Phillips 66 reached an agreement with San Luis Obispo County on Monday that will remove a sensitive habitat designation from the company’s Nipomo Mesa property.

Phillips 66, in exchange, has agreed to drop its challenge to the constitutionality of a SLO County environmental ordinance. Had Phillips 66 progressed with the lawsuit, the case could have compromised other SLO County rulings on sensitive habitat designations.

In March, the SLO County Board of Supervisors voted 3-1 to shoot down Phillips 66’s Nipomo rail spur project, which would have brought crude oil to the company’s South County refinery by train. After the board decision, which followed multiple years of mounting opposition to the project, Phillips 66 opted not to legally dispute the project’s denial.

However, Phillips 66 attorney Paul Beard sued SLO County over an environmental determination issued during the proposal process.

In its suit, Phillips 66 disputed the county’s decision to label the property an environmentally sensitive habitat and the validly of the county’s ESHA ordinance. The designation, based on fauna, diminished the value of the property and prohibited further development.

In the future, if Phillips 66 decides to develop the property, the county must make a new and independent decision on environmental concerns, according to the settlement.

Hence, Phillips 66 has the right to move ahead a new project or resubmit the rail spur project.

Following the settlement, environmental groups circulated a press claiming the Phillips 66 sued over the denial of the project, when the lawsuit was actually about the environmentally sensitive habitat designation and the ESHA ordinance.

The SLO Tribune then echoed the environmental groups and inaccurately reported that because of Monday’s settlement agreement, the rail spur project is “dead.”