani's announcement here.

City Council and staff will discuss tonight and vote whether to approve the agreement. 

Now, on to data centers. 

City Council will hold a public hearing tonight on a proposal to ban data centers designed to use more than 20 megawatts of power, and create regulations for smaller projects. No data center has been proposed in Benicia. The rules are proactive to ensure guardrails are created, and the city has a say.

It’s a hot topic. A March Gallup poll found seven of 10 Americans opposed an AI data center in their area. Our less-scientific Instagram post asking whether Benicia should allow data centers prompted more than 70 comments – a vast majority were along the lines of “Hard pass. No.” 

The proposed guidelines were reviewed and lightly tweaked at the Benicia Planning Commission last month after hearing public comment, including a few Benicia High School AP Environmental Science students who voiced concern about potential water and energy use. Other commenters expressed concern that the rules would limit potential growth in the Industrial Park, and send the wrong message to the tech industry that the city wants to attract. 

Assistant City Manager Suzanne Thorsen explained the reasoning behind the proposed limits. At the planning commission meeting, she said, “Yes, we should make sure to make room for something that complements and encourages the further development of our industrial park, but how do we make sure it’s not consuming the resources that another type of business might also need?” 

“The 20 megawatts (limit) seems more than reasonable to accommodate the types of data centers that could benefit our industrial users and future industrial users without necessarily taking away from the electrical capacity or the water supply that might be needed for other types of businesses and users of the industrial park.” 

In addition to banning large-scale data centers, the proposed rules would also require: 

• All electric power supply must only be through a utility or on-site renewable energy. No backup electricity may be provided by internal combustion equipment, like diesel generators, and, must use water-efficient cooling technologies, recirculation or recycled water to reduce water consumption. 
• Any project proposed over 50,000 square feet or with a proposed water consumption of over 30 gallons per minute would trigger a public hearing in front of the Planning Commission for approval or rejection. Smaller facilities could be approved or rejected following a public hearing before the Development Services Director.
• If approved, the operator of a data center has to submit an annual report including water consumption and electric power consumption.

Here’s what we’re reading: 

• Longtime Benicia Police Chief Mark Menesini announces retirement (Daily Republic) 
• Benicia anglers raise concerns over pier tensions, call for city to step in. (ABC7 News) 
• Regional news coverage of Benicia election:
  • Two Incumbents, One Newcomer Vie For Open City Council Seats. (SF Gate)
  • Benicia Voters to Decide on Tax Measures in November. (SF Gate) 
  • Meet the two candidates running for Benicia school board Trustee Area 1 (Vallejo Sun) 
  • Meet the three candidates running for Benicia City Council (Vallejo Sun) 
• A Bay Area Teacher Was Acquitted of Sexual Abuse. He’s on Trial Again for New Allegations. (KQED)
• (Not Benicia, but nearby) Inside the West Coast’s largest immigration court, chaos spreads and removal orders soar (The San Francisco Standard)