UPDATE 1-Court says Chevron refinery report needs more work

Mon Apr 26, 2010 10:53pm EDT

* Report needs to show if heavier grades will be processed

* Must explain how co will cut greenhouse gas emissions

* Chevron says disappointed with ruling (Adds response from Chevron in paragraphs 5-7)

NEW YORK, April 26 (Reuters) - A California state appellate court on Monday denied Chevron Corp's (CVX.N) efforts to overturn a lower court ruling that blocked it from expanding its Richmond oil refinery without first delivering a more expansive environmental-impact review.

San Francisco's First District Court of Appeal said state judge Barbara Zuniga properly interpreted California regulations last summer when she ruled Chevron's review of the potential health and safety effects of expanding the refinery needed more work.

Among other things, the court wants Chevron to reveal if the expanded facility, located near residential neighborhoods, will process heavier grades of crude oil, which generate more pollution than lighter grades.

The report must also explain how the second-largest U.S. oil company plans to reduce greenhouse gas emissions.

Chevron spokesman Brent Tippen said the company was disappointed with the ruling, and contends the expansion project was properly analyzed and permitted.

"We feel both the evidence and the law amply supported the adequacy of the (environmental report) prepared by the city of Richmond" for the project, he said in an e-mailed statement.

"We are now reviewing the court's decision and will determine what is next to be done." (Reporting by Joseph A. Giannone in New York and Braden Reddall in San Francisco; Editing by Himani Sarkar)

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