It’s Earth Day. Here in California, state regulators are celebrating with their Keep California Beautiful Event that kicks off at the State Capitol followed by cleanup activities, like picking up litter and collecting e-waste, across the State. The Department of Toxic Substances Control (DTSC) that protects communities from toxic harm is in on the act with Caltrans, California Highway Patrol, CalRecycle, and several other agencies.

The Director of the DTSC, Debbie Raphael, recently characterized her agency as one that “creates ballfields, parks, schools, and vibrant communities.” She says, “We hold people accountable for polluting the world and California. We protect drinking water…we give people a voice. We are problem solvers. We protect. We heal.”

Really? Tell that to the poisoned community of Wildomar built on toxic soil, or to the community of Los Nietos in the heart of Los Angeles that may be drinking water laced with carcinogenic hexavalent chromium, or to the people of Simi Valley who suffer the runoff of carcinogenic waste from the land Boeing owns at the Santa Susana Field Lab that suffered the worst nuclear meltdown in US history years ago.

All of these are platitudes and make-believe that don’t reflect reality. Government exists to solve collective problems that industry, with its profit motive and cutting corners, just can’t manage. Government has to provide the right incentives and the right regulation.  What the government has to offer individuals on Earth Day-US EPA tips include don’t litter, save water, compost, and ride a bike to work-doesn’t get us all the way there.

Here in California, we got a sobering picture last week. The US EPA said that the state of California has failed to spend $455 million of federal money to improve water structure in the state including on water treatment facilities. Thousands of Californians are exposed to water contaminated with nitrates and other toxins every day. The California Department of Public Health had no good answer for this. And where is the State Water Resources Control Board, that paragon of water quality protection? Apparently AWOL.

And you can trust the DTSC to circle the wagons instead of look soberly at how it falls down in protecting communities and the environment from toxic harm, as outlined in our report Golden Wasteland.

The DTSC routinely lets toxic polluters who manage hazardous waste slide. We have some of the toughest environmental laws in the nation, but some of the weakest enforcement. The DTSC is the poster child for that. The department levies wrist slap fines that are just the cost of doing business, lets companies operate on expired permits for decades at a time, and doesn’t have the moxie to revoke or deny the permits of serial toxic violators as the law intends. The result is communities that report illnesses from cancer to lupus because of toxic soil and groundwater. The devastation in these communities isn’t as visible as the devastation in West, Texas. But the harm is real. It just takes longer for it to manifest.

And don’t think that a West, Texas can’t happen here, either. The Chevron refinery fire in Richmond last summer is a case in point. It could have been far worse than sending 15,000 people to the hospital. People could have been killed as they were in West, where a deadly explosion at a fertilizer plant razed five blocks around the facility. But our system of fragmented regulation and passing off of responsibility from one regulatory agency to the next almost ensures we’ll have more disasters to come.

Here in Richmond, at a public meeting on Friday night that the regional head of the U.S. Chemical Safety Board couldn’t attend-because he was investigating the Texas explosion-the chairman of the federal body said that the secretive refinery industry should provide regulators with information on refinery technology and regulators should work together to monitor wear on materials.

Chevron chose not to replace corroded pipes that led to the explosion and toxic cloud over Richmond. The explosion could have been prevented, but the regulatory system is reactive and not capable of foreseeing and forestalling problems, according to the Board. And there aren’t enough skilled refinery inspectors in the state.

The DTSC’s own priorities are so inside out that the department has gutted its refinery inspection capability to two inspectors for the whole state-while two top officials invest in refineries and other companies the department regulates. The California Department of Occupational Safety and Health (Cal/OSHA) also has too few inspectors for workplace safety. Cal OSHA fined Chevron a pinprick $1 million dollars for the fire, while DTSC refused to sanction the refinery at all even though it has the legal right. And what about the Bay Area Air Quality Management District? AWOL too. Wrist-slap fines are routine for refinery air infractions and air regulators haven’t made a peep about the toxic black cloud over Richmond.

Ironically, the U.S. Chemical Safety Board is “grossly mismanaged” itself, according to one former board member. It’s got a short attention span and hasn’t completed investigations into the Tesoro disaster in Washington State and the Deepwater Horizon disaster. Thirteen board investigations are incomplete, according to the Center for Public Integrity.

We need a new regulatory paradigm. One where we break apart the fractured system of regulation we’ve got now in favor of coordinated inspections of refineries, chemical plants, pharmaceutical plants, hazardous waste processors and other large companies. We need to grow a spine when it comes to serial violators of environmental laws and enforce the laws on the books to break the pattern. We need to focus our efforts on enforcement-DTSC now has only 13 criminal investigators for the whole state and none in Southern California. And we need to let these investigators coordinate efforts across agencies.

The pressure is growing. Eighteen environmental groups, concerned citizens, and victims of toxic harm just petitioned Senator Kevin De Leon to thoroughly investigate the Department of Toxic Substances Control for gross mismanagement, including the drop in the number of cases referred to public prosecutors, and failure to insist on strict cleanup requirements for contamination. The group is also asking for legislators to jam the revolving door of industry influence on government regulators. So, as the Earth spins, don’t let anyone spin you. Instead, keep the pressure on. Set the regulators spinning to work for us, like they are supposed to. It’s in our hands.

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Posted by Liza Tucker, Consumer Advocate and author of Consumer Watchdog’s groundbreaking expose Golden Wasteland. Follow Consumer Watchdog on Facebook and Twitter.

If a tree falls in a forest and no one is around to hear it, does it make a sound? If a hazardous vapor spews out of an industrial plant, but no regulator reacts, was there ever a leak?

Well, on July 6, Evergreen Oil workers decided not to stick around to find out. Some 70 workers walked off the job the minute they heard there was a leak at the hazardous waste and used motor oil recycling plant. It was a “self-evacuation,” according to the Alameda County Fire Department. One worker did go to a medical facility, was evaluated for exposure, and later released. Everybody else came back sometime after the leak was contained in the mid-morning.

But no worries, said the Alameda Fire Department. The leak was harmless to people’s health. And Newark City officials patted Evergreen’s plant manager on the back for, get this, reporting the leak properly and quickly. Sadly, that could be a first.

Here’s what we know about Evergreen Oil up in Newark, California in the East Bay area:  It handles hazardous waste materials like anti-freeze and other toxic waste. And it’s the only oil refinery recycling used motor oil here in the West. It employs a couple of hundred workers, generates about $36 million in sales each year, and has been operating since the mid 1980s.

Now, recycling used motor oil is a great idea. We want to live sustainably. And we need to do something about the underbelly of toxic waste in California from chemicals used to make computers to the engine oil you left behind at your last oil change.

The problem is that Evergreen Oil’s operations aren’t safe. It’s a serial toxic polluter with a very long record. The point isn’t just this particular leak on July 6, which was quickly contained. The point is this leak is part of a much bigger problem involving Evergreen’s record of operations, and its ability to negotiate its way out any real accountability.

Since opening in 1986, nearly every agency with the ability to fine Evergreen has done so. Evergreen’s been cited for dangerous levels of cyanide, arsenic, and other harmful chemicals in its wastewater, for violating public health standards, for the toxic gases it has allowed to emanate from the site and that have, on occasion, reached the nostrils of school children, for poisonous fumes and odors at the site, for an explosion, and for illegally handling, treating and disposing of hazardous waste.

Yet, almost every single time, California’s Department of Toxic Substances Control has given Evergreen a pass to stay out of court with wrist-slap fines and promises the company will clean up its act. But somehow, Evergreen is never clean. Since it opened, Evergreen has had at least five major fires at its facility, at least three major oil spills, over 100 hazmat and odor incidents requiring the Newark Fire Department’s response, and thousands of complaints from the community to local authorities. If that wasn’t enough, in March 2011, a huge explosion at the Evergreen facility involving a hydrochloric acid tank and waste oil sent flames hundreds of feet into the air and nearly required an evacuation of the surrounding areas.

It’s understandable that local officials and the community want the jobs. But when it came to land use, local officials didn’t think much about the plant’s location. Evergreen operations are less than half a mile from a housing development. A former Newark City Manager, Alberto Huezo, put it like this to the Oakland Tribune: “This goes back to the fact that it’s an industry we desperately need. But it was put in the wrong place-and the neighbors were there first.”

An alphabet soup of state and local regulators has authority over Evergreen. It has permits for hazardous waste handling, storage, and disposal, air quality, waste water and more. But all these regulators seem to be leaving it to the next guy to figure out what went wrong and who’s responsible for enforcement. There are some boots on the ground investigating, but nothing is bubbling to the surface yet.

The Department of Toxic Substances Control should step in as the lead regulator. Evergreen is a hazardous waste plant, after all. But the department says its permit exempts from regulation the part of Evergreen’s plant involving certified recycled oil since it is no longer considered a “hazardous material.” That’s the part of the plant where the leak allegedly occurred. Never mind that recycled oil still contains toxins. And what leaked wasn’t the oil anyway, it was a hazardous heat transfer chemical used in the refining process.

As the DTSC investigates its own authority to regulate, its first instinct should always be proactive and protective. Because when an Evergreen falls, it definitely gives off smells and sometimes much worse.

Timidity and Fragmented Oversight of Evergreen Oil Plant Hamper Enforcement, Endanger Community, Says Group

New information obtained from emergency responders shows that a July 6th high-temperature leak at the Evergreen Oil re-refining plant in Newark, California involved a hazardous industrial chemical, not just recycled motor oil, as initially reported. Consumer Watchdog called on the chief regulator of the facility to shut the plant down. In a letter sent Tuesday to Debbie Raphael, Director of the Department of Toxic Substances Control (DTSC), the consumer organization asked her to convene fragmented regulatory agencies and respond strongly to the latest in a long series of safety violations and accidents at the plant in Newark, CA.

According to Consumer Watchdog, regulators are unclear about who is the lead regulator overseeing the facility, with DTSC’s own enforcers acknowledging they are uncertain of the department’s authority over the whole plant, which processes used motor oil. They were also not aware of what actions other agencies might be taking.

“The DTSC, which should be the leader in any event involving this serial safety violator, seems almost to be looking for reasons not to get involved,” said Consumer Watchdog advocate Liza Tucker. “This is an opportunity for the new director to show strong leadership and creativity in a department that appears to have faltered for years.”

The letter sent Tuesday said in part:

“Such holes in oversight must be filled for the safety of all Californians.  Rather than parsing its ability to regulate this portion and not that portion of a toxic waste plant, the DTSC should put itself at the forefront of saying that this is one dangerous accident too many….. ”

“On its face, the idea that the DTSC would have authority to regulate one part of a hazardous waste plant but not another is absurd, particularly when the release on July 6 was hazardous enough to warrant an evacuation, whether the dangerous leak was in the re-refinery area of the plant or not. ”

Download the entire letter here with a timeline of events

On July 6, a pipe leak spewed a hazardous vapor filled with “heat transfer” chemicals used in re-refining. That  triggered an emergency evacuation of the facility.  The company and Newark police warned the surrounding community, including a nearby elementary school, to expect a wave of “strong chemical odors” from the leak.

See link to CAL-EMA public record of initial report here.

The DTSC said that the leak on July 6 took place in a portion of Evergreen’s facility where recycled oil is processed.  A DTSC official stated that the department’s hands are tied because the permit issued to Evergreen does not cover the part of the facility where the leak occurred. According to DTSC, once the waste oil has been partially treated, it is no longer considered a “hazard.”  But the heat transfer liquid used to control refining temperatures is hazardous, according to the Alameda County Health and Environmental Agency.

“Evergreen’s long history of repeated and serious safety violations has to come to an end,” said Tucker. “The department has to take control of the situation, including coordination with other regulators, for the sake of the community surrounding the Evergreen plant, and to set an example for all Californians.”

The July 6 accident markeds the latest in a string of problems at the plant that includes a burst pipe and major fire in March 2011 and repeated citations by the DTSC for safety violations and carelessness.  Yet the DTSC has let the company off the hook with consent decrees and hand-slap fines for at least a dozen years, said Consumer Watchdog.  The group said now is the opportune time for new leadership at the DTSC to rethink its approach to regulating hazardous waste and recycling facilities.

Click here for more.

Read Consumer Watchdog’s July 16 letter to DTSC Director Debbie Raphael here.

Also read Consumer Watchdog’s April 9 letter to the Senate Judiciary Committee.  

State Department of toxic Substances Control Must Send “Strong Message” to Evergreen Oil Re-Refiner Over Repeated Safety Lapses, Accidents

Consumer Watchdog called on the Director of the California Department of Toxic Substances Control, Debbie Raphael, to indefinitely close the Evergreen Oil waste-oil re-refinery in Newark, Ca. in a letter sent today. On July 6, a pipe leak spewed “superheated oil” and triggered an emergency evacuation of the facility. The company and Newark police warned the surrounding community, including a nearby elementary school, to expect a wave of “strong odors” from the leak.

Read today’s letter to Raphael here

Consumer Watchdog cited repeated problems at the facility as an example of DTSC’s failure to take tough action against toxic industries that continue to operate after repeated safety violations near homes and schools in testimony and a letter presented at Debbie Raphael’s State Senate confirmation hearings in April.

The confirmation letter said several companies, including Evergreen, “appear to have manipulated or ignored the DTSC and other agencies to the detriment of concerned and frustrated local residents.”

The accident marks the latest in a string of problems at the plant that re-refines used motor oil, including a burst pipe and major fire in March 2011 and repeated citations by the DTSC for safety violations and carelessness.

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“Consumer Watchdog is appalled to learn of yet another accident at the Newark-based used oil recycler Evergreen Oil,” said Liza Tucker, an advocate at Consumer Watchdog. “We call on the DTSC to shut this refinery down indefinitely. Evergreen needs to know that sloppy safety procedures, and refusal to fix or replace shoddy infrastructure, is simply unacceptable.”

The DTSC has let the company off the hook with consent decrees and hand-slap fines for at least a dozen years, said Consumer Watchdog. The group called for the new leadership at the DTSC to send toxic industries a strong message that there is a new sheriff in town who won’t allow careless endangerment.

The letter sent today to Director Raphael said in part:

“Your department has repeatedly cited Evergreen Oil for cracks and gaps in waste container storage and transfer areas, failing to track contaminated petroleum waste coming in and out of the facility, careless soil contamination, and omissions in its own inspection system.

“Still, the DTSC fined this company that generates some $36 million in annual revenues less than $60,000 under six separate consent decrees between 2006 and 2011. This practice of accepting promises that Evergreen will police itself, instead of taking the company to court, has been an abject failure. The DTSC has cited the company for failure to follow even its own simple safety procedures.

“At the same time, members of the local community say that for 25 years Evergreen has ignored federal and state laws and polluted their neighborhoods.”

The department has a special responsibility to working and middle class families in the small cities where companies produce and recycle toxics including PCBs, dioxin, and heavy metals near homes and schools, Consumer Watchdog said. Too many of these companies have mastered the arts of delay to avoid fixing leaks, improving infrastructure, and following adequate internal safety controls.

“Evergreen Oil has proven repeatedly that it cannot be trusted,” said Tucker. “The DTSC and other regulators need to put community safety first and show zero tolerance for such polluters.”

Consumer Watchdog has previously described problems at several hazardous waste sites, and also called for reforms at the DTSC to address a lack of transparency, a disconnect between inspection and enforcement, and a preference for weak settlements instead of more aggressive prosecution of serial violators.

Read Letter to Director Raphael

Also read Consumer Watchdog’s April 9 letter to the Senate Judiciary Committee

State Department of toxic Substances Control Must Send “Strong Message” to Evergreen Oil Re-Refiner Over Repeated Safety Lapses, Accidents

Consumer Watchdog called on the Director of the California Department of Toxic Substances Control, Debbie Raphael, to indefinitely close the Evergreen Oil waste-oil re-refinery in Newark, Ca. in a letter sent today.  On July 6, a pipe leak spewed “superheated oil” and triggered an emergency evacuation of the facility.  The company and Newark police warned the surrounding community, including a nearby elementary school, to expect a wave of “strong odors” from the leak.

Read today’s letter to Raphael here

Consumer Watchdog cited repeated problems at the facility as an example of DTSC’s failure to take tough action against toxic industries that continue to operate after repeated safety violations near homes and schools in testimony and a letter presented at Debbie Raphael’s State Senate confirmation hearings in April.

The confirmation letter said several companies, including Evergreen, “appear to have manipulated or ignored the DTSC and other agencies to the detriment of concerned and frustrated local residents.”

The accident marks the latest in a string of problems at the plant that re-refines used motor oil, including a burst pipe and major fire in March 2011 and repeated citations by the DTSC for safety violations and carelessness.

“Consumer Watchdog is appalled to learn of yet another accident at the Newark-based used oil recycler Evergreen Oil,” said Liza Tucker, an advocate at Consumer Watchdog.  “We call on the DTSC to shut this refinery down indefinitely.   Evergreen needs to know that sloppy safety procedures, and refusal to fix or replace shoddy infrastructure, is simply unacceptable.”

The DTSC has let the company off the hook with consent decrees and hand-slap fines for at least a dozen years, said Consumer Watchdog.  The group called for the new leadership at the DTSC to send toxic industries a strong message that there is a new sheriff in town who won’t allow careless endangerment.

The letter sent today to Director Raphael said in part:

“Your department has repeatedly cited Evergreen Oil for cracks and gaps in waste container storage and transfer areas, failing to track contaminated petroleum waste coming in and out of the facility, careless soil contamination, and omissions in its own inspection system.

“Still, the DTSC fined this company that generates some $36 million in annual revenues less than $60,000 under six separate consent decrees between 2006 and 2011.  This practice of accepting promises that Evergreen will police itself, instead of taking the company to court, has been an abject failure. The DTSC has cited the company for failure to follow even its own simple safety procedures.

“At the same time, members of the local community say that for 25 years Evergreen has ignored federal and state laws and polluted their neighborhoods.”

The department has a special responsibility to working and middle class families in the small cities where companies produce and recycle toxics including PCBs, dioxin, and heavy metals near homes and schools, Consumer Watchdog said.  Too many of these companies have mastered the arts of delay to avoid fixing leaks, improving infrastructure, and following adequate internal safety controls.

“Evergreen Oil has proven repeatedly that it cannot be trusted,” said Tucker.  “The DTSC and other regulators need to put community safety first and show zero tolerance for such polluters.”

Consumer Watchdog has previously described problems at several hazardous waste sites, and also called for reforms at the DTSC to address a lack of transparency, a disconnect between inspection and enforcement, and a preference for weak settlements instead of more aggressive prosecution of serial violators.

Read Letter to Director Raphael

Also read Consumer Watchdog’s April 9 letter to the Senate Judiciary Committee

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State Department of toxic Substances Control Must Send “Strong Message” to Evergreen Oil Re-Refiner Over Repeated Safety Lapses, Accidents

Consumer Watchdog called on the Director of the California Department of Toxic Substances Control, Debbie Raphael, to indefinitely close the Evergreen Oil waste-oil re-refinery in Newark, Ca. in a letter sent today.  On July 6, a pipe leak spewed “superheated oil” and triggered an emergency evacuation of the facility.  The company and Newark police warned the surrounding community, including a nearby elementary school, to expect a wave of “strong odors” from the leak.

Read today’s letter to Raphael here

Consumer Watchdog cited repeated problems at the facility as an example of DTSC’s failure to take tough action against toxic industries that continue to operate after repeated safety violations near homes and schools in testimony and a letter presented at Debbie Raphael’s State Senate confirmation hearings in April.

The confirmation letter said several companies, including Evergreen, “appear to have manipulated or ignored the DTSC and other agencies to the detriment of concerned and frustrated local residents.”

The accident marks the latest in a string of problems at the plant that re-refines used motor oil, including a burst pipe and major fire in March 2011 and repeated citations by the DTSC for safety violations and carelessness.

“Consumer Watchdog is appalled to learn of yet another accident at the Newark-based used oil recycler Evergreen Oil,” said Liza Tucker, an advocate at Consumer Watchdog.  “We call on the DTSC to shut this refinery down indefinitely.   Evergreen needs to know that sloppy safety procedures, and refusal to fix or replace shoddy infrastructure, is simply unacceptable.”

The DTSC has let the company off the hook with consent decrees and hand-slap fines for at least a dozen years, said Consumer Watchdog.  The group called for the new leadership at the DTSC to send toxic industries a strong message that there is a new sheriff in town who won’t allow careless endangerment.

The letter sent today to Director Raphael said in part:

“Your department has repeatedly cited Evergreen Oil for cracks and gaps in waste container storage and transfer areas, failing to track contaminated petroleum waste coming in and out of the facility, careless soil contamination, and omissions in its own inspection system.

“Still, the DTSC fined this company that generates some $36 million in annual revenues less than $60,000 under six separate consent decrees between 2006 and 2011.  This practice of accepting promises that Evergreen will police itself, instead of taking the company to court, has been an abject failure. The DTSC has cited the company for failure to follow even its own simple safety procedures.

“At the same time, members of the local community say that for 25 years Evergreen has ignored federal and state laws and polluted their neighborhoods.”

The department has a special responsibility to working and middle class families in the small cities where companies produce and recycle toxics including PCBs, dioxin, and heavy metals near homes and schools, Consumer Watchdog said.  Too many of these companies have mastered the arts of delay to avoid fixing leaks, improving infrastructure, and following adequate internal safety controls.

“Evergreen Oil has proven repeatedly that it cannot be trusted,” said Tucker.  “The DTSC and other regulators need to put community safety first and show zero tolerance for such polluters.”

Consumer Watchdog has previously described problems at several hazardous waste sites, and also called for reforms at the DTSC to address a lack of transparency, a disconnect between inspection and enforcement, and a preference for weak settlements instead of more aggressive prosecution of serial violators.

Read Letter to Director Raphael

Also read Consumer Watchdog’s April 9 letter to the Senate Judiciary Committee

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State Department of toxic Substances Control Must Send “Strong Message” to Evergreen Oil Re-Refiner Over Repeated Safety Lapses, Accidents

Consumer Watchdog called on the Director of the California Department of Toxic Substances Control, Debbie Raphael, to indefinitely close the Evergreen Oil waste-oil re-refinery in Newark, Ca. in a letter sent today.  On July 6, a pipe leak spewed “superheated oil” and triggered an emergency evacuation of the facility.  The company and Newark police warned the surrounding community, including a nearby elementary school, to expect a wave of “strong odors” from the leak.

Read today’s letter to Raphael here

Consumer Watchdog cited repeated problems at the facility as an example of DTSC’s failure to take tough action against toxic industries that continue to operate after repeated safety violations near homes and schools in testimony and a letter presented at Debbie Raphael’s State Senate confirmation hearings in April.

The confirmation letter said several companies, including Evergreen, “appear to have manipulated or ignored the DTSC and other agencies to the detriment of concerned and frustrated local residents.”

The accident marks the latest in a string of problems at the plant that re-refines used motor oil, including a burst pipe and major fire in March 2011 and repeated citations by the DTSC for safety violations and carelessness.

“Consumer Watchdog is appalled to learn of yet another accident at the Newark-based used oil recycler Evergreen Oil,” said Liza Tucker, an advocate at Consumer Watchdog.  “We call on the DTSC to shut this refinery down indefinitely.   Evergreen needs to know that sloppy safety procedures, and refusal to fix or replace shoddy infrastructure, is simply unacceptable.”

The DTSC has let the company off the hook with consent decrees and hand-slap fines for at least a dozen years, said Consumer Watchdog.  The group called for the new leadership at the DTSC to send toxic industries a strong message that there is a new sheriff in town who won’t allow careless endangerment.

The letter sent today to Director Raphael said in part:

“Your department has repeatedly cited Evergreen Oil for cracks and gaps in waste container storage and transfer areas, failing to track contaminated petroleum waste coming in and out of the facility, careless soil contamination, and omissions in its own inspection system.

“Still, the DTSC fined this company that generates some $36 million in annual revenues less than $60,000 under six separate consent decrees between 2006 and 2011.  This practice of accepting promises that Evergreen will police itself, instead of taking the company to court, has been an abject failure. The DTSC has cited the company for failure to follow even its own simple safety procedures.

“At the same time, members of the local community say that for 25 years Evergreen has ignored federal and state laws and polluted their neighborhoods.”

The department has a special responsibility to working and middle class families in the small cities where companies produce and recycle toxics including PCBs, dioxin, and heavy metals near homes and schools, Consumer Watchdog said.  Too many of these companies have mastered the arts of delay to avoid fixing leaks, improving infrastructure, and following adequate internal safety controls.

“Evergreen Oil has proven repeatedly that it cannot be trusted,” said Tucker.  “The DTSC and other regulators need to put community safety first and show zero tolerance for such polluters.”

Consumer Watchdog has previously described problems at several hazardous waste sites, and also called for reforms at the DTSC to address a lack of transparency, a disconnect between inspection and enforcement, and a preference for weak settlements instead of more aggressive prosecution of serial violators.

Read Letter to Director Raphael

Also read Consumer Watchdog’s April 9 letter to the Senate Judiciary Committee

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The energy investigators who nailed Enron for energy price manipulation that nearly bankrupted California just took aim at oil refining giants including Chevron and BP. May the refiners’ gasoline-price schemes now come crashing down in an Enron-style heap.

We’ve known for years that California and West Coast refiners find endless ways to shut down some of their gasoline production, cutting supplies and jacking up  pump prices.  They actually make more money from making and selling less gasoline. It explains why West Coast drivers are stuck paying $4-plus a gallon while pump prices take a dive in the rest of the country. Now a credible study and a U.S. Senator have reached the same conclusion-and trying to put some muscle on the oil industry.

Washington State Sen. Maria Cantwell is probably the best-informed on the petroleum industry of all federal legislators, at least among those not joined at the hip with Exxon. She is calling on the  the Federal Trade Commission to investigate six major refiners-Alon, Chevron, ConocoPhillips, Shell, Tesoro and BP.  It’s a smart move, because the oil lobby has a stranglehold on Congress and most state legislatures. President Obama has tried at least twice to reduce the industry’s billions of dollars in taxpayer subsidies, and gotten nowhere.

Here’s the gist of the story by McClatchy news service’s Kevin Hall:

In a letter being sent to regulators on Thursday and obtained by McClatchy, Sen. Maria Cantwell, D-Wash., calls on the Federal Trade Commission to investigate refinery operators Alon, Chevron, ConocoPhillips, Shell, Tesoro and BP following the shutdown of BP’s Cherry Point refinery in Washington State.

Citing a report by Portland energy consultant McCullough Research – a group whose work helped topple energy-trading giant Enron Corp. – Cantwell questioned why May gasoline prices in her state soared recently to within cents of the local record of $4.35 a gallon set in July 2008. Meantime, gasoline prices nationwide in May fell 17 cents a gallon and oil tumbled more than $14 a barrel.

The McCullough Research report questioned whether the historically low gasoline inventories on the West Coast were really a result of a fire on Feb. 17 that idled the BP plant for about three months.

Gasoline prices on the West Coast had tracked closely with the price of West Texas intermediate crude delivered at Cushing, Okla., but in May veered widely from historical norms, according to the report. Had prices followed supply costs, said the report’s author, Robert McCullough, retail gasoline prices on the West Coast would have dropped to about $3.65 a gallon. Instead, prices have been about 68 cents higher.

The report estimates “a windfall profit of $43 million a day” for refiners on the West Coast as the supply manipulation continues.

The investigators who nailed Enron ought to be able to get the attention of the FTC, and Sen. Cantwell may be able to get the oil CEOs into a hearing room for some sworn testimony.

Here’s the full report from McCullough Research, and the news release from Sen. Cantwell’s office, with her letter to the FTC attached. She requests the FTC to:

…utilize its regulatory authority and responsibility granted by Congress to ensure that Washington state consumers are not subject to “any manipulative or deceptive device or contrivance” that could be resulting in unjustifiably high gasoline prices.  In particular, I am asking the Commission, pursuant to the Prohibition on Market Manipulation Rule, to investigate whether or not recent and inexplicable gas price spikes in Washington state are the result of deliberat[e] efforts by West Coast refiners to keep gasoline inventories artificially low.

This is a fight that’s been going on for a long time and California is even more affected by what the refineries are doing. Cantwell would no doubt welcome some company in her effort from Sens. Dianne Feinstein and Barbara Boxer.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.