Frustrated green groups to sue ExxonMobil, saying Texas regulator isn’t regulating

Introduction

Tired of waiting for state regulators to take meaningful action, two environmental groups are preparing to file a lawsuit against the nation’s largest oil refinery, accusing ExxonMobil Corp. of illegally releasing at least 5.9 million pounds of dangerous air pollutants over five years and jeopardizing the health of thousands of nearby residents.

Environment Texas and the Sierra Club hope the lawsuit will force ExxonMobil to cut emissions, enhance monitoring, and pay a multimillion-dollar civil penalty for pollution from its Baytown, Texas, facility. The case is due to be filed in federal district court late summer, reflecting a chorus of criticism of the state’s environmental regulator, the Texas Commission on Environmental Quality (TCEQ), already under pressure from the federal Environmental Protection Agency to strengthen its air permitting program and more rigorously enforce current laws.

“We’re doing what the EPA should have done and what TCEQ should have done,” said Joshua Kratka, a lawyer at the National Environmental Law Center, a nonprofit legal service in Boston that represents Environment Texas and the Sierra Club.

ExxonMobil declined to comment on the impending lawsuit, but said it has spent hundreds of millions of dollars to upgrade its Baytown complex and reduce emissions.

Unplanned and unauthorized air emissions at the complex — which includes the huge refinery and two chemical plants — started once every four days on average in 2005 and once every nine days on average in 2009, according to a Center for Public Integrity analysis of state emissions records included in a notice letter that precedes the filing of the lawsuit. The records show that ExxonMobil’s chemical plants released nearly 1.3 million pounds of toxic substances in addition to 5.9 million pounds from its refinery, all above the facility’s permitted emissions.

Chemicals spewed into the air included benzene and 1,3-butadiene, both of which have been linked to cancer, and sulfur dioxide, which can cause breathing difficulties and burning of the lungs, nose and throat.

Following the Deepwater Horizon catastrophe in the Gulf of Mexico, BP has been widely condemned for its safety and environmental practices, while ExxonMobil has sought to distance itself from the accident and promote its commitment to higher standards. The data behind the impending lawsuit, however, suggest that ExxonMobil’s environmental record is hardly spotless.

The TCEQ categorized about 85 percent of the incidents at the three ExxonMobil plants in Baytown as “avoidable” or “preventable,” according to a Center analysis of nearly 500 pages of enforcement orders issued during the past decade. In some orders, the Texas regulators described maintenance and training practices that could have prevented chemical releases, noting that one event in 2003 was “part of a frequent and recurring pattern indicative of inadequate design operation and maintenance.”

The problem, said Neil Carman, clean air program director for the Sierra Club in Texas, is the TCEQ’s light-handed regulatory approach. He likened the state enforcement actions to issuing “traffic tickets” — fines too small to deter future violations — and applying “Band-Aids” — cheap and quick repairs and upgrades that fail to prevent unauthorized releases, known as upsets.

“These upsets are almost all preventable,” Carman said. But companies “push the envelope because they want to make money.”

The ExxonMobil incidents have lasted hours or even days. The TCEQ records cited in the lawsuit notice letter detail about 340 incidents over five years, with estimated chemical releases totaling about 7.2 million pounds from the company’s Baytown complex. The letter alleges that an additional 4.5 million pounds released during maintenance, startup or shutdown activities could be illegal, but it’s impossible to tell because they are addressed in a confidential part of ExxonMobil’s permit.

Even for Baytown, a gritty industrial city 25 miles east of Houston, that rate of air-fouling emissions seemed high to some residents.

Chemical stench, family sickened

Stuart Halpryn, who lives about a quarter-mile from the Exxon complex, said he often sees smoke billowing from the plant, and a chemical stench nearly overwhelmed him in February 2009 as he stepped out of his house. “I couldn’t get a breath; I almost passed out,” Halpryn, a member of Environment Texas, said. It was a “horrendous release.”

Two of his four children, now ages 5, 7, 11, and 14, vomited for several days afterward, he said, and the family was sick with fevers, congestion and sleeplessness for almost a week. A chemical odor pervaded the Halpryns’ home and lingered behind closed closet and pantry doors for several days, he said.

TCEQ records show more than 17,000 pounds of chemicals were released into the air that day. Among the compounds was hydrogen sulfide, which irritates the eyes, nose and throat, and in high concentrations may cause loss of consciousness or even death.

In a written statement to the Center, ExxonMobil spokesman Kevin Allexon said the company has spent $700 million since 2001 on “projects to improve environmental performance” at the Baytown refinery, which began operating in 1920, and has “made significant progress in improving air quality at Baytown through reduced emissions.”

John Sadlier, deputy director of TCEQ’s Office of Compliance and Enforcement, defended state regulators, saying his office was “doing exactly what we’ve been charged to do.” But, he said, “There’s certainly an argument to be made that any penalties that can be imposed by the state of Texas might not be a deterrent. When a company is that large, it’s difficult.” Sadlier added that negative publicity might have some deterrent effect: “Sometimes it’s not the fines that they’re afraid of; it’s the enforcement process.”

During the past five years, the state has issued 29 enforcement orders against the three ExxonMobil plants in Baytown, assessing about $1.2 million in penalties, according to a Center analysis of EPA data. Tom McGarity, a University of Texas professor who specializes in environmental and administrative law, characterized the fines as “pocket change” for the energy giant, which rang up net income of about $19.3 billion in 2009.

Federal enforcement

Some critics of TCEQ agree that air quality in Texas has improved from dismal to less dismal but maintain that the credit for that goes to the EPA and not the state. “Yes, we’ve made progress, but if it was up to the state and there wasn’t the [federal] Clean Air Act, the state wouldn’t do anything,” Carman said.

Indeed, a pair of related civil enforcement actions by the EPA dwarfed all state penalties during the past five years.

In 2005, ExxonMobil reached an agreement with the EPA to resolve alleged violations of the Clean Air Act at six of its refineries around the country, including Baytown. ExxonMobil denied that it had violated the act but agreed to cut emissions and pay $7.7 million in civil penalties and $6.7 million for supplemental environmental projects.

Three years later, ExxonMobil and the EPA entered into another agreement after the company reported that four refineries “may have” violated the 2005 pact. Again the company did not admit wrongdoing but agreed to pay about $6.1 million in civil penalties — virtually all of which related to alleged violations at Baytown.

The EPA has also punished ExxonMobil for running afoul of federal water pollution and hazardous waste laws. During the past three years, the agency repeatedly labeled at least one of the three Baytown plants as being in violation of the Clean Water Act or the Resource Conservation and Recovery Act.

Texas regulators, on the other hand, have been slow to detect problems and reluctant to take the actions necessary to correct these problems, said the Sierra Club’s Carman.

In a series of unauthorized emissions between 2006 and 2008, the Baytown refinery released thousands of pounds of potentially harmful chemicals from one unit. Many of these events occurred while a TCEQ enforcement action for an earlier release from the same unit was pending. The TCEQ assessed just over $140,000 in penalties even though it deemed almost all of the events avoidable.

Frustration with state regulators has spurred two previous lawsuits by Environment Texas and the Sierra Club. The suits are all based on the Clean Air Act, which allows private citizens to sue to enforce the law.

In a June 2009 settlement, Shell agreed to cut unauthorized emissions by more than 80 percent and pay a $5.8 million civil penalty in response to a suit involving its Deer Park refinery, just a few miles west of ExxonMobil’s Baytown complex. In August 2009, the environmental groups alleged similar violations at the Chevron Phillips chemical plant in Baytown; that case is pending and the company has denied any wrongdoing.

Federal vs. state regulators

The planned ExxonMobil lawsuit is set against the backdrop of an escalating dispute between the EPA and Texas regulators over the state’s “flexible” air permits — the type governing emissions at the Baytown facilities. The permits set facility-wide pollution caps rather than caps on individual pollution sources within a refinery or plant, making it more difficult for regulators to monitor compliance. The flexible permits also allow certain emission points — perhaps those closest to a nearby residential area — to release dangerous amounts of pollutants while the facility as a whole remains in compliance, said Matthew Tejada, executive director of the clean-air group Air Alliance Houston

Al Armendariz, EPA’s Region 6 administrator, told the Center that the flexible permits “are almost impossible for my staff to enforce.” Using a combined emissions cap for all pollution sources in a facility is like using a combined speed limit for all cars on a highway, he said.

“I am frustrated that it has taken as long as it has for us to begin a serious discussion [with the TCEQ] of how to fix this,” Armendariz said, adding that his recent talks with the state agency “are going in the right direction.” The EPA formally invalidated the flexible permits on June 30, and the agency plans to work with companies to transition to new, non-flexible permits.

The TCEQ defends the flexible permits, saying they help reduce emissions and protect public health. But Texas environmental law experts say political reluctance fueled by close ties between the oil industry and government can hamper serious state action.

“I think TCEQ has always viewed itself as a friendly policeman,” said Jim Blackburn, an environmental law instructor at Rice University who has a private practice in Houston. “It’s a direct reflection of Texas politics. … They think of themselves as a partner with industry in putting forward a regulatory structure that helps the public but is a little friendlier than the federal government might be.”

The air permits have become a political issue in the heated race for governor.

The permits are “fully compliant with the Clean Air Act” and have helped reduce air pollution, a spokeswoman for Gov. Rick Perry said in a written statement to the Center. “This is Washington’s latest attempt to intrude on the state’s authority, and will not only undermine Texas’ successful clean air programs, but will cost the state tens of thousands of jobs,” the statement said.

A spokeswoman for Bill White, Perry’s Democratic challenger, said that White opposes an EPA takeover of the state’s air permitting program but recognizes that Texans “can’t count on the TCEQ to do their job.” The spokeswoman, Katy Bacon, blasted Perry as a “career politician” who is “looking to raise his profile” by seizing on the issue as an opportunity to wave the states rights banner. White would work with industry, the TCEQ and the EPA to resolve the dispute and keep permitting authority with the state, Bacon said. “There are plenty of states that are able to have industry and enforce the Clean Air Act,” she said.

As the political battle over air permits plays out, some observers in the Houston area expect ExxonMobil to stage a protracted legal battle over the Baytown complex. Air Alliance Houston’s Tejada said he anticipated that ExxonMobil would fight the lawsuit more aggressively than Shell and Chevron Phillips have. “That’s their reputation,” he said.

Litigation related to the Exxon Valdez tanker oil spill off the coast of Alaska dragged on for 20 years, and a jury’s original award of $5 billion in punitive damages was reduced on appeal to roughly $500 million.

“In Houston, Exxon’s the big guy on the corner that you walk on the other side of the street to stay away from,” Tejada said. But, he added, the current spotlight on the oil industry might weaken ExxonMobil’s position: “I think for Exxon to fight this, especially this summer, is going to take some cojones, as we say in Texas.”