10 Years of Pollution, $2 Million in Penalties

In Texas, an old pollution case is looming over new development.

National Journal
Ben Geman
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Ben Geman
May 21, 2014, 1:16 a.m.

COR­PUS CHRISTI, Texas — “I am in the middle of my speech about your crim­in­al activ­it­ies, give me a break,” Su­zie Canales tells two se­cur­ity of­ficers for oil re­finer Cit­go as they ar­rive at her car win­dow.

Canales, a long­time en­vir­on­ment­al act­iv­ist, is de­scrib­ing a years-long court battle over air pol­lu­tion from the re­finer, a case that led to a 2007 con­vic­tion but, more re­cently, a de­feat for vic­tims seek­ing resti­tu­tion. And she’s do­ing it while parked next to one of two Cit­go re­finer­ies along the city’s “re­finery row” on a re­cent af­ter­noon.

Her pres­ence (and mine), as well as the fact that we were snap­ping pho­tos, has drawn se­cur­ity’s at­ten­tion. One re­quests that no more pho­tos are taken, ar­guing a pass is needed. Canales bristles be­cause we’re on a pub­lic street. The private cops ac­cept my busi­ness card, and that’s pretty much it.

The brief in­cid­ent is a re­mind­er of long-stand­ing ten­sions between act­iv­ists and the city’s pet­ro­leum in­dustry at a time when even more in­dus­tri­al de­vel­op­ment is headed here. Boom­ing oil and gas pro­duc­tion from the in­land Eagle Ford Shale is prompt­ing a wave of new and ex­pan­ded pet­ro­chem­ic­al and man­u­fac­tur­ing pro­jects in the area.

Canales, founder of the loc­al group Cit­izens for En­vir­on­ment­al Justice, has a knack for col­or­ful state­ments. But her re­peated use of the word “crim­in­al” to de­scribe Cit­go wasn’t hy­per­bole.

Cit­go was con­victed of crim­in­al charges un­der the Clean Air Act in 2007 for op­er­at­ing two large tanks at its Cor­pus Christi East Plant without emis­sions con­trols from 1994 to 2003. The lack of con­trols, pro­sec­utors say, ex­posed nearby res­id­ents to the car­ci­no­gen ben­zene and oth­er com­pounds.

But sev­en years after the con­vic­tion, the case is still a fo­cus of at­ten­tion in this in­dus­tri­al port city on the Gulf Coast of Texas, where re­finer­ies abut largely poor and minor­ity neigh­bor­hoods. Vic­tims are con­tinu­ing to press their case for resti­tu­tion pay­ments from Cit­go for hun­dreds of people.

Cit­go was hit with a $2 mil­lion fine when sen­ten­cing for the 2007 con­vic­tion oc­curred in Feb­ru­ary, but more re­cently a fed­er­al judge ruled against provid­ing what the Justice De­part­ment and vic­tims say should be far more to ad­dress fu­ture med­ic­al costs and more.

Melissa Jar­rell, an as­so­ci­ate pro­fess­or of crim­in­al justice at Texas A&M Uni­versity (Cor­pus Christi), said the $2 mil­lion fine im­posed against Cit­go early this year sends the wrong sig­nal.

“There is no de­terrent value, really, in our sen­ten­cing guidelines for cor­por­a­tions, be­cause we know that $2 mil­lion is not a de­terrent for a ma­jor, mult­i­bil­lion-dol­lar cor­por­a­tion,” Jar­rell, who works with act­iv­ists here, said in an in­ter­view in early May. “I’m cer­tain oth­er cor­por­a­tions saw that.”

The pen­alty that dis­trict court Judge John Rainey im­posed is in­deed re­l­at­ively little money for the ma­jor re­finer, a sub­si­di­ary of Venezuela’s state-owned oil com­pany PDVSA.

The Justice De­part­ment has ar­gued that a vastly lar­ger fine could be im­posed, and has not ruled out an ap­peal. Two mil­lion dol­lars was the max­im­um fine spe­cified in law, but cor­por­ate crime stat­utes also al­low an al­tern­at­ive of twice the gain that an of­fend­er reaped, and pro­sec­utors ar­gued Cit­go gained $1 bil­lion through il­leg­al op­er­a­tion of the re­finery.

The very re­cent past has brought two key de­vel­op­ments in the case.

On April 30, the judge handed the Justice De­part­ment and com­munity mem­bers a de­feat by re­ject­ing vic­tims’ bid for tens of mil­lions of dol­lars in resti­tu­tion to pay for med­ic­al screen­ing for can­cer and oth­er dis­eases, fu­ture med­ic­al ex­penses, and re­lo­ca­tion of people who live near the re­finery.

On Monday, a three-judge pan­el of the U.S. Court of Ap­peals for the 5th Cir­cuit denied the vic­tims’ bid for re­view of Rainey’s April 30 rul­ing. The Justice De­part­ment says it’s re­view­ing the April 30 rul­ing, which can also be ap­pealed by the de­part­ment, and a spokes­man said in a state­ment that the de­part­ment is “dis­ap­poin­ted” by the de­cision to deny resti­tu­tion.

People who live near the re­finery have told the court that they ex­per­i­enced ail­ments such as head­aches, skin ir­rit­a­tion, fa­tigue, burn­ing throat and lungs, and oth­er woes.

But Cit­go has ar­gued in court fil­ings that there is no evid­ence to sup­port pay­ing tens of mil­lions of dol­lars in resti­tu­tion.

For in­stance, in a late 2013 court fil­ing, the com­pany ar­gued that hun­dreds of cur­rent and former res­id­ents who provided state­ments to the court have not shown that their in­jur­ies were “dir­ect and prox­im­ate” res­ults of emis­sions from the two un­covered tanks in ques­tion at the re­finery.

The com­pany also said there’s no evid­ence of long-term health risks.

In his 20-page April 30 rul­ing deny­ing resti­tu­tion, Rainey spells out a suite of reas­ons for the de­cision, in­clud­ing the com­plex­ity of at­tempt­ing to tie med­ic­al prob­lems to the un­checked emis­sions from 1994-2003 at those spe­cif­ic tanks.

Paul Cas­sell, a crim­in­al-law pro­fess­or at the Uni­versity of Utah who rep­res­ents Cor­pus Christi res­id­ents liv­ing near the re­finery, says the case “raises a lot of very ser­i­ous ques­tions about wheth­er we have in place stat­utes to pro­tect crime vic­tims in these en­vir­on­ment­al crimes.”

He says the rul­ing that fo­cuses on the com­plex­ity of resti­tu­tion as a reas­on against it is dan­ger­ous. “That ba­sic­ally be­comes an in­vite for ma­jor cor­por­ate crim­in­als to throw a bat­tery of at­tor­neys at a prob­lem and com­plic­ate the is­sue and ba­sic­ally make it im­possible for a judge to award resti­tu­tion,” Cas­sell said.

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