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Federal Firefight Costs Taxpayers

Friday September 6th, 2013   •   Posted by K. Lloyd Billingsley at 8:38am PDT   •  

epa_200The fire at Chevron’s Richmond, California, refinery has been out for more than a year, but the blaze still illuminates governments’ ability to take any crisis situation and make it worse.

The August 6, 2012, fire belched smoke and drove thousands of people to medical centers for treatment of breathing problems. The US Chemical Safety Board (CSB) conducted more than 100 interviews to determine the cause of the blaze, reportedly a corroded pipe, and recommend ways to avoid such accidents in future. But the CSB is not the only federal bureaucracy involved. The federal Environmental Protection Agency (EPA) deploys 200 agents to prosecute what they view as criminal conduct. EPA zealots want to seize the CSB interviews for purposes of prosecution. The CSB is resisting and even fighting the EPA in court. That may be a good thing, but taxpayers pick up the tab for bureaucratic redundancy. And it’s not as though Chevron has escaped prosecutorial zeal from the state of California.

Chevron recently pleaded no contest to six misdemeanor charges and will pay $1.28 million in fines, more than $720,000 in restitution payments to the state Attorney General’s office, a local workforce program, and the Bay Area Air Quality Management District. The biggest share of the restitution payments, nearly $300,000, goes not to those who suffered respiratory problems from the fire but to Cal/OSHA, a state regulatory agency that had already fined Chevron $1 million for safety violations in January.

The root cause of the problem may be bureaucratic opposition to new refineries. The Chevron Richmond refinery is more than 100 years old and last modernized in the 1970s. Between 1985 and 1995 ten refineries were closed in California, and it is unlikely any new ones will be built. Nationwide, the newest refinery with a capacity of more than 100,000 barrels a day, in Garyville, Louisiana, dates from 1977. New refineries are safer and more efficient, but California won’t allow anybody to build one.

Governments do not find crude oil and refine it into the gasoline people need, particularly in car-dependent California. Independent companies produce gasoline, diesel, jet fuel, and other vital transportation products. They do so at considerable risk, even under a regulatory regime that blocks new facilities and exploits every mishap for all it is worth. That’s why gasoline and government are both expensive.

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September 2013