The One That Got Away

On August 14, Michael Peters and Jeffrey Jackson, former managers of the Huntsman chemical facilities in Port Neches and Port Arthur, became the first industrial plant executives in the nation to be sentenced to prison for violating the Clean Air Act. Their crimes, which involved massive discharges of benzene, a known carcinogen, at the Port Arthur plant and a conspiracy to conceal the releases from regulators earned them each three-year prison terms plus $50,000 in fines.

Federal prosecutors hope jail time sends a clear message to would-be polluters: Violate the Clean Air Act–Risk losing your freedom. “Nothing focuses the mind like a prison sentence,” says Matthew Orwig, the U.S. attorney for the Eastern District of Texas. “I will make sure this isn’t the last case like this we see. In fact, I’m already working on two more.”

Are prison sentences the missing ingredient in Texas’ losing battle against air pollution? Fines routinely doled out to dirty chemical plants and oil refineries are often only a fraction of what it would cost to maintain a clean, safe facility. A prison sentence, on the other hand, cannot be easily subjected to a cost/benefit analysis. It might make plant managers think twice before contaminating neighborhoods with illegal toxic releases. Time will tell if this case sets a precedent, or is merely an exception. Orwig is optimistic. “By prosecuting individuals, you send a strong message to the executives who call the shots–they will be held responsible for their crimes,” he insists.

But, for now, the residents of Port Neches and Port Arthur have little reason to celebrate. The price of justice in the Huntsman case appears to be allowing the company to continue polluting. Local communities around the Huntsman facilities still suffer. Peters and Jackson are not in jail yet. Freed on bail, they are appealing their sentences. And state regulators who must provide the foundation for successful prosecutions won’t do their jobs.

The regulatory agencies that work in Texas rely, almost entirely, on information provided to them by industry. This makes discovering even routine violations very difficult. In order to sniff out an environmental crime, the Texas Commission on Environmental Quality (TCEQ) (formally the Texas Natural Resource Conservation Commission) has to wait for a company to admit it committed a violation and agree to accept a nominal fine. A serious, proactive enforcement action requires catching bungling conspirators in a particularly egregious act–like poisoning a neighborhood with millions of pounds of benzene and other noxious chemicals–and then finding enough evidence to prove they not only knew about it, but didn’t really care.

Prosecuting environmental crimes poses a particularly thorny legal challenge for the government, since breaking an environmental law is not necessarily a criminal violation. The prosecution has to prove, beyond a reasonable doubt, that the individual or corporation willfully broke the law. The Department of Justice recommends charging a company itself (as well as individuals in charge) if that company doesn’t have an adequate compliance program in place. Huntsman was clearly vulnerable to this charge. If Huntsman had been tried and convicted along with Peters and Jackson, it would now be under probation and more closely scrutinized. Instead, a company that condones polluting, as Huntsman seems to do (see “Huntsman’s Odessa Syndrome,” by Greg Harman, September 22, 2000) appears to have sacrificed a few minor executives and continued to pollute.

Mike Bradford, the former U.S. Attorney for the Eastern District of Texas, says that his office considered prosecuting the company as well, but decided against it. “In a case like this, the company usually tries every tactic to stonewall the investigation,” he says. “Huntsman, on the other hand, gave us unfettered access to the plant and all their records, without a warrant. They also seemed genuinely concerned about what had happened, and eager to implement systematic changes. They didn’t act guilty, and we didn’t have evidence they were.” Bradford added that Huntsman also agreed to give money to a wetlands preservation project.

The jury convicted Peters and Jackson, environmental manager and plant manager respectively, in November 1999, but clouds of toxic fumes continue to wash over households near Huntsman’s Port Neches plant, just a few miles away from its Port Arthur facility. Huntsman itself was granted immunity from criminal prosecution in exchange for testimony in the case. (Two civil suits against the company remain unsettled. A civil suit against Huntsman’s Odessa plant was settled in February for $210,000.)

A startling TCEQ memo written in December 2000, a year after the convictions, describes a team of mobile air monitors near the Port Neches facility becoming ill from simply driving by the plant with the windows closed. “These effects, which resulted after very short-term exposure, included eye, nose, and throat irritation, coughing, headaches, and nausea, as well as strong odors.” The memo, which discusses elevated levels of cancer-causing chemicals in the air over a ten year period, concludes that “it is essential that the concentrations of the chemicals be significantly reduced without further delay.”

This urgent call seems to have been ignored. The Port Neches and Port Arthur plants have garnered at least 46 pollution violations since that memo was written. Clearly the problems at Huntsman extend far beyond Peters and Jackson, so it is not surprising that Charles Blau, Jackson’s defense attorney, wonders why they should lose their freedom. “The corporation should have been fined, just like in every other case,” he believes. “They didn’t do anything out of the ordinary. Why were they left to walk the plank?”

Blau has a point. As chilling as it is to contemplate, these sorts of crimes probably aren’t that rare. In fact, state and federal environmental data indicate many plants manipulate their emissions inventories. The Peters and Jackson case is unique only in the willful attitude of the offenders, the egregious nature of their crimes, and the volume of evidence available to the prosecutors. That is what secured their conviction.

The government began documenting Peters and Jackson’s crimes beginning in 1994, the year Huntsman bought the Port Arthur plant from Texaco, but it was a dirty plant long before then. Court documents show that residents of the El Vista neighborhood, a poor, mostly black community that borders the plant, had been complaining of vile odors since the mid-1980s. Even then, Michael Peters bore some responsibility for the toxic emissions. At the time, he was head of the regional TCEQ air control board, and, therefore was in charge of policing the plant.

In fact, Neil Carman, who worked at the TCEQ with Peters before joining the Sierra Club, says that Peters and Texaco had a cozy relationship before he left the agency. “In 1992,” he says, “there was an investigator in Beaumont who was hitting Texaco with lots of violations. Texaco complained to Peters, and suddenly she was transferred to Corpus Christi. This wasn’t unusual behavior within the agency, though.”

It is common for TCEQ officials to move from state employment to become environmental managers for industry. This unofficial “revolving door” policy is great for the underpaid, under-appreciated public official–Peters made over $100,000 a year at Huntsman–but it’s effects on enforcement activities, says Denny Larson of the Sustainable Energy and Economic Development Coalition (SEED), is deleterious. “Texas is not unique,” he says. “But it is the national poster child when it comes to this sort of revolving door policy. It simply destroys the integrity of enforcement efforts.” In Peters’ case, it is clear that his intimate knowledge of TCEQ procedure and his relationship with the agency taught him he could flagrantly break the law.

In December of 1994, after numerous complaints from nearby residents, the TCEQ inspected the plant and discovered that one of the cooling towers was emitting massive quantities of toxic air pollutants–6,484 pounds of benzene were measured, plus an additional 6,122 pounds of other Volatile Organic Compounds (VOCs). Although the TCEQ made no effort to monitor the cooling tower on a regular basis, Huntsman’s own records reflect that close to this amount–described by one inspector as “off the charts”–was being released daily. (VOCs are a group of chemicals that evaporate quickly into the air, forming smog. Benzene, a common solvent, is considered one of the most hazardous VOCs. It is known to cause cancer, birth defects and sterility and is suspected of also causing liver toxicity and nerve damage.)

After the TCEQ inspection, Peters immediately drafted a letter claiming it was a “major upset” caused by a leaky valve. He promised the problem would be fixed immediately. An upset is defined as an unpreventable, one-time release of dangerous pressure, and is exempt from normal emissions quotas. But when chemical plants have a release caused by inadequate maintenance, environmentalists charge it is often explained as an “upset” to avoid penalties. In this case, the upset report was clearly a ruse. Peters knew it would get the TCEQ off his back. In fact, the problem wasn’t fixed until almost a year later, and by that time a few other valves had burst, and were leaking a similar toxic stew. The federal government estimates that the cooling tower alone released 2,300 tons of VOCs a year.

That was just the beginning of Huntsman’s problems. The massive plant was springing leaks like an old hose. One of their flares, a device used to burn excess VOCs that mechanically resembles a huge elevated gas stove burner, was in serious disrepair. During the summer of 1995, only one of six pilot lights worked, so, depending on the direction of the wind, pure VOCs were released into the atmosphere. Fixing the flare would have required shutting down the plant for a day, costing $500,000. But since a broken flare doesn’t slow down production–the VOCs are still vented–the management saw no urgent need to fix it. At roughly the same time, Peters and Jackson knowingly used a tank with damaged seals to hold benzene wastewater, allowing the gas to escape into the atmosphere. Once again, the cost to fix the problem, around $50,000, was more than the managers were willing to spend.

Residents of the bordering El Vista neighborhood, of course, were well aware that the plant was having problems: many of them were complaining about nausea, trouble breathing, burning eyes and other symptoms. The neighborhood Citizens Advisory Panel (CAP) demanded an emergency meeting with Huntsman management. CAPs are designed to facilitate communication between the fenceline communities that bear the brunt of industrial pollution, and management, so that problems can be resolved directly. Peters, though, had other plans in mind. Acknowledging in an e-mail that there was a “significant condition brewing in El Vista,” he argued for “deflective action.” In particular, he said in a letter to employee Jack Doucet that Huntsman would drive “steaks” into the heart of El Vista residents, a reference to the fact that a meal would be served at the CAP meeting, and in the margin wrote, “I mean stakes.” At the CAP meeting, Jackson falsely described the massive benzene releases as “odorous, but nontoxic.”

The TCEQ was also aware of the problems at the plant, and continued to request information from Huntsman management. It even issued the occasional Notice of Violation. But the effort was weak-willed. Peters and Jackson certainly didn’t expect regulators to monitor the plant emissions closely. This meant that as long as Huntsman management was willing to lie outright about the conditions at the plant, the TCEQ was kept in the dark about the magnitude of the problem. The fact that Peters and Jackson will ultimately pay for their crimes, if their appeals don’t succeed, does not erase the fact that they got away with releasing as much as eight million pounds of benzene over several years. According the TCEQ, in 1996 the Huntsman plant was responsible for almost 13% of the total reported VOCs in Jefferson, Hardin and Orange counties.

Some have speculated that top management at the TCEQ Beaumont office, who are the local officials charged with enforcing the Clean Air Act, never had any intention of bringing the case to trial. Vic Fair, the director of the Beaumont office, worked for years under Michael Peters. The Sierra Club’s Carman says that Peters hired Fair for the top position. They went to the same church and had mutual friends. According to Carman, it was not Fair but a junior staffer who exposed the massive fraud at the plant. “It was a low-level TCEQ investigator with a conscience that broke ranks and went to the U.S. attorney’s office,” says Carman. “The TCEQ management has never made criminal investigations a priority.”

But even if the TCEQ was committed to uncovering environmental crimes, cases like this will always be difficult to prosecute. Defense lawyers are free to invoke the “rule of lenity,” which states that if a law is unclear, then it cannot be the basis of a criminal suit. With regulations as complicated as those governing chemical plants, this is a common argument. “Industry always complains about the complexity of the regulations,” says Steve Solow, former chief of the environmental crimes division at the Justice Department under the Clinton Administration. “But the regs make it just as hard on us. If you can’t explain the violations in simple language to a jury, you don’t have a case.” Solow says that this is especially true with regard to the Clean Air Act, after the law was significantly amended in 1990. “It takes time for the law to settle out,” he says. “But we have reached a point where both the regulatory agencies and industry understand the expectations.”

The TCEQ and the EPA could also step up their efforts to write violations and impose fines, which can be done without a day in court. Businesses hate to lose money more than anything. But for this strategy to work, the fines have to be more expensive than the cost of properly maintaining the plant. Peters and Jackson clearly decided that $500,000, the cost to shut down the plant to fix the benzene leak and the flare, was more expensive than the risk of enforcement. “Many firms have decided that paying fines is just a cost of doing business,” says Jennifer Arlen, a law professor at New York University.

Above all, the Peters/Jackson case demonstrates that the current system of relying exclusively on industry to accurately report their emissions is unworkable. Unfortunately, the system is unlikely to change anytime soon. Closely monitoring even one chemical plant–with its countless flanges, gaskets, flares and tanks to vent toxic fumes–is prohibitively expensive. The TCEQ does have ambient air monitors in industrial neighborhoods; if the wind is blowing right, if the emissions are long lasting and constant, the monitors might stir a TCEQ investigator to action. But even when levels are above normal it is usually impossible to prove which plant is responsible. Sam Coleman, director of enforcement for the regional office of the Environmental Protection Agency in Dallas, testified in the Peters/Jackson case that the “EPA relied 100 percent on the accuracy of information reported by regulated facilities.” The sad fact is, if the neighbors hadn’t complained, Huntsman’s crimes would have gone entirely unnoticed.

“The real problem is the culture at TCEQ,” says Carman. “They seem to believe their job is to protect industry. There is way too little enforcement.” Carman has documented a number of cases across Texas that he says were blatantly criminal, some of which resulted in employee deaths. “If the TCEQ had his
orically been tougher on corporate cr
me, Peters might have acted differently.” Carman said that emissions reports should be audited, much like the IRS audits tax returns, and that the company should be responsible for hiring independent testing firms to confirm the reports.

Former Justice Department prosecutor Solow, however, thinks that better enforcement is just part of the solution. He says that even if the number of investigators were doubled, you would still be largely relying on voluntary compliance by industry. “Whether it is Enron or Huntsman, we need to look at what kinds of internal compliance programs corporations have in place,” he says. “It is the culture inside the plants–that is where the system fails.”

Whether it is corporate culture, lax enforcement, or both, the latest research proves that the system in Texas is a spectacular failure. The preliminary findings of the Texas Air Quality Study 2000, a $20-million air quality study of the Houston area, shows that amounts of ethylene and propylene measured in the atmosphere seem to be at least three times higher than the emissions inventories reported by industry.

Huntsman’s plants continue to break down and cough up dangerous emissions with alarming regularity. Although the worst problems at the Port Arthur plant were fixed shortly after the criminal indictment, the neighbors near the Huntsman plant in Port Neches, a few miles away, continue to be victimized by substantial releases of 1,3 butadiene, a carcinogen, and other VOCs. The price the company will pay for their violations remains to be seen, since two civil suits, one for each plant, are still pending. Peters and Jackson may, one day, pay for the suffering they caused, but both state and federal regulators are a long way from bringing justice, and clean air, to the people of Port Neches and Port Arthur.

Michael May is a freelance writer based in Austin.