Huge gaps in oversight for industry full of risks

By Eric Nalder

A crusading oil patch lawyer calls the American refinery industry an “under-regulated cesspool.”

A member of the U.S. Chemical Safety Board is more polite, describing a mismatch between well-heeled oil companies and under-qualified government regulators.

Reid Porter, a spokesman for the American Petroleum Institute, sees it the opposite way: “This is already one of the most heavily regulated industries in the country.”

In fact, a San Francisco Chronicle investigation launched after the Aug. 6 fire that destroyed part of Chevron’s Richmond, Calif., plant and sent thousands of residents to hospital emergency rooms found that refinery oversight is riddled with gaps. Porter’s industry group plays a major role in what critics say is a self-regulating system for refineries.

In the past three years, the industry has been accused of blocking or watering down federal efforts to require refineries to reveal safety incidents that threaten their operations and the nation’s fuel supply. Safety experts say such reporting sheds light on accumulating problems that can lead to refinery disasters.

The petroleum institute is more than an oil industry lobbying organization — it’s also the source and publisher of most of the national standards and guidelines for refinery operations.
Government oversight of refineries is split between two federal agencies that have broad responsibilities elsewhere. Other hazardous industries are regulated by a single federal agency.

Reactive approach

The Environmental Protection Agency and the Department of Labor, plus their state-level counterparts, regulate the refinery industry mostly by responding to incidents rather than taking preventive measures.
A number of experts said this bifurcated watchdog system opens huge gaps in oversight. Chemical Safety Board Chairman Rafael Moure-Eraso said the board will examine the role of both federal agencies in its investigation of the Chevron fire.

“The problem is — and they’ll admit this — they don’t have the resources to stay on top of this,” said Mark Griffon, a member of the safety board. In particular, he said, the Labor Department’s Occupational Safety and Health Administration is “stretched pretty thin.”

Increased inspections can produce results — OSHA found more than 1,000 citable violations in refineries during a temporary program that began in 2007.

Labor Department officials declined interview requests.

Risky business

The dangers that refineries pose are immense. The Environmental Protection Agency — which deals with refinery spills and toxic gas releases — says no other industry suffers as many catastrophic incidents.
The Chevron blaze fire was not an anomaly. There have been at least 28 refinery fires in 2012 alone.

Among them were accidents that involved corroded pipes, which is suspected of being a factor in the Chevron fire. There have also been petroleum leaks, unusual releases of hazardous gases and other close calls.

Communities are at risk if a refinery’s operation goes awry. Chemicals like hydrogen fluoride, used to increase gasoline octane levels and capable of spreading death throughout neighborhoods if it escapes into the
air, are regularly used in refineries, said Rick Hind, legislative director for Greenpeace in Washington, D.C.

His organization and dozens of others petitioned the EPA in July to force refineries and other chemical plants to use more modern processes, Hind said.

EPA officials declined to comment.

The real power

The U.S. Chemical Safety Board has investigative and advisory powers, but no enforcement role. The real authority when it comes to refinery guidelines is the American Petroleum Institute.

Critics say the industry group uses a dual role to keep government regulation to a minimum. On the one hand, it assembles experts from industry and outside sources to produce the bulk of the safety and technical standards that govern the way refineries operate. The institute’s stamp is the “gold standard” in the petroleum industry, Porter said.

In its other role, the petroleum institute is a political operative, armed with a political action committee and a lobbying arm. It spent $8.6 million lobbying Congress and federal agencies last year to, among other things, reduce regulatory burdens for all parts of the oil industry, according to the nonprofit Center for Responsive Politics.

Porter said the two sides of his organization are kept separate. Others wonder.

“They are conflicted,” said the safety board’s Griffon.

Texas disaster

After the worst refinery accident in recent years — a 2005 explosion at BP’s plant in Texas City, that killed 15 workers — the Chemical Safety Board recommended that the petroleum institute, unions, environmentalists and others collaborate to develop methods for measuring the safety performance of refineries. Scores given to refineries would be subject to “nationwide public reporting,” the board suggested.

The collaborative effort didn’t last long. In August 2009 the three unions that attended the petroleum institute’s gatherings withdrew in protest, the industry group said.

A roster of the committee working on the plan shows that industry representatives outnumbered union members, 26 to 4.

“They were going to vote as a bloc and our ideas were not going to be incorporated into key parts of the regulation,” said Tom McQuiston, a United Steelworkers union safety trainer.

Comparisons difficult

The final product calls for refinery grades to be released publicly as a nationwide report card in 2014. But they will be attributed to corporations, not to individual refineries, undermining easy plant-to-plant comparisons, McQuiston said.

Each refinery will separately release its own grades to employees and the local community, but not the grades of other refineries.

The safety board’s Griffon also said the data the petroleum institute chose won’t capture enough events to make meaningful comparisons among refineries. Mourse-Eraso, the board’s chairman, called the program an acceptable first step but “very incomplete.”

The petroleum institute has promised to review the program every two years.

Limited data

The EPA and the Labor Department already collect other refinery data, but they are limited to injuries, deaths and a certain level of environmental releases. The Chemical Safety Board said after the Texas City disaster that reliance on this kind of data alone “blinds” refinery regulators and operators to festering flaws that could spell doom in the plant.

A few years ago, the U.S. Department of Energy proposed collecting daily information from refinery owners about unplanned outages, in part to prepare the government for fuel shortages and price spikes. In 2010, the agency dropped the idea.

A spokesman for the American Fuel and Petrochemical Manufacturers confirmed that trade group opposed the plan, arguing that it was too burdensome.
Unions, environmentalists, members of the Chemical Safety Board and others have called for an overhaul, including the creation of a regulatory agency dedicated to petrochemical plants.

‘They are just greedy’

One such advocate is Brent Coon, a Beaumont attorney who acquired a reputation suing accident-prone companies and who characterized refineries as an “under-regulated cesspool.”
The refinery industry spends lavishly “make sure they aren’t overly regulated,” Coon said. “They are not idiots. They are just greedy.”

“To categorize my industry as unsafe is patently unfair and is patently over the top,” countered Charlie Drevna, executive director of the American Fuel and Petrochemical Manufacturers. “For all of our members, safety is paramount. The most critical asset we have is our employees, and the second most important is the plant itself.”

The Chemical Safety Board’s decision to investigate Chevron’s Richmond fire was notable, since the small agency has deployed to only 100 incidents in 14 years.

The board chose to look into the blaze in part because of its proximity to a large population. One of the board’s top stated goals for 2012 is to “select incidents and hazards for investigation with high potential to generate recommendations with broad preventative impact.”

enalder@hearst.com