Houston, 13 October (Argus) — A small Louisiana asphalt refiner will pay the largest Clean Air Act fine in the state's history and plead guilty to felony US environmental violations in a deal that includes $12mn in criminal penalties and the threat of more.
US prosecutors said officials of Houston-based Pelican Refining admitted to numerous violations of the federal environmental act and to submitting false reports to a state environmental agency regarding its 30,000 b/d Lake Charles, Louisiana, refinery.
Large emissions of hydrogen sulfide, a potentially lethal gas, went unreported and unrepaired for years at the facility. Pollution control equipment did not work; the site did not include an environmental department or manager in its budget.
Other serious safety hazards were found during an inspection by Louisiana Department of Environmental Quality investigators in 2006.
Prosecutors included photos of plastic children's pools stained with crude and chemicals from leaking pipes and a nautical flare gun US investigators said refinery workers used to try to light a safety flare channeling explosive, toxic gases into the air in a statement announcing the deal.
“Pelican had demonstrated a manifest disregard for accepted practices that are designed to protect human health and the environment,” Assistant US attorney general Ignacia Moreno said in a statement.
The company will be on probation for five years in addition to the criminal penalties, and could be banned from future refining unless it submits to outside auditing and oversight from a court-appointed monitor.
“If they commit any more violations, all bets are off and they're subject to going back to the table and being fined again,” said Carl Parker, a former state senator in Texas and counsel for the refiner.
Parker was also part of the 2007 defense team for one of the Pelican's co-owners – Texas oilman Oscar Wyatt.
Pelican was purchased in 2005 as a joint venture between Wyatt's Nucoastal Refining & Marketing and trader David Chalmers' Bayoil USA. Both men went to prison, accused of paying kickbacks to Saddam Hussein's regime for crude contracts in connection with the United Nations Oil-for-Food scandal.
Parker said Wyatt and Chalmers had nothing to do with the day-to-day operations of the refinery.
“They own an interest in the two companies that are partners in the business,” he said.
It was not immediately clear whether the small refinery would continue to operate under such scrutiny.
“While we regret this chapter in our history, we are moving forward and looking forward to serving the energy needs of the Louisiana and the United States in compliance with state and federal regulations,” according to a Pelican statement issued yesterday.
But when asked whether that future included continued operations in Lake Charles, spokeswoman Dorothy Beeler said she could not comment.
The refinery has never been at full capacity since its purchase in 2005, she said. Employees remain on site, but Beeler would not say whether the facility was currently producing asphalt or other refined products.
“We're just not going to comment on planned operations at this time,” she said.
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