CONTACT: Stacy Kika
Kika.stacy@epa.gov 202-564-0906 202-564-4355

FOR IMMEDIATE RELEASE
December 16, 2011

Sentence is the largest ever criminal fine in Louisiana for air pollution

WASHINGTON – Pelican Refining Company LLC, was sentenced to pay $12 million for felony violations of the Clean Air Act and to obstruction of justice charges in federal court in Lafayette, La. announced Cynthia Giles, assistant administrator for the U.S. Environmental Protection Agency’s Office of Enforcement and Compliance Assurance, and Ignacia S. Moreno, assistant attorney general of the Environment and Natural Resources Division of the Department of Justice.

“Facilities have a responsibility to protect their employees and local residents by following our nation’s environmental laws,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Corporations that choose to cut corners and ignore these critical safeguards will face significant consequences.”

“This corporation operated without even the most basic requirements of an environmental compliance plan and endangered the public and its own employees by implementing unsafe practices in violation of its permit and reporting requirements,” said Ignacia S. Moreno, assistant attorney general for the Environment and Natural Resources Division of the Department of Justice. “Today’s plea demonstrates that the Justice Department will continue to vigorously prosecute those who violate environmental and workplace safety laws.”

Pelican was sentenced to pay a $12 million penalty, which includes a $10 million criminal fine and $2 million in community service payments that will go toward various environmental projects in Louisiana, including air pollution monitoring. The criminal fine is the largest ever in Louisiana for violations of the Clean Air Act. Pelican is also prohibited from future operations unless it implements an environmental compliance plan, which includes independent quarterly audits by an outside firm and oversight by a court-appointed monitor.

In a joint factual statement filed in court, Pelican, headquartered in Houston, Texas, admitted that the company had knowingly committed criminal violations of its operating permit at the refinery located in Lake Charles, La. The violations were discovered during a March 2006 inspection by the Louisiana Department of Environmental Quality (LDEQ) and the Environmental Protection Agency (EPA), which identified numerous unsafe operating conditions. Pelican also pleaded guilty to obstruction of justice for submitting materially false deviation reports to LDEQ, the agency that administers the federal Clean Air Act in Louisiana.

Pelican admitted to the following:

* Pelican had no company budget, no environmental department and no environmental manager;

* In order to comply with a permit issued under the Clean Air Act, the refinery was required to use certain key pollution prevention equipment, but that equipment was either not functioning, poorly maintained, improperly installed, improperly placed into service and/or improperly calibrated;

* It was a routine practice for over a year to use an emergency flare gun to re-light the flare tower at the refinery designed to burn off toxic gasses and provide for the safe combustion of potentially explosive chemicals; because the pilot light was not functioning properly, employees would take turns trying to shoot the flare gun to relight the explosive gasses;

* Sour crude oil was stored in a tank that was not properly placed into service and remained in the tank after the roof sank;

* A caustic scrubber designed to remove hydrogen sulfide from emissions was bypassed;

* A continuous emission monitoring system (CEMS) designed to measure the hydrogen sulfide levels in refinery emissions was not working properly, and

* Pelican provided false information to the State of Louisiana and the State of Texas concerning the laboratory testing of asphalt.

Byron Hamilton, the Pelican vice-president who oversaw operations at the Lake Charles refinery since 2005 from an office in Houston, Texas pleaded guilty on July 6, 2011, to negligently placing persons in imminent danger of death and serious bodily injury as a result of negligent releases at the refinery. Hamilton faces up to one year in prison and a $200,000 fine for each of the two Clean Air Act counts. On Oct. 31, 2011, Pelican’s former asphalt facilities manager, Mike LeBleu, also pleaded guilty to a negligent endangerment charge under the Clean Air Act.

The government’s investigation of the Pelican Refinery continues. Under the Crime Victims’ Rights Act, crime victims are afforded certain statutory rights, including the opportunity to attend all public hearings and provide input to the prosecution. Any person adversely impacted is encouraged to learn more about the case and the Crime Victims’ Rights Act or contact the Victim Witness Coordinator for the U.S. Attorney’s Office, Western District of Louisiana.

The criminal investigation is being conducted by the EPA Criminal Investigation Division in Baton Rouge and the Louisiana State Police, with assistance from the Louisiana Department of Environmental Quality. The case is being prosecuted by U.S. Attorney Stephanie Finley, Richard A. Udell, Senior Trial Attorney of the Environmental Crimes Section of the Environment and Natural Resources Division of the U.S. Department of Justice, Trial Attorney Christopher Hale with the Environmental Crimes Section.

More information on EPA’s criminal enforcement program:
http://www.epa.gov/compliance/criminal/index.html

Read the joint factual statement: http://www.epa.gov/compliance/criminal/investigations/pelican-jfs-10-21-11.pdf

Photos: http://www.epa.gov/compliance/criminal/investigations/pelican-exhibits.pdf

Special thanks to Richard Charter

http://www.nola.com/opinions/index.ssf/2011/12/moving_forward_on_repairs_to_s.html

Times-Picayune

Published: Saturday, December 17, 2011, 7:09 AM
By Editorial page staff, The Times-Picayune

The first projects covered by BP’s pledge to provide $1 billion for early restoration from the 2010 oil spill will include creating 104 acres of marsh, placing oyster cultch on six public seed beds and upgrading a Grand Isle oyster hatchery. That’s fitting, since wetlands and oyster beds are both important natural resources in Louisiana that took serious blows in the disaster.

It’s also encouraging that Louisiana is getting $28 million of the first $57 million in projects that was approved this week. A committee of trustees representing the five Gulf Coast states, the federal departments of Interior and Commerce and BP gave the OK for the projects, which represent only a fraction of what BP will pay. The oil giant may ultimately have to fork over as much as $20 billion to compensate for damage done to natural resources in the blowout of the Macondo oil well.

The Louisiana wetlands project will create 104 acres of unbroken marsh. The $13.2 million effort is an expansion of an existing project in Lake Hermitage in Plaquemines Parish and replaces plans to create 70 acres of marsh terraces.

The fact that $14.9 million in oyster projects for Louisiana are included is especially significant since BP had been opposed to paying for damage to beds. The company’s argument was that freshwater from Mississippi River diversions that the state opened up after the spill were responsible for wiping them out, not oil.

But some beds were damaged by oil, and Louisiana opened up freshwater diversions to prevent oil from moving into the wetlands and doing even more damage. Clearly, the freshwater impact on oyster beds was a direct consequence of the spill.

Louisiana officials and the oyster industry were pushing to include oyster bed projects, and rightly so. Louisiana oysters are a natural resource that suffered great harm. Production this year is down 65 percent, according to Mike Voisin, who is a member of the Louisiana Oyster Task Force.

The projects approved by the committee include placing oyster cultch on 850 acres of public seed beds at 3-Mile Bay and Drum Bay in St. Bernard Parish, Lake Fortuna and South Black Bay on the east bank of Plaquemines Parish, Hackberry Bay in Lafourche Parish and Sister or Caillou Lake in Terrebonne Parish. The work also includes an upgrade to the oyster hatchery.

“This is the trustees recognizing that damage to the oyster industry (from the spill) is an important issue, and BP also concurring that it’s an important issue,” Mr. Voisin said.

That’s progress, especially considering BP’s previous unwillingness to take responsibility for freshwater damage to oyster beds.

Special thanks to Richard Charter.

There are questions about the safety of seafood in the Gulf following the BP oil disaster. Gary Tuchman reports.

http://ac360.blogs.cnn.com/2011/11/21/video-is-gulf-seafood-unsafe-to-eat/

http://www.bloomberg.com/news/2011-12-15/chevron-s-oil-spill-in-brazil-prompts-10-6-billion-lawsuit.html

By Peter Millard and Adriana Brasileiro – Dec 15, 2011 12:00 AM ET

This photo taken Nov. 18, 2011 and released by Rio de Janeiro’s government, shows an aerial view of a boat crossing an area of the oil spill in an offshore field operated by Chevron at the Bacia de Campos, in Rio de Janeiro state, Brazil. Photographer: Rio de Janeiro’s government,Rogerio Santana/AP Photo

A Brazilian lawsuit that seeks to halt Transocean Ltd. (RIG) and Chevron Corp. (CVX) operations after an oil spill would reduce the country’s offshore drilling at a time when it wants to double output in ten years.

Federal prosecutors in Campos, in the oil region of Rio de Janeiro state, are suing both companies for 20 billion reais ($10.6 billion) in environmental and social damages and asked a court to suspend their operations, according to a statement yesterday. Chevron, based in San Ramon, California, and Transocean, based in Vernier, Switzerland, said they haven’t been notified and are cooperating with authorities.

The case imperils Brazil’s plan to boost crude output because Transocean operates 10 out of the 61 rigs working in the country and it would be hard to replace them in a tight market for oil equipment, said Judson Bailey, an analyst at Jefferies & Co Inc. Brazilian oil production growth has slowed after the country increased safety requirements following the spill at BP Plc’s Macondo well in the Gulf of Mexico last year.

“The rig market is pretty tight, so if Transocean were banned, the oil companies wouldn’t be happy at all,” Bailey said in a phone interview from Houston. “Chevron and Petrobras can’t get a rig elsewhere, so it messes with the state-owned oil company.”

Chevron, Brazil’s third-largest producer behind state- controlled Petroleo Brasileiro SA (PETR4) and Royal Dutch Shell Plc, will see production wane in Brazil until the government lets it drill again, said Cleveland Jones, an oil specialist and professor at Rio de Janeiro State University.
‘Opening Shot’

Chevron fell 3 percent to $100.53 at the close in New York yesterday. Transocean declined 3.9 percent to $40.19.

Chevron has come under increased scrutiny in Brazil after 3,000 barrels of oil leaked last month from an oil field in deep waters of the Campos Basin. The company underestimated the amount of pressure at an oil deposit it was exploring, and crude leaked from the reservoir for about eight days, George Buck, the head of Chevron for Brazil, said on Nov. 20.

BP has booked more than $40 billion in losses related to the April 2010 blowout of the Macondo well in the Gulf of Mexico. The accident killed 11 workers aboard Transocean’s Deepwater Horizon well and spilled 4.9 million barrels of crude. That’s about $8,163 per barrel spilled, compared to $3.57 million per barrel if the Brazilian fine were to hold.
Still Operating

“Ultimately this is an opening shot, Chevron’s attorneys are probably not at all fazed by this,” said Jones. “The prosecutor’s office will be a positive development for Chevron, because they will ensure that the letter of the law is followed and the letter of the law is reasonable.”

Chevron said in an e-mailed statement that it “responded responsibly to the incident at its Frade Field and has dealt transparently with all Brazilian authorities.” Guy Cantwell, a Transocean spokesman, said the company’s rigs are operating in Brazilian waters and the company continues to cooperate with the government.

Chevron holds a 51.74 percent stake in Frade. Petrobras holds a 30 percent stake, and Frade Japao Petroleo Ltda., a joint venture including Inpex Corp. and Sojitz Corp, holds 18.26 percent. Frade is about 230 miles (370 kilometers) northeast of Rio de Janeiro in the Campos Basin and produced 76,000 barrels a day of oil and natural gas in October.
Criminal Lawsuit

In the next few weeks, prosecutors will probably file a criminal lawsuit against Chevron for alleged environmental crime, said Romulo Sampaio, a law professor at Brazil’s Getulio Vargas Foundation.

“In this case, everything conspires against the company: it’s a foreign company, drilling for oil in Brazilian waters. That may bring about emotional responses,” Sampaio, who coordinates the university’s Environmental Law program, said in a telephone interview.

Prosecutors’ track record in lawsuits against companies involving environmental issues has been at best mixed. Federal prosecutors twice this year sought to halt construction of the Belo Monte hydroelectric dam in the Amazon, and on both occasions federal judges ruled that the project should proceed.

Federal prosecutors in 2009 convinced Brazilian cattle ranchers in Para, the state that has lost the most forestland to illegal logging, to halt Amazon forest destruction and replant trees to avoid an international ban on meat after prosecutors took action.

Brazil’s five largest meatpackers — JBS SA, the world’s largest beef producer, Marfrig Alimentos SA, Bertin SA, Minerva SA and Frigol Comercial Ltda. — agreed to stop buying cattle from suppliers that contributed to stripping the Amazon forest.

A lawsuit against Alcoa Inc. is still pending after six years of legal haggling. Federal and state prosecutors sued Alcoa’s Brazilian mining subsidiary in 2005 in an effort to block construction of the Juruti bauxite mine in the state of Para, saying the company had circumvented the law by not applying for a federal permit and instead seeking a license from the state of Para.

To contact the reporters on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net; Rodrigo Orihuela in Rio de Janeiro at rorihuela@bloomberg.net Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net

To contact the editor responsible for this story: Carlos Caminada at ccaminada1@bloomberg.net

Special thanks to Craig Quirolo

http://www.newsobserver.com/2011/12/12/1707129/cuba-shows-us-its-response-plans.html

ERIKA BOLSTAD – MCCLATCHY NEWSPAPERS

Dec 12, 2011

WASHINGTON – As Cuba prepares to embark on a new round of exploratory offshore drilling, U.S. officials are slightly more enlightened about the island nation’s plans in the event of a catastrophic oil spill on the scale of last year’s Deepwater Horizon explosion. Several Caribbean countries – including the United States and Cuba – met last week in the Bahamas to talk about response plans. U.S. officials got an opportunity to see the Cuban disaster-response plans; Cuba already has participated in a mock response drill in Trinidad with the Spanish oil company that’s doing the first round of drilling. That company, Repsol, also agreed to allow U.S. inspectors from the Interior Department to look at the rig that will be doing the drilling.

Sarah Stephens, the executive director of the Center for Democracy in the Americas, said she was encouraged that Cuban and American officials had met, along with other nations that have an interest in regional oil production. “There should be a lot more direct conversation and collaboration between the U.S. and Cuba and others about the rig, because it’s inevitable,” she said.

U.S. officials say their priority is mitigating any potential threat to the United States and its territorial waters from oil drilling in Cuban waters. They say they’ve done nothing to facilitate oil drilling in Cuban waters, and that their main goal is to be prepared for the possibility of a spill and how they’d respond to it. “The United States will continue to engage multilaterally to advance regional collaboration and to ensure responsible stewardship of the Gulf of Mexico and the Caribbean Sea,” the State Department said in a statement issued before the meeting in the Bahamas. Although U.S. officials say they’re not actively working to keep Cubans from drilling in their own waters, the Cuba embargo that’s been in place since the 1960s may have slowed things down.

Repsol had to find an oil rig made from fewer than 10 percent U.S. components – not an easy task. Although few rigs are made in the United States, many components of them are, including software and blowout preventers. The rig, which is owned by a subsidiary of the Italian oil company Eni, will be used next by a rotation of state-owned oil companies: Petronas, a Malaysian company, and the Oil and Natural Gas Corp., an Indian company that will be partnering with Russia’s Gazprom. “That rig was custom-built to be sure that it met the embargo limitations,” said Jorge Pinon, a former Amoco executive and a visiting research fellow with Florida International University’s Latin American and Caribbean Center’s Cuban Research Institute. “That’s why it’s taken so long, over the last three years, for international oil companies to be able to drill in Cuba.”

Pinon and other experts in Cuba’s drilling and regulatory abilities remain concerned that the U.S. government hasn’t spoken with the state-owned oil giants that will be leasing the rig after Repsol to drill in Cuban waters. “Politics have exceeded common sense in protecting the environment and economy of Florida,” Pinon said.

The United States doesn’t have the same leverage with the companies next in line, however, Interior Department officials told Congress in October. But because it’s a public company and because of its other extensive U.S. interests, Repsol is likely to exercise caution in a prospect less than 100 miles from the Florida coastline.

Special thanks to Richard Charter