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Chronicle's Chip Johnson on Chevron Debacle

The following column in today’s San Francisco Chronicle by Chip Johnson (called by one newspaper, “one of the most feared journalists in the East Bay”), provides a perspective on the recent shutdown order of Judge Zuniga for the Chevron Energy and Hydrogen Renewal project.


Let’s use this as an opportunity to reflect on what went wrong and how we can fix it.


First of all, while this may be a good time to savor vindication, it is not a good time for gloating. For the people of Richmond and beyond, replacing old equipment and reducing both pollution and greenhouse gas production was a desirable benefit from the project. If the project also resulted in increased profits for Chevron, I certainly would not begrudge that. And finally, a workforce of as many as 1,000 mostly Bay area construction workers will soon be standing down, certainly not a good thing.


How did this happen? It happened because a self-important but naïve majority of the 2008 city Council chose to both discredit and ignore the same environmental organizations that recently won the EIR legal challenge favor of their own hack consultants, ESA (EIR consultant), Ellen Garber of Shute Mihaly & Weinberger (CEQA consultant) and Ranajit Sahu (technical consultant), who told the City Council majority what they wanted to hear instead of the truth.


The fact that City Council members were predisposed to favor advice from their own consultants and statements from Chevron made it a lot easier to reject the arguments of CBE, APEN, Earthjustice and West County Toxics Coalition. How did these supposedly highly-qualified consultants err so egregiously? Was it incompetence? Were they co-opted? Were they pandering to the City Council majority? I don’t really know, and perhaps I never will, but I do know that they were massively mistaken.


I also have to confess that I have a tinge of guilt about this myself. When the Chevron project first started through the pipeline, I recommended to both the city manager and the City Council that the City retain a consultant outside the EIR process (I don’t trust EIR consultants) to advise the City on issues that surely would be raised by environmental organizations. I recalled that CBE had challenged the last Chevron project in a CEQA lawsuit and also won. I knew the City was getting bad CEQA advice and wanted to head this off for the Chevron project. I asked around about good CEQA attorneys that would at least respect the legal arguments of the environmental community, and a name that kept popping up was Shute Mihaly & Weinberger. Eventually, Shute Mihaly & Weinberger was selected by staff, and I supported it.


However, once the environmental challenges started and Ellen Garber, the designated attorney assigned from Shute Mihaly, started opining, I knew we were in trouble. She simply did not get it. Eventually, she was in lockstep with ESA and Sahu, discrediting CBE and other environmental organizations and assuring the City Council majority of the soundness of the ground they stood on.


While we are at it, let’s take a look at the role labor played. In the beginning, the construction trades retained technical consultants and attorneys and began challenging the EIR. This is a tactic frequently used by labor unions to gain leverage to negotiate labor agreements for an upcoming project. Once they get what they want, they back off. I am not critical of this; they are just doing their job for their members, and I must disclose that I have both supported and been supported by the construction labor unions in Contra Costa County. In this case, labor leaders assured us that they were in the fight to the end. Whatever concession they achieved regarding jobs on the project would not sway them from protecting the health of Richmond residents.


In the end, however, they all caved, some faster than others. They blamed it on agreements that had been made at the national level between their organizational superiors and Chevron. I have no reason to believe this is not accurate, but I just don’t know. At any rate, they abandoned their challenges. Now, those same labor organizations that stood down while others stood up are bemoaning the loss of jobs that resulted.


What I am leading up to is that in the end, if everyone had stood up to Chevron and taken the EIR at face value, we would probably have a viable project still under construction today. The lesson, which has been replayed in Richmond too many times to count, is that cutting corners on environmental review and conditions of approval as often as not results in killing projects rather than helping them.


I even have tiny bit of sympathy for Chevron. While they were completely complicit in undermining the EIR process and advocating for unreasonable outcomes, they were also a victim of the flawed EIR and the City’s underperforming consultants who empowered them to press for the flawed permit they eventually received.


So what do we do now?


There are too many benefits from the Chevron project to let it go away. But it also has to be done right. Contrary to what many people believe, the city Council is really not much of a player in resolving it. The real players are Chevron and the environmental organization plaintiffs who have so far prevailed. They are discussing a settlement that presumably would make the litigation and the judge’s order go away.


What should such a settlement include? Here are my suggestions:


·         Find a workable and dependable method of assuring that “dirtier” grades of oil will not result in dirtier air in the future. CBE and the other plaintiffs advocated for a limit on the “crude slate.” While this would have been an effective and simple tool, it may not be realistic given the state of the world oil supply in the future. I have to believe that there is some “tailpipe” technology that can accurately measure and limit what comes out instead of what goes in. This is similar to a widely circulated plan by Jim Rogers, which I can appreciate in concept, but I disagree with Jim’s proposal to make the director of the bay Area Air Quality Management District the arbiter of Chevron’s performance. The air board is weak and does not have a good record in Richmond nor a good record overall for standing up against major polluters.

·         Make sure the entire project, including the poster child cogeneration facility goes forward in order to achieve maximum cleaner air benefits for Richmond.

·         Clean up the Community Benefits Agreement. Get rid of the fluff. Make all payments due now instead of being tied to future permits. Note that the litigation has already derailed the agreement and zapped several million dollars out of Richmond’s recently adopted general fund budget. This kind of risk in unacceptable.

·         Specify all of the greenhouse gas reduction strategies in advance and make sure that to the limit of technology, they all occur in Richmond. This could make Richmond literally the renewable energy capital of the world. Failure to specify such mitigation projects was a major criticism by the judge.


There are other details, but this would be a good start.




Chip Johnson

Savoring Chevron's comeuppance

Tuesday, July 7, 2009

Chalk one up for the little guy.

Corporate America doesn't get put in its place very often, but that's exactly what happened last week in Richmond, of all places.

A Contra Costa County Superior Court judge ruled that Chevron Corp. is going to have to scrap the current expansion at its Richmond refinery because the original environmental report failed to provide answers to key questions about the project. Superior Court Judge Barbara Zuniga gave the company 60 days to halt construction.

While environmentalists who filed the lawsuit savor the win, the ruling came as a bit of shock to city officials, who were advised to drop opposition to the expansion, said Tom Butt, a veteran City Council member.

"I feel vindicated because when this whole thing was happening, I kept saying the EIR was fatally flawed, but the city's legal consultants told us to give up," he said. "They said the best remedy was surrender."

Normally, the mention of Chevron and lawsuit in the same sentence sends chills down the spine of the city's elected officials.

"Maybe this will give us a little leverage to sit down with Chevron officials and work through some of these issues, because every time we've gotten into a dispute with Chevron there is a concern that if we don't give in, they'll sue us and take us to the cleaners," Butt said.

An agreement between the city and Chevron in which the company helps fund community projects has a clause that allows the oil giant, in the event of a lawsuit by the city, to withhold those payments.

The expansion would have allowed Chevron to process heavier grades of oil into petroleum products. But the environmentalists and Richmond residents feared it would process those heavier grades into gasoline, which would create more air emissions - and the judge agreed.

Chevron officials lamented the potential loss of up to 1,000 jobs, with workers losing $50 million to $75 million in income, and said Richmond city officials stood to lose up to $61 million in funding for community projects.

But when the frills and lace are removed from the agreement, Butt said, the cash benefit to the city would only be $10 million to $12 million.

Over the years, Richmond and Contra Costa County officials have done what they could to hold Chevron's feet to the fire when it comes to paying its fair share of property and business license taxes, and the company has fought them every step of the way.

While the refinery expansion project may be on the back burner for now, Chevron is still fighting a new business license tax passed by the city and is also involved in a property tax dispute with county officials over the assessed value of the Richmond plant.

For the people of Richmond, the Chevron plant has been both a provider of economic stimulus and a bringer of pain over the years. While the refinery is undoubtedly the city's largest employer, tax contributor and corporate resident, the risk to the respiratory health and safety of citizens is as ever-present as the waterfront refinery.

In neighborhoods near the plant, children suffer from disproportionately higher rates of asthma. One advocacy group reported that asthma rates in the industrial belt of Contra Costa and Solano counties are among the highest in the state.

Add that physical discomfort to the prospect of sirens warning of a chemical leak, like the one that kept people shuttered behind their doors in August 2003, and it's pretty clear that locals have good reason to be concerned - and suspicious.

For all the scrapes among Richmond government, its environmentally minded citizens, residents and Chevron, there is hope that whatever comes out of this will provide a long-term benefit on both sides of the fence.

"As of right now, we are reviewing our options and will work with the city to find a path forward," Brad Tippen, a Chevron spokesman, told The Chronicle last week.

Butt, the city's longest-standing council member, doesn't begrudge the oil company its record-setting profits in recent years or oppose its efforts to upgrade facilities to turn more profit for its stockholders.

"I've never had a problem with them cleaning up the plant and making themselves some more money. I just want it done right - and I want to see the city get a piece of the action," Butt said.

"They've got to come up with a way to prove to the public that they aren't going to pollute the air. They say, 'Just trust us,' but the plant they wanted to build made that impossible to do."

Chip Johnson's column appears in the Chronicle on Tuesdays and Fridays. E-mail him at chjohnson@sfchronicle.com.

This article appeared on page C - 1 of the San Francisco Chronicle