Proposal that would have punished oil refineries is dead – gutted and amended in Senate after approval by full Assembly –

KQED News, by Ted Goldberg. Aug 24, 2022

A proposal that would have punished oil refineries that illegally pollute the air with toxic chemicals is dead, after opposition from the industry led to such a weakening of the bill that its own author pulled her support.

The state Senate was poised to vote later this month on a proposal to increase the maximum penalties for California oil refineries that violate air quality laws. If passed by the Legislature and signed by the governor, it would have marked the first major change to the penalty structure specific to the oil refining industry in the state in more than two decades.

But two weeks ago, legislators weakened the bill so much that California’s leading oil industry group dropped its months-long opposition to it. Now, the East Bay Assemblymember behind the push, whose district includes one of California’s largest refineries, has decided to kill the bill and push for another piece of legislation that has similar goals but does not go as far as her original proposal.

The legislation’s changes did not take place during multiple public hearings where lawmakers debated AB 1897 and then overwhelmingly backed the bill four separate times.

Instead, in a hearing behind closed doors earlier this month, state senators apparently bowed to oil industry demands, reducing some of the bill’s proposed fine increases and making the standard for the hikes more stringent.

The changes were made in the Senate Appropriations Committee, a panel charged with weighing the costs of proposed legislation. During their annual suspense file hearing, legislators decide the fate of hundreds of bills away from the public eye — and legislative leaders often use the opaque process to kill or change bills that aren’t just expensive but politically unpalatable.

“I’m disappointed that changes made to the bill by the Appropriations Committee weakened the maximum penalties for polluters,” said Assemblymember Buffy Wicks (D-Oakland), the proposal’s author.

Wicks represents the area of Chevron’s Richmond refinery, which has committed scores of violations against local air regulations over the last decade. On Tuesday she decided to drop AB 1897, prompted by its recent changes.

Environmentalists have long criticized fine structures for California’s refineries, complaining that companies that own the state’s petroleum plants end up paying small penalties when they often make significant profits. For example, Chevron says it made $11.6 billion in the second quarter of this year.

When Wicks proposed the bill in February, the legislation would have increased the civil penalty maximum for violations of air quality regulations from $10,000 to $30,000 if that violation resulted in “severe disruption to the community.”

The Senate Appropriations Committee cut out that phrase and replaced it with a much higher standard: “a significant increase in hospitalizations, residential displacement, shelter in place, evacuation, or destruction of property.”

The initial proposal called for maximum $100,000 fines against refineries with a “subsequent violation” within a one-year period. The appropriations panel cut that down to $50,000.

“I was watching, like, everyone else to see what would happen with the bill,” said Alan Abbs, the legislative director for the Bay Area Air Quality Management District, which sponsored Wicks’ proposal. “I didn’t know what the amendments would be until I saw them in print later in the day.”

In March, the Western States Petroleum Association sent a letter to Wicks, expressing opposition to the bill. The industry group said  then that AB 1897 unfairly singled out refineries.

That opposition was not enough to deter majorities of the Assembly Natural Resources Committee, the Assembly Judiciary Committee, the Assembly Appropriations Committee, the full Assembly, the Senate Environmental Quality Committee and the Senate Judiciary Committee — all panels that advanced the bill.

But after the changes were made in the Senate Appropriations Committee, the petroleum association changed their position last week.

“The change in our position is due to amendments that make the proposed legislation more consistent with the way air quality violations have been assessed in the past,” stated Kevin Slagle, a representative for the industry group, in an email.

A representative for Wicks says her office had no control over the amendments and was left in the dark about what prompted them.

“We don’t know who ultimately pushed these changes — the appropriations process is very opaque, and we don’t have visibility into the decisions or control over what gets adopted,” said Erin Ivie, the lawmaker’s communications director.

“Some of these changes seem to respond to criticism of the bill made by the oil industry … While we don’t know who exactly, the why seems to be to make the bill less objectionable to the oil industry.”

Earlier in the summer, the Newsom administration also quietly expressed opposition to the original version of AB 1897. In June, months before it was changed, state finance officials raised concerns about a part of the proposal that directed penalty revenue to communities affected by violations that led to the fines — instead of to local air districts charged with monitoring emissions.

“(The California Air Resources Board) maintains that the bill would effectively defund the districts due to the districts’ historical reliance on the civil penalties collected, in part, to fund their operations,” the Department of Finance wrote in its fiscal analysis of the bill.

The administration argued that if local air districts couldn’t collect enough penalty money, the state’s air resources board would need to provide more support to such agencies, something finance officials said would create “cost pressures” on state funds.

A staff analysis by the Senate Appropriations Committee made a similar argument in the days before the committee amended the bill and sent it to the Senate floor.

The death of Wicks’ bill marks the third time in the last 10 years that a proposal specifically to increase fines for refineries died in the state Legislature.

In 2013, on the heels of a major fire at Richmond’s Chevron refinery, then-state Sen. Loni Hancock, D-Berkeley, introduced legislation to raise such penalties. The state Senate approved the bill, but it died on the Assembly floor amid opposition from energy companies.

Five years later state Sen. Bill Dodd, D-Napa, proposed tripling some of the most serious penalties for refineries. He said then that he authored that bill, in part, because of a major refinery accident at Valero’s Benicia plant in 2017. That proposal never received its first committee hearing after opposition not only from the oil industry but also from environmentalists and the mayors of Richmond and Benicia, who said it wasn’t strong enough.

On Tuesday, Wicks decided to abandon her bill and join as a co-author on AB 2910, which would increase maximum fines for large industrial facilities that violate air pollution regulations, including refineries, from $10,000 to $30,000.

But, unlike the other bill, it would not increase penalties associated with multiple violations. And while AB 2910 calls for some revenue from those fines to go to local communities affected by authorized industry facility releases, it’s unclear how much.

The Western States Petroleum Association did not add its name to the list of groups opposed to that bill. The state Senate is expected to vote on AB 2910 next week.