July 29, 2004

Still Above The Law: Still Above The Law

In 1999, EWG analyzed enforcement records from local air districts for 32 sites in EPA's Sector Facility Indexing Program and found "a clear and persistent pattern" of violations of the federal Clean Air Act in five major California industries — oil and chemical refineries, pulp and paper mills, auto plants, iron and steelmaking and metal smelters. The average fine assessed between 1996 and 1999 was $3,101, and state law capped the penalty for most violations at $1,000 a day.

Most egregious was the response to violations by the state's worst air polluters — Northern California petroleum refineries. The five facilities in the state with the most violations were all East Bay refineries. Between 1996 and 1999 the average fine paid to settle violations by Bay Area refineries was just $699. There was a startling difference between enforcement by the Bay Area air district and the South Coast district in Los Angeles: Bay Area refineries were issued eight times as many violations as L.A. County refineries, but the average fine per violation paid by Southern California refineries was more than 28 times the Bay Area average.

EWG's 1999 findings echoed an audit by the Inspector General of the U.S. Environmental Protection Agency. The EPA delegates authority for enforcement of federal laws to the California Air Resources Board (ARB), which in turn delegates most enforcement to 35 local and regional air quality districts. In 1997 EPA found that that California air districts were not proposing adequate penalties in accordance with the Agency's guidelines, appropriately justifying reductions in proposed penalties, resolving cases in a timely manner or adequately publicizing enforcement activities. [1]

In 2001, the California Legislative Analyst's office took a closer look at the state's oversight role and diagnosed the same type of regulatory dysfunction as had been documented by the EPA and EWG. The Legislative Analyst concluded that the state Air Resources Board "takes little action when the local districts clearly disregard certain statutory reporting requirements, lacks data to assess the extent of enforcement, and devotes minimal time to program review ... [ARB's] review of local programs — a statutory mandate — is minimal." [2]

After each public scolding, the air districts and the ARB have argued that the enforcement record was improving and promised to do better. To see if that was true, we conducted a new analysis, different from the earlier study in two important ways: Instead of asking for EPA's data on federal violations by a limited number of highly-polluting industries in California, we went directly to the air districts for records on both federal and state violations by all major facilities. And rather than reporting average fines, which can be skewed by a handful of large penalties, we calculated the median fine — the level with an equal number of fines above and below — which gives a more accurate measure of the typical penalty. †3

Analysis of records from four air quality districts — Bay Area, South Coast, Sacramento and San Joaquin — from January 1999 through March 2004 found that half of all civil penalties were resolved for $2,000 or less. In that period the districts levied 2,370 penalties totaling about $11 million in fines. †4

  • The South Coast district, which regulates the region with the dirtiest air in the nation, levied 399 penalties to settle 742 violations, totaling $3.6 million. Half the violations involved fines of $2,000 or less (the median).
  • The San Joaquin district, which EPA recently downgraded to an "extreme" level of non-compliance with clean air laws, levied 901 penalties totaling $4.3 million with a median fine of $2,100.
  • The Bay Area district, which generally meets federal clean air standards but also regulates the East Bay refineries that are the worst repeat offenders in the state, levied 703 penalties totaling $2.8 million with a median fine of $1,450.
  • The Sacramento district, where the air quality also violates federal standards, levied 24 penalties totaling $84,500 with a median fine of $2,045.

It's true that the fines levied by air districts have generally increased over the past several years, since the state cap of $1,000 a day was raised to $10,000. The typical fine in the South Coast roughly doubled between 1999 and 2003, and from 2002 to 2003 almost tripled in the Bay Area.

However, in the first quarter of 2004, the median penalty declined in each of the districts from the previous year's level, leaving open the question of whether fines will continue to rise. What's more, the fines were so low to begin with, and so small in relation to corporate profits, that the impact is like raising bridge tolls from $2 to $3 — a minor inconvenience that doesn't change anyone's behavior.

The largest fine issued in the state in the last five years was in 2002, when the South Coast district penalized AES Pacific $17 million for "egregious" nitrogen oxide emissions at its Alamitos power plant. [3] That one fine represented more than three-fourths of all civil penalties collected by the district in that period.

A better measure of the increasing or decreasing severity of the penalties is to look at the percentage of fines above $30,000, as the EPA Inspector General did in 1997. That investigation found that, statewide, only one in 30 fines were greater than $30,000, and recommended that air districts levy more large fines. Today, the only one of the four districts that has maintained that pace is the South Coast. The other districts have lost ground. Over the last five years, in the Bay Area, Sacramento and San Joaquin districts, fewer than one in 50 fines were more than $30,000.

Statewide, fewer than 1 in 50 fines were more than $30,000 since 1999

Air district Number of fines >$30,000 Percent of penalties >$30,000
Bay Area 9 of 703 1.3%
Sacramento 0 of 24 0.0%
San Joaquin 14 of 901 1.6%
South Coast 23 of 742 3.1%
All Districts 46 of 2,370 1.9%

The state grants air districts considerable leeway in determining how best to bring polluters into compliance with their operating permits. Each district has a slightly different style of enforcement, which makes it tricky to compare them. The Bay Area and San Joaquin districts generally issue one penalty for each rule violation, while the South Coast and Sacramento often resolve multiple violations with a single penalty.

Because the South Coast often settles numerous individual violations with one fine, we had to calculate the average fine per violation, then use those figures to determine the median of all fines. The Bay Area issues more penalties to major sources, but the South Coast settles violations with higher fines. The Bay Area air district, in particular, points to these different enforcement styles to explain its low median fines — but the bottom line is that neither approach is deterring repeat offenders. The issue isn't which California air district's enforcement is "best," but that each district's effort is abysmal at its primary mission of discouraging violations.

In the past five years, fourteen major California polluters have each been penalized more than 50 times. In the Bay Area, Shell's Martinez refinery and Chevron's Richmond refinery were both cited for more than 120 violations during that period, averaging almost two violations a month. In the San Joaquin district, the Texaco refinery in Kern County has been fined for 121 penalties since 1999. As the EPA Inspector General said in 1997: "Evidence that a party violated an environmental requirement before clearly indicates that the party was not deterred by a previous governmental enforcement response."

In the air districts we looked at, refineries and power plants were clearly the worst violators. Of the 10 top polluters with fines totaling more than $400,000 in the period, nine were refineries and one was a power plant. Of the top 10 measured by the number of violations, eight were refineries and one was a power plant.

Top 10 California industrial air polluters by fines paid or violations settled

Facility City Total civil penalties paid Number of violations resolved
AES Alamitos $17,000,000 1
Mobil Oil Corporation Torrance $2,155,575 80
Chevron Products Company Richmond $662,511 123
Martinez Refining Company (Shell) Martinez $598,652 122
Equilon Enterprises Bakersfield $591,176 70
Occidental of Elk Hills Kern County $587,538 35
Chevron Products Company Bakersfield $547,467 78
Vintage Petroleum Inc. Kern County $523,680 8
Chevron Products Company El Segundo $518,450 93
Texaco California Kern County $427,308 121
Tosco Refining and Marketing Company Wilmington $382,363 74
Aera Energy Company Bakersfield $355,319 115
Hexcel Corporation Livermore $80,680 92

Since 1999, the Bay Area air district has settled 371 penalties against refineries operated by BP, Chevron Texaco, Conoco Phillips, Shell, Tesoro, Tosco, Ultramar, and Valero, for a total of $2 million. A quarter of the penalties were paid in a single fine by Shell to settle 71 violations gathered over a two-year period.

In that period the South Coast settled 336 violations in 111 civil penalties against Arco, Chevron, Equilon, Mobil, Tosco, and Unocal for a total of $3.7 million, with about half coming from the $1.75 million settlement with Exxon Mobil in 2002. The South Coast is currently seeking a record $319 million settlement against BP to resolve thousands of violations issued for false reporting, illegal flaring of gases and emissions of noxious fumes.

While these are much larger than the typical air district fines and seem like a lot of money to the average Californian, whose median family income is $63,000, in the context of oil company profits they are next to nothing. The $5.7 million collected from refineries in the South Coast and Bay Area for civil penalties over the past five years is less than half of the daily income of the average parent company. †5

Records show that during the 1990s, air districts typically settled violations in less than 90 days — a period ARB recommends as "both achievable and desirable" for effective enforcement. [10] But our analysis found that both the Bay Area and San Joaquin districts have gotten much slower in issuing penalties, while Sacramento improved marginally. (Average settlement times for the South Coast district were not available. We used 2000 as a baseline year for the other districts because data from 1999 reflected only cases opend and closed in the same year.) It may take time for air districts to settle complex violations with facilities, but longer settlement times mean less effective deterrence from penalties.

  • In 2000, the average settlement time for violations in the Bay Area district was 205 days. In 2003, it was more than 21 months.
  • In 2000, the average settlement time for violations in the San Joaquin district was 267 days. In 2003, it was more than 13 months.
  • In 2000, the average settlement time for violations in the Sacramento district was 273 days. In 2003, it was 250 days.


†3 If a district issued 1,000 fines of $1,000 and 2 fines of $1 million, the average fine would be about $3,000 but the median would be $1,000.

†4 This figure doesn't include the two statistic-skewing fines by the South Coast air district in 2002 of $17 million against AES Pacific at Alamito, the state's largest gas-fired power plant, for excessive nitrogen oxide emissions, and $1.75 million against Exxon Mobil for multiple violations at its Torrance refinery. This figure includes all civil penalties by the four districts; the South Coast issues additional penalties described in Appendix 2.

†5 The average net income of Chevron, Exxon Mobil, Shell, Conoco, BP, Tesoro, Valero and Unocal in 2003 was $4.38 billion.