TCEQ Needs Authority to Consider Criminal Conduct in Environmental Permit Applications

Public Citizen supports Senate bill 1931

By Michael Coleman

Pasadena Refining was at the center of a 10-year bribery scandal that eventually led to the impeachment of Brazil’s president Dilma Rousseff.[3]
Texas needs to ensure that the people in charge of companies that affect our environment have a good track record.

That’s why Public Citizen is backing CSSB 1931, a bill in the Texas Senate sponsored by Sen. Judith Zaffirini, a Laredo Democrat. The bill would provide the Texas Commission on Environmental Quality (TCEQ) with another tool to review environmental permit applications: a criminal background check of officers or governing persons.

This good legislation by Zaffirini would give TCEQ authority to deny a permit application, or revoke or suspend a permit, if the applicant has been convicted of a crime directly related to the duties and responsibilities of a permit holder, or a crime involving moral turpitude within the last five years.

Why is this necessary? Well, there are several examples in Texas of criminal conduct at companies with environmental permits. Some of these companies eventually had large pollution events or accidents.

Adrian Shelley, director of Public Citizen’s Texas office, lays out several examples in his letter to lawmakers below. We urge the Texas Legislature to approve this important bill.

To the members of the Senate Committee on Natural Resources & Economic Development.

Via hand delivery.

April 11, 2019

Re: CSSB 1931 (Zaffirini) – relating to the authority of the Texas Commission on Environmental Quality to access criminal history record information and to use a conviction of certain criminal offenses as a ground for denying, revoking, or suspending certain permits.

Supporting testimony of Public Citizen

Dear Chairman Birdwell and members of the committee:

Public Citizen appreciates the opportunity to testify for CSSB 1931. The bill would provide the Texas Commission on Environmental Quality (TCEQ) with another tool to review permit applications: a criminal background check of officers or governing persons.

SECTION 3 of the bill grants authority to the TCEQ to deny a permit application, or revoke or suspend a permit, if the applicant has been convicted of a crime directly related to the duties and responsibilities of a permit holder, or a crime involving moral turpitude within the last five years.

There are several examples in Texas of criminal conduct at companies with environmental permits. Some of these companies eventually had large pollution events or accidents. Here are a few examples:

Theft plagues the scrap metal recycling industry, typically involving the sale of stolen materials to a recycling company. In 2011, the legislature passed HB 1933 (Wayne Smith), which provided for more documentation and recordkeeping within the scrap metal industry, provided penalties for criminal conduct, and created a grant program for theft prevention in the industry. In 2013, Harris County passed a regulation requiring license applicants to provide, among other things,

A statement of whether the individual applicant, any partner in a partnership, or any officer or director of a corporation, has been arrested, charged, or convicted for any criminal offense in this state or any other state or country: if arrested or jailed for any such offense, list the offense, the date of the arrest or confinement, and the place, court and case number of the case;[1]

In one of the more prominent Superfund cases in recent years, a German citizen named Klaus Genssler operated a fraudulent hazardous waste recycling company called U.S. Oil Recovery in Harris County. Gennsler failed to properly handle or store hazardous wastes on his Pasadena property, engaging in egregious conduct such as purchasing and filling a nearby wastewater treatment plant with hazardous waste. Although we aren’t aware of any previous criminal convictions for Genssler, violations at his site were first documented by OSHA in 2008, he was sued by Harris County in 2009, and the site was placed on the Environmental Protection Agency’s National Priorities List (Superfund) in 2010. Gennsler was eventually indicted on six felony counts of improper handling and storage of hazardous waste, whereupon he led the country and remains a fugitive from justice.[2]

In another unfortunate case in Pasadena, the Pasadena Refining System, Inc oil refinery was negligently operated by Petrobras, the Brazilian national oil company. Pasadena Refining was at the center of a 10-year bribery scandal that eventually led to the impeachment of Brazil’s president Dilma Rousseff.[3] The refinery was sold for the hugely inflated price of $1.2 billion, most of which turned out to be overpayments in a bribery scheme. Petrobras was the subject of 25 securities fraud cases. During this time, Pasadena Refining was poorly operated and plagues with large, hazardous pollution events, including an explosion in 2011, a $750,000 settlement with Harris County in 2012, and an explosion and fire in 2016 that injured one.[4] In 2018 the company settled a clean air citizen suit for more than $3 million.[5]

None of these cases speaks directly to the situation addressed by CSSB 1931, in which a permit applicant has a governing member who has been convicted of certain crimes in the past. But each situation demonstrates that when criminal conduct follows environmental permitting, disaster is likely. For this reason, we support CSSB 1931.

Respectfully,

Adrian Shelley, Texas Office Director, Public Citizen

CC:      Sen. Judith Zaffirini, Sen. Pat Fallon, Sen. Peter P. Flores, Sen. Kelly Hancock, Sen. Juan Hinojosa, Sen. Bryan Hughes, Sen. Borris L. Miles, Sen. Angela Paxton, Sen. Beverly Powell, Sen. José R. Rodríguez


[1] See “Regulations of Harris County, Texas Governing Metal Recycling Entities” adopted Dec. 4, 2012, effective Jan. 1, 2013, available at https://static1.squarespace.com/static/5390d7a1e4b0f5b00cae341b/t/5499ee9be4b04808026daa5b/1419374235791/MetalRecyclingRegsEffJan2013.pdf; see also https://www.houstonchronicle.com/news/houston-texas/houston/article/County-targets-metal-thieves-with-heap-of-new-new-4091318.php (attached).

[2] See https://www.houstonchronicle.com/news/houston-texas/houston/article/Pasadena-Superfund-site-s-owner-indicted-missing-4342439.php?utm_campaign=CMS%20Sharing%20Tools%20(Premium)&utm_source=t.co&utm_medium=referral (attached).

[3] See https://www.houstonchronicle.com/news/houston-texas/houston/article/Brazilian-scandal-centers-on-purchase-of-Pasadena-6618757.php (attached).

[4] See https://www.reuters.com/article/us-refinery-fire-pasadena-petrobras-idUSKCN0W70R1.

[5] See https://www.texastribune.org/2018/07/26/houston-area-refinery-agrees-pay-millions-settle-air-pollution-suit/.