EPA Gives Chevron a Reprieve : Environment: The agency says construction project aimed at producing cleaner fuel lacks proper permits. But the company has one week to negotiate.

After ordering Chevron USA Inc. to shut down construction of a $700-million project to produce cleaner-burning gasoline--because it allegedly violated environmental laws--the U.S. Environmental Protection Agency on Friday granted a last-minute reprieve of one week to give the company time to negotiate.

EPA officials said construction at Chevron’s El Segundo refinery has been illegal since it began last spring because the company does not have proper air-quality permits or an approved environmental review. The company first was warned by the EPA 10 days ago that it was violating laws, but continued construction anyway.

In a highly unusual move, the EPA criticized James Lents, executive officer of the South Coast Air Quality Management District, for giving Chevron written authorization in July to begin construction before the company had permits and an approved environmental impact report.

“It is a very clear violation,” said Bill Glenn, a spokesman for the EPA’s regional office in San Francisco. “The refinery is already a major source (of air pollution) and any modification that would increase emissions needs a permit. It is serious because if you don’t do that, you cannot ensure the proper pollution controls are put on.”

Company officials maintain that they violated no laws because they had worked closely with the AQMD.

“None of this has been done in a way to circumvent any process,” said Chevron spokesman Rod Spackman. “It was just within the last several weeks that the EPA interjected themselves into this work.”

The huge Chevron refinery, which processes more than 10 million gallons of crude oil per day, is the largest industrial source of smog-causing gases in the Los Angeles basin.

The conflict over the construction is ironic because Chevron is overhauling its refinery to follow federal and state law requiring oil companies to begin producing cleaner-burning gasoline by January, 1995. The reformulated fuel program, which is one of the most ambitious clean-air projects in years, is expected to cut car emissions by 10% to 30%.

The company applied for an AQMD permit 18 months ago, but it has not yet been granted, partly because the environmental impact report for the project is still undergoing public review.

Lents said he was shocked by the EPA’s action, calling it “totally inappropriate” because his move to allow Chevron to begin construction before the permits were final would help clean up the region’s air by getting the new gasoline on the market more quickly.

“Try to find the air quality advantage to what (the EPA) did,” he said. “How was there any harm done to the public by what we did?”

EPA officials, however, say such early approval makes a mockery of laws that require a final environmental review and permits to analyze and minimize the construction’s impacts on air quality, water and other resources.

In a letter sent Wednesday, David Howekamp, the EPA’s regional air division director, told Lents he had violated the Clean Air Act because he had no authority to grant Chevron approval.

The EPA warned Chevron on Sept. 22 that it was violating the law, but construction continued, so the EPA issued its shutdown order Wednesday and threatened prosecution.

Then, just minutes before the order was supposed to go into effect Friday, EPA officials granted the reprieve.

“Chevron wanted more time to talk to us. We told them we are willing to give them one more week but that doesn’t change the fact that they are still considered in violation and liable for possible civil penalties,” Glenn said.

Meetings between EPA officials and Chevron executives are expected early next week.

“It will give us more time to have a more constructive discussion on the issues involved,” Chevron’s Spackman said. “We’re going to have a week now to see if cooler minds prevail.”

Chevron has completed about $80 million worth of construction on the $700-million project. About half the steel and concrete superstructure, which is 150 feet high and 70 feet wide, is finished.

If the company must wait for the permits, an estimated 300 construction workers will have to be rehired and trained, which would delay the project four to six weeks, Spackman said. That will make it harder, he said, to meet the 1995 mandate for producing the fuel.

Environmentalists on Friday also called the construction a brazen violation of laws, and blamed both Chevron and the AQMD.

“We think EPA is quite properly taking the appropriate course of action in enforcing the law,” said Denny Zane, executive director of the Coalition for Clean Air.

“I am sure the AQMD was well-intended but it was a big mistake. Permit procedures are created for clear and important reasons, not just to regulate, but to ensure fair and equitable treatment. You can’t play fast and loose with the permit process.”

Lents said he gave the go-ahead only after consulting with AQMD attorneys, who told him Chevron could begin construction as long as the new facilities did not start operating until the permits came through.

“Why nit-pick businesses that are trying to do the right thing? We have reviewed the project for more than a year and we can foresee no reason we would disapprove it, so why should we make them wait?” AQMD spokesman Tom Eichhorn said.

The federal order came after a pipe fitter’s union complained to the EPA that Chevron had begun the construction without showing proper permits.

Glenn of the EPA said no action is expected against the AQMD, but criminal or civil charges could be filed against Chevron. Fines can run as high as $25,000 per day of violation.

Other refineries in the area, including Texaco, Unocal and Mobil, face the same 1995 mandate to produce cleaner fuels.

“The other refineries are complying with the law, so Chevron is getting an unfair advantage by violating the rules,” Glenn said.

When asked why Chevron was not forced to wait like the others, Eichhorn said, “They asked for it and made a convincing case. We get beat up for not helping business and then when we do help them, we get beat up again.”

Lents said he had intended to give similar approval to other companies.

“I feel bad that we let Chevron get started and then EPA reversed it,” Lents said. “Companies have to rely on the messages we send, so we have to get a clear understanding with EPA so it doesn’t happen again in the future. But I tell you, I think their interpretation is totally inappropriate.”