Oil Giant Citgo Gets Slap On the Wrist for 10 Years of Illegal Operations


A foreign oil company convicted of polluting a Texas community’s air with dangerous chemicals has gotten off easy in a criminal case that could undercut the prosecution of environmental crimes in the U.S. The case revolves around Venezuelan-owned Citgo Petroleum’s decade-long violation of the federal Clean Air Act at its refinery in Corpus Christi.

The Citgo refinery in Corpus Christi, TX. Photo credit: U.S. Chemical Safety Board

In 2007, the Citgo refinery became the first to be criminally convicted of violating the Clean Air Act by a U.S. jury. The refinery had spent a decade illegally operating two giant oil-water separator tanks without any emission controls. Every day for 10 years, nearby residents breathed noxious fumes emitted from the roofless tanks, including the carcinogen benzene.

It took another seven years, until February, before the judge in the case finally sentenced the company. U.S. District Judge John D. Rainey fined Citgo a little more than $2 million—a penalty prosecutors said would not deter Citgo from committing future crimes since, they argued, the company made $1 billion in profit as a result of its illegal operation. Corpus Christi residents were disappointed with the fine, but disappointment quickly turned into fear and confusion when the judge refused to announce in court that day his ruling on how much restitution must be paid to the refinery’s neighbors.

On April 30, people who had been awaiting a decision for years finally found out what they would receive from Citgo: absolutely nothing.

“When I walked out of [the courtroom] I knew what it was gonna be: he was going in Citgo’s favor,” says Thelma Morgan, who lived two blocks away from Citgo for more than 35 years and whose husband and son were also exposed to toxic chemicals. “When he said ‘I’ll notify you all by letter’ I said then, ‘You’re against us, so we can forget it.’”

Morgan, 79, says she was regularly sick during the time she lived near Citgo, but her husband got the worst of it. A host of health problems forced him into early retirement, so he was home more than she was. One day he was gardening when he suddenly broke out in blisters. Doctors asked if he’d been exposed to any chemicals. He later developed colon cancer and died in 2003, just two years after the family moved out of the Hillcrest neighborhood bordering the refinery.

On one occasion, Morgan says, Citgo paid her after she was exposed to a chemical that came from the refinery. She says she couldn’t stop vomiting and thought she had the flu until she was diagnosed with pneumonia. She doesn’t remember the amount Citgo offered her but thinks it was about $450.

People who live in the Hillcrest and Oak Park neighborhoods nearest the refinery have been hit hardest. Many have stories about exposures that led to respiratory problems, burning eyes and noses, scratchy throats, nausea and sometimes vomiting and severe headaches. Foul odors penetrate their homes and can linger for days. Residents say the worst episodes happen at night: that’s when the strongest odors come, sometimes following explosions or flares. A 2009 blast nearly sent a cloud of hydrogen fluoride, a deadly gas, into the neighborhoods.

Residents’ complaints to the Texas Commission on Environmental Quality—more than 200 of them during the 10-year period—led the agency to inspect Citgo repeatedly, but the company covered its tracks. During the conviction phase of the federal trial, the Justice Department showed that Citgo employees removed the oil from the uncovered tanks each time the refinery was due for an inspection, so that by the time an investigator arrived, the company was operating legally. It wasn’t until a TCEQ investigator arrived unannounced that the agency realized Citgo was operating the tanks illegally.

The Justice Department proved that Corpus Christi residents’ ailments occurred as a result of Citgo’s actions. It was the first time sufferers of effects from air pollution had ever been recognized as crime victims in the U.S.

Bill Miller, a former U.S. Environmental Protection Agency (EPA) lawyer who worked with the Justice Department on the Citgo prosecution and has since retired, says air pollution cases are much harder to prove than water contamination cases. It’s difficult to establish that a company’s emissions caused specific people’s health problems and deaths, he says, even if courts broadly acknowledge that exposure to toxic chemicals is harmful to human health.

Following that line of thought, Judge Rainey initially denied 20 victims’ request to be granted restitution under the Crime Victims’ Rights Act, but the 5th Circuit Court of Appeals ordered him to reconsider. Eventually, Rainey granted crime victim status to more than 800 residents, which allowed them to give oral testimony in court at the beginning of the sentencing hearing last fall. Morgan was one of about 160 people who shared their stories.

Experts say the judge’s refusal to grant the victims restitution last month sets a dangerous precedent for similar cases, particularly if the government doesn’t appeal the ruling.

“I think it’s clear that the judge never wanted to consider them victims in the first place,” says Melissa Jarrell, a criminal justice professor at Texas A&M-Corpus Christi who studies environmental crime. “Why that’s concerning to me is that ultimately the judge was the victims’ safety net—he was the one that could really help them and he didn’t.”

Too Big to Punish

Rainey, a former director of the Angleton, TX, Chamber of Commerce, was appointed to federal judgeship by President George H.W. Bush in 1990. He was recommended for the position by Phil Gramm, the former Texas senator who was instrumental in engineering the “Enron loophole” that deregulated electronic energy trading, and whose wife served on the board of Houston-based Enron, an energy-trading company that collapsed in the wake of an accounting scandal in 2001.

Rainey rejected the residents’ and the government’s requests for restitution, which would have included funding for annual cancer screenings and other diseases linked to chemical exposure. The Justice Department also had asked that Citgo set up one trust fund to cover property buyouts and relocation costs and another for victims’ future medical expenses, attorney’s fees and other administrative costs, at a total cost of $55 million.

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