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Prepping for the Chevron Appeal Hearing

Copied below is an extensive article in the East Bay Express about the upcoming appeal of the Chevron Energy and Hydrogen Renewal project. Also, I received two very interesting and highly detailed letters today from CBE criticizing the previous action by the Richmond Planning Commission and criticizing the recommendations of Richmond’s secret consultant, Dr. Sahu, for unsubstantiated opinions and advice. Click here and here for the letters.

East Bay ExpressPrinted from the East Bay Express Web site:

Big Oil in Little Richmond

Whose interests will the city council serve as it considers Chevron's latest upgrade proposal?

July 9, 2008

Maya Sugarman

Chevron's 106-year-old Richmond refinery towers over the city both literally and figuratively.

Maya Sugarman

Rev. Kenneth Davis began campaigning against Chevron after moving to North Richmond.

Ramses Teon

Members of Communities for a Better Environment at a 2007 protest.

Maya Sugarman

Relations between Richmond and the Chevron refinery have been complicated for more than a century.

Maya Sugarman

Residents of Richmond suffer from significantly higher rates of hospitalization due to asthma and cancer than any other city in Contra Costa County.

On June 18, President Bush took to the Rose Garden to deliver a speech about energy in which he emphasized the pressing need to modernize US oil refineries. "With recent changes in the makeup of our fuel supply, upgrades in our refining capacity are urgently needed," he said. And if the United States is to reduce its dependence on Middle Eastern oil, the president said Congress needs to make it easier for oil companies to use unconventional sources of fuel. "It has been nearly thirty years since our nation built a new refinery," he added, "and lawsuits and red tape have made it extremely costly to expand or modify existing refineries."

The president could easily have been talking about Richmond, which is one of 22 cities studying proposed refinery modifications to accommodate changes in the industry's fuel supply. Back in 2004, the Chevron Corporation proposed a billion dollar "Energy and Hydrogen Renewal Project" at its 2,900-acre Richmond refinery. Company officials say the project is designed to modernize old equipment, produce 6 percent more California-grade gasoline, and let Chevron refine a wider, more contaminated range of crude oils — all with less pollution than before. But Chevron's critics worry that the renovations will end up fouling the air in the already-blighted Richmond neighborhoods downwind of the refinery, and have taken up arms to halt the project's progress.

The company's plans illustrate the ways in which the nation's refineries will likely respond as global demand for energy drives oil and gas prices to all-time highs. The Department of Energy expects US refiners to increase their capacity by 4.5 percent between now and 2010. And as supplies of so-called light, sweet crude oil become scarcer and ever-costlier, much of this new capacity will be dedicated to refining heavier and more polluting crude oil from Canadian tar sand reserves. Thus refineries, which turn crude oil into gasoline, must upgrade or pay the price. "This project is the camel's nose under the tent for the rest of oil refining in the West," said Greg Karras of the group Communities for a Better Environment, part of a coalition of community organizations crusading to halt the project.

Chevron's Richmond project also epitomizes the regulatory challenges described by President Bush. The expansion faces opposition from longtime critics like Karras who believe the company's actual intent is to refine dirtier and heavier grades of crude oil. Although Richmond's Planning Commission approved the project at a June 19 meeting, it imposed a number of conditions that both Chevron and its opponents thought were inadequate. Both sides swiftly appealed the decision, which is now scheduled to go before the city council on July 15. Before they cast their votes, council members will need to shrug off a din of conflicting interests and a longtime history with the company to focus on the project's complex facts. The council's decision will be a litmus test for how far the city has come since its days as a perceived Chevron "company town."

Although the oil company's plans have been reviewed by a small army of experts, there is little consensus on even the most basic of issues. Chief among them is whether it actually plans to use significantly dirtier and heavier crude oils in Richmond. Company officials declined to respond to multiple requests for an interview for this story. But in various public forums, Chevron officials have insisted that they don't plan to refine the more contaminated heavier crude oils in Richmond. "We cannot now and we will not in the future be able to run heavy crude," company representative Bob Chamberlin said at a June 5 planning commission meeting.

But there is evidence to the contrary. A recent study by the Louisiana-based Subra Company, Inc., an environmental consulting firm, suggested that similar projects at other refineries have enabled other companies to refine heavier crude oil, resulting in increased emissions of sulfur dioxide, a chemical linked to negative health effects. And in its 2007 annual report, the oil company told investors, "To improve margins, Chevron is selectively investing in its refining system to process greater quantities of low-cost heavy and high-sulfur crude oils." Finally, a December filing with the Securities and Exchange Commission suggested that these are the very factors driving its Richmond upgrade: "Design and engineering for a project to increase the flexibility to process lower API-gravity crude oils at the company's Richmond, California refinery continued in 2007."

Consequently, Chevron's opponents aren't buying its assurances. In March, Communities for a Better Environment held a press conference to address what it called the "hidden" nature of Chevron's proposed project. "Refining lower-quality oil would release five to fifty times more pollutants," Karras said. In response to the group's assertions, Attorney General Jerry Brown responded by hiring an independent chemical consultant, Geoffrey Dolbear, to review Chevron's plans. Dolbear concluded that the new equipment proposed for Richmond would indeed allow Chevron to refine heavier and potentially more contaminated grades of crude oil, which would increase the company's emissions.

This disagreement was just the latest source of confusion regarding the oil company's plans. Last December, the Attorney General's office sent a letter to Richmond officials complaining about the quality of the information the oil company had provided the city. "It appears that Chevron has provided incomplete and inconsistent material information to the different permitting agencies, which raises questions about the parameters of the project and its environmental impacts," it said. "The changing information on the data forms creates a moving target and each appears to present a different project."

As far as Karras is concerned, anything that one of the world's biggest polluters calls an upgrade could well be a downgrade for the citizens of Richmond. "What we know for sure is that this project would drastically increase flaring and other toxic pollution that would not be able to be controlled," he said. Karras believes Chevron is disguising its real plans inside a promise to make environmental upgrades that should have been completed years ago.

Yet a consultant hired by the city of Richmond, Ranajit Sahu, insists that Chevron is telling the truth about its plans. Based on his research, which includes access to materials not released to the public or company critics, Sahu said Chevron has taken all necessary precautions to prevent any significant increase in pollution. "Yes, Chevron would like to refine heavier crudes than they are processing now," Sahu said. "But they will still keep them in the light-to-medium crude range."

At a highly charged June 5 meeting of the city's planning commission, Chevron's Chamberlin tried to quell the many suspicions about the company's intentions. "I want to be very clear that there is no conspiracy or hidden plan by Chevron to process heavy crude at the Richmond refinery," he said. "We plan to run the same types of crudes that we have been running," he said. Chamberlin insisted that Chevron would need to come back before the city for permission to refine the heaviest and most contaminated crude oil.

Those who weren't convinced by Chamberlin's assurances were even less convinced when he pointed to data indicating that Richmond's air quality represents some of the best in the Bay Area. "The bottom line is that Richmond has very good air quality and it will continue to get better," he said. The comment drew jeers from the crowd, and the row of suited Chevron representatives sitting behind Chamberlin — none of whom live in Richmond — shifted nervously in their seats.

Chevron's claims about Richmond's air quality didn't impress Reverend Kenneth Davis, who lives in a 52-unit apartment complex for seniors in the heart of North Richmond, an unincorporated area surrounded by the city. This neighborhood is one of the most poverty-stricken and crime-ridden in Contra Costa County, and also happens to be one of the closest to the refinery's sputtering smokestacks, labyrinthine pipelines, and sand-colored tanks. "How in the world can anyone say that we have the best air here?" he asked. "All they need to do is come and spend a few days with me. These lawyers come in there and have nerve enough to dictate my health. It just makes me angry."

Reverend Davis wasn't up in arms about Chevron until he moved to North Richmond in 2006. "I moved here out of necessity, because it was the only place I could afford to live," he said. "I didn't even think about the fact of how close we are to Chevron." Since then, however, he said that he and other visitors to a local senior center have developed severe respiratory problems. But can he prove that the emissions from the Chevron refinery caused those problems? Not really.

A 2007 report issued by Contra Costa County Health Services shows that Richmond has significantly higher rates of cancer and asthma hospitalizations than any other city in the county. And although many of the pollutants emitted by refineries are known to cause respiratory problems, there's not enough data to conclusively point any fingers. According to the West County Toxics Coalition, Contra Costa County also has the highest concentration of industrial facilities in the state, making it difficult to blame bad air quality on Chevron alone.

"In industrial settings, environmental health is a really tough one to show cause and effect with," said Chuck McKetney, a health expert from Contra Costa County Health Services who helped put together the 2007 report. Causation also is difficult to prove because respiratory illness is an especially complex disease, he said. And there are too many variables involved to generate really accurate conclusions. For example, Reverend Davis may be inhaling bad air from the refinery, but he also smokes on occasion, which could be another reason he can't go five minutes without coughing.

However, Chevron certainly can be held accountable for its history of accidents. "When you have fires and explosions in places where people already have respiratory problems, that's a problem," McKetney said. Chevron's Richmond facilities have seen four major accidents since the chemical explosion in 1999 that released an 18,000-pound cloud of sulfur dioxide into the air and sent hundreds to the hospital. The refinery's most recent incident occurred in the early morning hours of January 15, 2007. Reverend Davis remembers waking up just in time to see an enormous plume of flames billowing from Chevron's smokestacks. The refinery is part of the view from the third-floor apartment where he lives. It wasn't so much the fire itself that concerned him — he had seen plenty of fire spewing from the stacks on a nightly basis — but he had never seen one of that magnitude before.

Reverend Davis turned on the television, but doesn't remember seeing any warning messages or hearing any "shelter-in-place" sirens. Shelter-in-place is a community warning system meant to inform neighbors to stay indoors and tape their windows shut after an incident that could have released dangerous toxins into the air. For the primarily non-white residents who live close to the refinery, the threat of shelter-in-place is just a fact of life, much like the frequent traces of rotten-egg stink in the air. It turned out that most residents didn't hear the shelter-in-place sirens, and were instead awoken by fire trucks or refinery sirens. Three months after the incident, investigations revealed that the fire was caused by aging pipes that were improperly installed more than twenty years ago. Although residents were concerned about the residual pollutants that could have been released into the air as a result of the accident, Contra Costa emergency responders determined that the amount was "insubstantial," and wouldn't harm human health.

Tensions between Chevron and Richmond are nothing new. The big oil company and the little city have a long-standing relationship that some might classify as synergistic, others as parasitic. Since its establishment by Standard Oil in 1902, the refinery has served as both the backdrop and lead actor in the city's ups and downs. As the largest taxpayer and employer in the city, Chevron — whose Richmond refinery is one of the oldest and most productive in the west — has a well-earned reputation for knowing how to sweet-talk city officials into giving it what it wants.

For years, Richmond was the virtual definition of a company town. And today there's plenty of debate about how much times have changed. "There was a time that Chevron basically owned the city council," said Councilman Tom Butt, who has served on the Richmond City Council for more than thirteen years and has been known to stand up to the company. Chevron long had a habit of picking off individual council members with promises of hefty donations to their personal projects. Today, Butt said, the company rarely makes direct contributions to political candidates, and instead takes a more indirect route by donating to their personal causes, or joining innocuous-sounding groups that then donate money. Butt said the company also tends to give to local organizations led by community leaders, which can hinder their ability to be critical of the corporation keeping them afloat. His own pet cause, the Rosie the Riveter Trust, has received around $10,000 over the past couple of years from Chevron. "You're not supposed to look a gift horse in the mouth," he noted.

Consequently, Richmond residents are not only wary of Chevron's environmental impact, they're also wary of their own city council's ability to make decisions unfettered by Chevron's influence. Even with the 2004 inauguration of their first Green Party Mayor, Gayle McLaughlin, Richmond's city council still stands divided on many issues involving Chevron. "The council has changed some since our mayor took office, but Chevron still has people in politics," said Dr. Henry Clark of the West County Toxics Coalition, a Richmond-based environmental justice nonprofit organization. "And here again, it's going to come down to politics."

Karras believes the city's elected officials have finally begun to establish their independence, but that the city's employees are lagging behind. "The staff has consistently helped Chevron cover this project up, and has done so while repeatedly failing to comply with the commissioners' directions that they analyze and address the environmental impacts of the project and quality of oil that Chevron is planning to refine," Karras said. He adds that the staff blatantly ignored addendums he suggested to the environmental report at the urging of the attorney general's office, which would have accounted for these oversights. "Staff and civil service isn't caught up with the progression of the elected officials," he said.

Veteran council members say the city's relationship with the company has changed tremendously in recent years. "They used to work really hard at relationships, for lack of a better word," Butt said. "And I think it paid off well for them. Several years ago, for whatever reason, they made a policy decision that they wanted to work at antagonizing the city council."

The changes seem to have arisen around the time of Chevron's 2001 merger with Texaco, and climaxed during Richmond's budget crisis in 2004. "At the worst possible moment in Richmond's history, they completely unplugged," said Councilwoman Maria Viramontes. The company stopped buying many products and services from local businesses, and managers stopped attending city events and pulled out of personal involvement with civic nonprofits. "It was a very bottom-line, cutthroat thing," Viramontes said. "You would get this disengagement at every level."

The city's 2004 budget crisis was accompanied by Chevron's introduction of a new Richmond refinery manager. According to an article in the East Bay Business Times, manager Jim Whiteside took it upon himself to cut at least $150 million in costs as part of the company's global reorganization following the Texaco merger. Whiteside, who cut 800 jobs in his first few months on the job, had a reputation as a "no-nonsense cost-cutter," according to the article. As part of his cost-cutting, he found a way to avoid paying the city's recently increased utility tax rate, which cost Richmond a cool $1.4 million.

Chevron has since sued the city twice, and negotiated a number of other tax appeals. Contra Costa County Tax Assessor Gus Kramer is currently grappling with an appeal that could cost the county $60 million in property taxes that Chevron claimed it overpaid between 2004 and 2006. Kramer said that's just business as usual for the county's oil giants. "Chevron is entitled to their opinion — jaundiced as it is by corporate greed," he said.

Kramer said Chevron's glossy brochures pledging that its project will "generate millions in tax revenues that could be used to fund city programs including public safety, street repairs, libraries and youth services" are extremely misleading. Last year, he went in front of the city's Design Review Board to say just that. "It's not that I'm against the project," Kramer said. "The reason I showed up that night and spoke before the review is that I didn't want the community or anyone to think that the property taxes are going to increase as a result of it."

Nonetheless, the auditor, who has worked for the county for thirteen years, said he's seen a noticeable change in the way that city officials interact with the oil company, and is expecting councilmembers to display surprising brawn at the upcoming meeting: "I think some of the Richmond City councilpeople want their pound of flesh next to Chevron's heart," he said.

And indeed, several councilmembers have said they would like to see Chevron contribute more money to the city. In 2007, the refinery reportedly contributed about $1 million in charitable donations to county organizations. While Butt appreciates that generosity, he said $1 million is just a "drop in the bucket," and believes the company can do better. For comparison, he noted that the much smaller Murphy Oil Corp. dedicated $50 million in college scholarships for students from its tiny hometown of El Dorado, Arkansas.

In a recent interview on NPR's Forum, Chevron representative Dean O'Hair responded to questions about Chevron's contributions to Richmond: "Could we do more? Maybe. But what needs to happen is that we do that in partnership with the city. One of the things I think we can try to help do is economic development with projects like these and maybe more." The company says that the project will contribute 1,200 construction jobs and ten permanent new positions at the refinery.

Some observers say Chevron might be able to rekindle its relationship with Richmond given the right investment of time, money, and personal attention. That kind of charm offensive is certainly within the means of a company that reported record profits of $18.7 billion in 2007. Others say that nothing can make up for putting the health of the community at risk. Most people at least agree that if the refinery is there to stay, it should install up-to-date equipment. As for Reverend Davis, he just hopes that city officials do their homework. "Don't just rubber-stamp this project," he urges the council. "Study it. Know what's going on."

But that will be easier said than done. For the city's decision-makers, wading through all the local, state, and federal environmental regulations — many of which are still new and yet to be implemented anywhere — has been a complex, time-consuming, and altogether nerve-racking experience. "There's a lot at stake, and a lot of regulatory bodies involved," said Councilwoman Viramontes. "We could end up with a lawsuit from both ends." If the city council approves the project, it not only runs the risk of lawsuits and endangering the public, but it also risks further corroborating its reputation as the company's lapdog. On the other hand, if it disapproves the project, it could marginalize the operations of the city's chief employer, benefactor, and taxpayer.

The recommendations of Ranajit Sahu will definitely carry weight with the city council, as they did with the planning commission. Sahu was Richmond's $60,000 investment in objective advice about the project. But there was one hitch. He was the only outside consultant given access to Chevron's "proprietary data." So when he presented his findings to the public and city officials — some of which flew in the face of what Karras had found — his suggestions were met with some backlash. For instance, Sahu says that most of Karras' concerns about the project's potential environmental effects are based on speculative data. "Karras' theory is that by increasing sulfur content, you would generate more acid gases, which could in turn cause more potential for shutdowns due to erosion of equipment," said Sahu. "But that presupposes that you cannot design around these issues." Karras said he won't buy any of Sahu's rebuttals until he can see Chevron's secret data, and he thinks Richmond's city council should demand the same.

Councilwoman Viramontes said she and her peers are pulling out all of the stops to sift the facts of the project by studying the most recent edition of the environmental impact report, which thanks to months of updates and revisions is now approximately the size of three hefty phone books.

Most councilmembers are hesitant to make predictions about the final vote. Mayor McLaughlin and Councilmembers Butt, Jim Rogers, and Tony Thurmond will most likely cast their votes in opposition. Butt predicts that Viramontes, Nathaniel Bates, Ludmyrna Lopez, John Marquez, and Harpreet Sandhu— known by some as the "Viramontes Five" because their agreement on major city decisions since 2006 has given them control of the council — will ultimately make the final decision on the matter. Then, he says, the decision will likely go straight from council chambers into litigation. If the council's thinking is anything like that of the planning commission — and it must be since councilmembers confirm those commissioners — then there's a good chance the council will eventually approve the project with conditions. There's also a good chance that both Chevron and community groups will respond by taking the city to court.

Still, some members are convinced that the council will come together. "I think that Chevron has managed to do the nearly impossible task of unifying the council in opposition," said Councilman Jim Rogers, who has a mixed track record when it comes to voting with or against the interests of Chevron. He said Chevron's proposal, as it currently stands, is "dead in the water, R.I.P., good riddance." Rogers believes the council reached its wits' end with Chevron when the oil company took its "leaner, meaner" attitude in recent years. "It's like any relationship," Rogers said. "If you feel like you're not getting anything out of it, you're bound to get fed up eventually."

Viramontes said there is mostly consensus among councilmembers on "big picture things." She doesn't see anyone on the council as being afraid of taking on the oil giant. "If there's any disagreement, it will be about the social and legal boundaries of the proposal," she predicted. "It will be about what tools we use to get there." But Chevron will have to prove its dedication to the betterment of the city to get her vote, she said. "If they're going to be here, they have to reengage," she said. "You're here in this community and you have some social responsibility."

Chevron's 106-year-old Richmond refinery towers over the city both literally and figuratively.