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How Business is Really Done Before Environmental Agencies

If you think the environmental news in California is depressing with the latest fiasco of regulators allowing oil companies to re-inject wastewater from fracking into hundreds of aquifers containing water designated as clean for years and years, it’s worse than you think.

It’s the same story everywhere because most everywhere companies have “captured” their own regulators. This regulatory co-opting happens through the ties that bind—people in government go to work for private companies, but they don’t leave their relationships behind. They donate to politicians. They rub shoulders with other people at lunches and cocktail parties. They don’t rub shoulders with hoi polloi. They go back to government and come back out again. It happens when regulators wear more than one hat—and actually work on the side for a company that appears before them.

Take for example the meeting at the Los Angeles Regional Water Quality Control Board on Feb. 12. Mr. Charles Stringer, who works as Chair, recused himself but has never publicly disclosed that he and his consulting firm work for Boeing to water down the cleanup of the Santa Susana Field Lab in Simi Hills that is home to the only site in California to suffer a partial nuclear meltdown where half a million people now live within ten miles.

Boeing came before the Board for an extension of a very weak water discharge permit after striking a deal with regulators to minimize fines for violations going forward. The end result? The Board unanimously rubberstamped the woefully weak—in fact weakened—permit extension. Proof positive of regulatory “capture.”

To see how business really works before regulatory agencies, you can read this testimony, which I delivered before the Board, to dead silence with never a question in its wake:

TESTIMONY:

My name is Liza Tucker, with the public interest group Consumer Watchdog. I am the author of an investigative report called Inside Job.

The report documented how the Boeing Company hired well-connected fixers, including Mr. Peter Weiner and Mr. Charges Stringer, to work to block the long-promised full cleanup of the Santa Susana site. 

I am here to make some observations about how polluters co-opt their regulators—capture them for a better word—in the context of the current proposal before this Board to further weaken an already woefully weak pollution permit for Boeing.

Instead of protecting the public health and environment by issuing a pollution permit with strict requirements, and levying fines big enough to matter when limits are violated, the Board appears to have bent over backwards to save a profitable aerospace giant money on a cleanup of a partial nuclear meltdown site that has been linked to cancer. My evidence?

The record speaks for itself. The Board has in recent years fined Boeing only a few tens of thousands of dollars a year, while the company continues to violate its discharge permit. Why should Boeing comply when the fines are cab fare to a company that made $4.5 billion in profits in 2013?

Let me point out just a few relationships that the Board may claim had nothing to do with its lax regulation, but that raise many eyebrows among the “little people” that live near the Santa Susana site, some of whom have suffered cancer.

The current chair of the Water Board is Mr. Charles Stringer. Several years ago, Boeing hired Mr. Stringer and his firm, Renewable Resources, to help get Boeing out of having to clean up most of the contamination at SSFL. My report details how they worked on behalf of Boeing to create an “Astroturf” group (in other words, a fake grassroots group) that would advocate for Boeing not to have to clean up the great majority of the contamination at Santa Susana. This would save Boeing a lot of money, but keep risking the public health and environment by continued migration of the contamination off the property.

Having the Board Chair employed by a major polluter that the Board regulates taints public perception of the Board. The Board may say that Mr. Stringer has recused himself from voting on the Boeing matter today, but there are many ways in which influence can play out. The top staff of the Board are hired by the Board which Mr. Stringer chairs. And indeed, the staff’s conduct regarding the Boeing permit reinforces public concerns in this regard.

There is neither a published disclosure statement nor notice of recusal on the Board’s website. Indeed, Mr. Stringer himself never disclosed the work for Boeing on his conflict of interest forms. The public had a right to know of this relationship. That in itself could affect the way the Board treated Boeing—and the public.

Yet the Board’s Chief Executive Officer asserted there was no obligation to disclose the conflict and that if the public was concerned, they could ask Mr. Stringer and his firm about their Boeing work. This badly misunderstands disclosure principles. The person with the conflict is supposed to publicly disclose the conflict; it is not up to the public to discover the secret conflict and ask the official to reveal what was hidden.

The Board’s Chief Executive Officer went further and attempted to spin Mr. Stringer’s work for Boeing as assisting in creating “open space.” In fact, Mr. Stringer and his firm have pushed for the site to be declared uninhabitable to allow cleanup to a far lesser standard that leaves most contamination not cleaned up. The Astroturf group Mr. Stringer helped to create to advocate for this outcome incudes former employees of the companies responsible for the contamination, now repurposing themselves as “community members.” How can there be any integrity to the Board’s process under such circumstances?

A second example:

The tentative permit at issue in today’s hearing is an even weaker version of the permit that was worked out between the Board and Boeing in 2010. During the same time, the Board staff negotiated with Mr. Weiner a controversial consent judgment limiting Boeing’s fines for future violations of that permit. The Board’s Executive Officer was Tracy Egoscue. When most of the work was done, Ms. Egoscue left the Water Board to work for—Peter Weiner.

Now the Board recently signed a renewed consent judgment with Boeing continuing weak penalties that have allowed Boeing to remain out of compliance. On top of that, the Board proposes today to extend Boeing’s prior permit, weakened even further.

Over the years, Mr. Peter Weiner, who is retained by Boeing, has done everything possible to minimize regulation of Boeing’s discharges at the site and to minimize its fines.

In 2009, Mr. Weiner appeared before this Board on behalf of Boeing and blamed the Department of Toxic Substances Control for Boeing’s violations of its discharge permit. Weiner asserted, twice under oath that Boeing wanted to clean up the site, but that DTSC had refused to approve interim measures proposed by Boeing to remove contaminated soil polluting the surface water running off the site. The Acting Deputy Director of DTSC at the time was so outraged that he wrote a letter to this Board informing it that Mr. Weiner’s statements under oath were not true—that DTSC had never blocked any Boeing proposed interim measures and indeed had approved each one that was requested.

One would think this would trouble the Board. But the Executive Officer at the time, Tracy Egoscue, wrote back to DTSC, refusing to enter the DTSC letter into the record, and stating that the Board never presumes that statements under oath are true and thus didn’t rely on the veracity of Mr. Weiner’s statements.

Boeing’s treatment, the overlooking of false statements made by a licensed attorney, and Mr. Weiner hiring Ms. Egoscue the next year may have no relationship to one another, but the public has a hard time believing that. Ms. Egoscue was the top officer at the Water Board during a period in which Boeing was consistently coddled, where violations continued repeatedly, but weak deals were cut. And then went to work for Mr. Weiner.

Now the Board, headed by Mr. Stringer, proposes to grant an even weaker new permit to Boeing. Moreover, the Board didn’t even post the tentative permit until after a public comment period—which ran over the Christmas holidays—closed. Boeing’s application for the permit has been kept secret for more than a year. The changes made to the permit were not disclosed.

About half of Boeing’s proposed changes to the tentative permit have been accepted by Board staff and made the permit even weaker. By contrast, of the comments submitted by the public groups trying to strengthen the permit and protections of health and the environment, not one has been accepted.

Given the ties that I have just described—a Board Chair working for Boeing but having filed no public disclosure of that fact, the prior Chief Executive Officer going to work for Boeing’s lawyer after presiding over numerous actions at the Board favorable to Boeing—it is not surprising that there is great skepticism about on whose behalf the Board is acting. It will take some very strong actions by this Board today to restore the public’s confidence.