Citgo gets nicked for Clean Air Act crimes.
Nearly seven years ago, a jury
convicted Citgo Petroleum Corp. of criminal violations of the Clean Air Act, the first time this had happened to a major oil company. On Wednesday, a Texas judge finally pronounced sentence: a paltry $2 million fine. Probably about half as much as the company will spend on the party celebrating getting off so easy although executives there have known since 2012 what the maximum sentence would be.
Even so, Citgo lawyers whined in court that the company had cleaned up the storage tanks that were the cause of the violations a decade ago and, therefore, shouldn't be harshly punished because it had already fixed the problem. Yessiree, a model corporate citizen ... when caught.
However, U.S. District Judge John D. Rainey, who announced the fine, may impose an additional penalty when he rules on restitution for nearby residents who were exposed to harmful chemicals from Citgo's Corpus Christi, Texas, refinery from 1994 to 2005. About 80 of those residents—mostly minorities and many of them elderly—were in court for the sentencing.
Citgo, a U.S. subsidiary of the state-owned Petróleos de Venezuela, was convicted in 2007 after an inspection showed it had illegally stored oil in two uncovered storage tanks. Emily Atkin writes:
The ruling, made Wednesday, is a disappointment to the residents who live near the Citgo refinery and had complained of nausea, dizziness, burning throats and other health problems because of the emissions. Their original lawsuit had sought $2 billion—a punishment they believed would be sufficient to actually put a dent in the multi-billion dollar company’s pocket.
“That is a punishment that does not fit the crime,” Melissa Jarrell, a professor of criminal justice at Texas A&M-Corpus Christi, told Priscila Mosqueda at the Texas Observer. “What message does it send when a multibillion-dollar corporation receives a $2 million fine?”
The technical term for that message is: Carry on. No Big Deal.
More to read below the fold.
The case was groundbreaking in that it was the first time that people affected by a criminal violation of the Clean Air Act had been allowed to testify under the Crime Victims Rights Act. Jarrell said the case was important because it could open the door for other air pollution victims to claim that status in court.
Last year, Citgo celebrated a victory when Rainey granted the company’s request to block the federal government from seeking the highest possible monetary sentence. Citgo argued its punishment should be limited to paying the statutory maximum of $500,000 per felony count, which amounts to $2 million, chump change for a multi-national oil company. The U.S. Justice Department calculates that Citgo raked in $1 billion in profits during the time it was violating the Clean Air Act, and tried to set the maximum penalty at twice the “gross, pecuniary gain,” or $2 billion. Rainey said empaneling a jury to evaluate Citgo’s financial gain would prolong the sentencing process, and capped the penalty at $2 million.
“[If] a company like Citgo makes $1 billion violating the Clean Air Act and gets sentenced to a $2 million penalty, that is not a deterrent to future violations of the Clean Air Act,” says Bill Miller, a former EPA attorney who worked on the Citgo case but has since retired. Because corporations can’t do jail time, the threat of prohibitive financial penalties is one of the few ways to deter them from committing crimes, Miller said.
If Judge Rainey, a George H. W. Bush appointee, wants to get tough, however, there no limits on what he could impose on Citgo for restitution. He could, for instance, force the company to pay to relocate nearby residents.
