Years of Negligence Ignite CAPECO Fire

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For years, federal regulators have cited Caribbean Petroleum Corporation (CAPECO) multiple times for serious environmental violations and levied $1.3 million in penalties and fines for discharging hazardous waste to water, air and soil, showing disregard for residents’ health and safety.

Yet local and federal government agencies have allowed the company to operate interrupted for more than 50 years and have not been diligent in oversight to guarantee a safe operation, an investigation has found. Government’s carelessness includes no federal occupational safety inspections in almost a decade and failing to establish an emergency plan for disasters with the communities as required by law.

The facility at the Luchetti Industrial Park in Bayamon, where an explosion 14 days ago produced a toxic fire that took firefighters over two days to extinguish, and caused fuel leakages into neighboring waterways, had not been inspected by the Occupational Safety and Health Administration since 2000. This is the second time CAPECO operations caused a major fire in the area.

“That was a disaster waiting to happen,” said an insider, who knows about the company’s dealings but asked to remain anonymous. The facility had deteriorated for years and maintenance has been poor said the source who made his last visit to the facility three years ago.

The cause of the explosion that affected 21 of their 40 fuel reserve tanks is still under investigation and it will focus on how CAPECO manages the tanks, how they train their operations and the regulatory framework in Puerto Rico, said Jeffrey Wanko, lead investigator of the U.S. Chemical Safety and Hazard Board (CSB). The probe, led by the CSB, is now investigating possible negligence and human error. Terrorism has been ruled out.

But a review of inspections conducted by the Environmental Protection Agency, bankruptcy records and interviews with chemical safety experts, regulators, insiders, community activists and residents paints a picture of a company that has been under EPA scrutiny for decades and later sought Chapter 11 bankruptcy protection to obtain relief from financial pressures.

The environmental impact from the recent explosion, past incidents of spills and federal violations is unknown at this point. But residents say federal and state officials have done little to keep people informed about the potential risks and establish a plan of action in case of a disaster.

Since 1990, the National Response Center, an entity that reports oil, chemical, radiological, and biological discharges into the environment in the U.S., has recorded at least 25 oil spill incidents from the company to the island’s water, air and soil. Other companies, including Bacardi, pharmaceuticals, Shell, and Texaco, most of which are located in the same area as CAPECO, have also reported dozens of spills of chemical substances.

Even so the company has continued to conduct business, as usual, under a new name and with local government support. It even received a pardon of $154 million through a tax-write off from Puerto Rico Treasury Department in 1999.

This write-off was negotiated by the company’s law firm, McConnell Valdés, which oversees Governor Luis Fortuño’s personal trust.

The firm also has in their team two former Treasury secretaries including the attorney who negotiated the deal with CAPECO and later joined the firm.

When asked how it was possible that the company has been allowed to continue operating for so long despite the repeat violations, José Font, deputy director for EPA Caribbean, contended that the agency’s priority is to assure that the operations are meeting federal rules.

“What we have to look is for compliance with the law,” Font said.

Other findings include:

1993-1997: one of the company owned gas stations in Utuado contaminated the Rio Grande in Arecibo, pumping between “5,000 and 20,000” gallons of fuel, which affected 263 residents’ health, according to a civil suit.

1996: the company entered into an agreement with the EPA to address soil and water contamination at the facility.

1998: the EPA levied $52,000 in penalties and fines after the facility was cited for violations under the Clean Water Act shortly after hurricane George.

1999: EPA levies $1.3 million in penalties and fines for an array of violations. The case was referred to the U.S. Department of Justice.
2001:The company and its subsidiaries sought bankruptcy Chapter 11 protection.

1990-2009: EPA’s National Response Center has reported at least 25 reports of leakages and explosions, 19 of them after 2000 when the company was heading towards bankruptcy.

2008-2009: bankruptcy court orders $1.3 million compensation to 30 residents living in Utuado, where a leak took place and residents, according to a civil lawsuit, alleged health problems afterwards.

2009: 21 storage tanks exploded igniting a fire that lasted 60 hours, where water and air contamination took place. The incident is under investigation.

Critics said a company with repeated violations, ravaged by financial problems and a management that doesn’t support improved safety procedures creates a weak system that could contribute to accidents, risking the life of workers and residents living in nearby communities.

“In my opinion, they are delinquents who have not been rehabilitated,” said Rosa Hilda Ramos, a long-time community activist who cares for the environment. “I don’t have any evidence that proves that they have changed their history or that they care for residents’ health and security or that they are good neighbors.”

Years ago, Ramos filed a complaint with OSHA, on behalf of workers, who were too afraid to voice concerns, alleging unsafe working conditions, she said.

Ramos said that federal and local regulatory agencies have done a poor job inspecting the facility over the years.

“What I want for state and federal agencies is to do their jobs. Why do we, the people, have to act as detectives, police, and biologists?” Ramos asked. “They [regulators] should comply with their responsibility, which is to protect the people and their health, and not to protect dangerous industries.”

CAPECO’s spokeswoman, Frances Ríos, did not respond to questions concerning the company’s history despite several requests for comment.

Many deficiencies found over time

Though damages to properties could amount to $6.4 million, residents living in the communities surrounding the 179 acre facility have long suspected that CAPECO operations could pose a risk to their health, safety, the environment and way of life.

“We denounced it decades ago, but they [government officials] said we were crazy,” said community leader Pedro Carrión

Federal regulators have found deficiencies at the refinery for years.

In 1996, the company, then known as Caribbean Petroleum Refining LP, entered into an agreement with the EPA to address soil and water contamination at the facility after inspectors discovered the refinery had pumped 82,000 gallons of fuel, which contaminated soil and ground water, all violations under the Resource Conservation and Recovery Act (RCRA), according to Bonnie Bellow, a spokeswoman for the EPA.

Bellow said that until now the company has been meeting requirements under RCRA.

The facility had also been cited shortly after Hurricane George in 1998 for violations under the Clean Water Act. The company paid $52,000 in fines and penalties to the EPA, Bellow said.
EPA records show some violations were unresolved and the federal agency referred the case to the U.S. Department of Justice on Feb. 16, 1999 for enforcement and to collect fines and penalties amounting to $1.3 million.

In 2000, the company shut down the refinery, citing financial problems prompted by increasing crude oil prices, records show. The facility is now a fuel farm where jet fuel, oil and gasoline are stored.

On Dec. 13, 2001, Caribbean Petroleum L.P., Caribbean Oil L.P., Caribbean Petroleum Refining L.P., Gulf Petroleum (Puerto Rico) Corporation and the parent company Caribbean Petroleum Corporation (CAPECO) filed bankruptcy.

The company had an estimated debt of over $100 million, according to bankruptcy records filed in the U.S. Bankruptcy Court District of Delaware at the time.

Bankruptcy records show that in 2003 CAPECO entered into a six-year payment plan with DOJ to pay the $1.3 million in penalties but is unclear whether the company has made any payments.

State inspectors have visited the site numerous times in recent years.

The company was cited by state inspectors for violations under the Clean Air Act in January 2007 and March 2007. The company corrected deficiencies, EPA inspection records show.

Early this year, CAPECO was cited for violations occurring in March and June, EPA records show. State inspectors gave the company an informal written reprimand in March, according to EPA electronic inspection records. The company corrected deficiencies and was in compliance in September.

A dangerous business

Refineries are among the nation’s most dangerous industries.

No other industry sector, according to the Occupational Safety and Health Administration, has had as many fatal or catastrophic incidents related to the release of highly hazardous chemicals as the petroleum refining industry.

Yet, OSHA inspectors have not inspected CAPECO since 2000. Inspectors, at the time, cited the facility for violating rules pertaining to safety management of highly hazardous chemicals and lacking records showing that employees participated in training.

Since May 1992, accidental releases of hazardous chemicals at refineries have resulted in 52 deaths and 250 injuries in the U.S., OSHA records show.
In 2005, 15 workers died and 170 workers were injured in an explosion and fire at the BP Texas City, considered to be one of the worst oil refinery disasters in history. Another incident took place in New Mexico causing injuries to six workers when a release of hazardous chemicals occurred during pump maintenance.

To reduced preventable deaths and injuries at refineries, OSHA launched a National Emphasis Program for petroleum refineries in 2007 to scrutinize refineries throughout the U.S. by conducting inspections of all refineries to ensure that facilities are complying with safety management regulations.

Until two years ago, OSHA, the federal agency that regulates the workforce to prevent work-related injuries, illnesses, and deaths, had a few inspectors nationwide who specialize in refinery safety.

It is unclear if Puerto Rico’s refineries have been inspected as part of this program.

In reality many refineries have reduced costs as profits dropped in recent years due to the high prices of crude oil and the instability in the market place. And these reductions have affected maintenance and safety.

“Most refineries have the same problems,” said Kim Nibarger, a health and safety specialist for United Steelworkers, the union that represents many refinery workers nationwide. “You can change the name on the top, but they are all the same.”

Another issue is that most facilities are getting old and have not been updated in a long time.

“We pride ourselves that workers are very careful,” said Nibarger, who testified two years ago during hearings held by the U.S. Senate. “But if they are not changing equipment, doing maintenance and training, that’s a bad sign.”

Fearing the worst

For decades, residents of nearby poor communities like Puente Blanco, Cucharillas, Villa Paraíso, Las Palmas, Las Vegas and Juana Matos, where about 30,000 people live in wooden and cement homes between the towns of Cataño, Bayamón and Guaynabo, have feared the worst.

“We live in fear. We are living here in a time bomb,” said Bárbara Concepción, resident of Cucharillas for more than 20 years.

Residents said they worry that a huge blaze would trap them inside their homes if the huge pipe that surrounds their communities ignites. The pipe transfers different types of fuel from tankers located at the port to the CAPECO facility.

Most residents have trouble sleeping at night since the October 23 explosion, according to numerous interviews conducted here.

“We have always talked about it and we’ve always said that it would explode someday,” added Frankie Olivo, resident of Puente Blanco, who now has been subcontracted to clean the petroleum contaminated creek in front of his house.

But this is not the first time that CAPECO’s operation has a fire that affected neighboring communities and polluted its waterways.

Thirty years ago, a blaze moved fast after a resident lit up a bee hive near the Malaria Creek and sparks ignited the whole contaminated waterway located 10 feet away from homes in Main Street, according to long-time resident Samuel Sánchez Coreano, noting that the fumes coming from the creeks during those years were very strong.

Even before the explosion, most residents living here had no knowledge about what to do in case of an emergency or about the Right-to-Know Act, approved by Congress in 1986 to establish emergency planning efforts at the state and local levels to inform the public about toxic releases and explosions.

Under the Emergency Planning and Community Right-to-Know Act, local government and state agencies must create an emergency plan and provide the public with a picture about the worst case scenario so residents can prepare accordingly.

Ramos said that even she, who has been at the forefront of the environmental fight against CAPECO for two decades and was a member of one of the local emergency committees, has never seen the final plan. She says that state government is violating federal rules because no central committee has revised and approved the plan so it can be distributed to residents. The community committees have not been active for years.

“People don’t have a clue,” she said, noting that the recent explosion was serious enough to activate the emergency plan and alert the community but it never happened.

Experts said this is not uncommon. In fact, they’ve found that residents throughout the nation are usually unaware about the dangers or an emergency plan until a disaster takes place.

“I bet the citizens there have been completely ignorant and kept in the dark about the potential risks,” said Fred Millar, a chemical disaster and accident prevention expert.

Millar is a consultant for Friends of the Earth, an environmental nonprofit organization based in Washington D.C.
“In many cases, local communities are unprepared for such disasters far more than anybody realized it,” Millar said. “We like to think that we are safe, but we are not.”

Probe continues

A decade ago, the company’s financial leader Ramon Cantero Frau asked the Federal Bureau of Investigation to look into the company’s financial dealings and issues. That investigation faltered because it involved international banks.

Those same issues, including CAPECO’s maintenance practices and management culture, will be at the center of a federal investigation as the U.S. Chemical Safety and Hazard Board (CSB) determines the events that led to the explosion.

The probe, by the independent agency of the U.S. government, could take 18 months, Wanko said.

“We won’t stop at the leak,” Wanko said. “We want to know why this happened and understand how they manage the tanks, how they train their operations and the regulatory framework in Puerto Rico.”


Mc Nelly Torres is a freelance investigative journalist in South Florida and Omaya Sosa Pascual is Executive Co director Puerto Rico’s Center for Investigative Journalism. Torres is a member of the board of directors of the Investigative Reporters and Editors organization.