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By Ann Alexander, Author of “Before the Last Drop: Lessons from the Phillips 66 Los Angeles Refinery Closure”
Sacramento has seen significant sturm and drang this year about the prospect of California oil refinery closures and the impact they could have on statewide gasoline supplies. But the focus on supply risks overlooking a critical dimension of these closures, which is their impact on the communities left behind.
That local impact is the subject of a new report released today by two environmental justice organizations who have focused for years on the prospect of refinery closures – the Asian Pacific Environmental Network (APEN) and Communities for a Better Environment. The report, “Before the Last Drop: Lessons from the Phillips 66 Refinery Closure,” uses the impending closure of the Phillips 66 Los Angeles refinery to diagnose significant cracks in our collective readiness for such closures, and provides recommendations for how to address them.
The Phillips 66 Los Angeles refinery is fairly typical of California refineries, and hence a useful prototype. It has been operating since the early 1900s – long before modern environmental laws were on the books – and will leave behind a heavily contaminated site. The Los Angeles Regional Water Quality Control Board, which has overseen low-level cleanup efforts there since the 1980s, estimated early on that the portion of the refinery site located in the City of Carson sits atop an underground pool of spilled hydrocarbons that’s up to 13 feet thick and covers 6 million square feet. Similarly, the Board noted that “the dumping and burying of wastes on-site was a common refinery industry practice from 1940 until 1977,” and found that the Wilmington portion of the refinery site was no exception.
The closure announcement had a likewise predictable and typical effect on operations. As has happened in the past with refinery closures – including and especially the closure in 2023 of the Phillips 66 Santa Maria refinery – workers began departing in droves for other opportunities immediately following the closure announcement, leaving the refinery dangerously under-staffed. Labor leaders reported back in spring that plant staff were at one point working 18-hour shifts, eventually dialed back to 12-hour days for 13 days in the row – still a grueling schedule that risks worker fatigue. There is a very real risk that fatigue-related errors could cause an accident that would harm workers and potentially place the surrounding community at risk.
And now, the Wilmington and Carson communities are on the threshold of possible site redevelopment. Neighbors are left wondering whether they will be included in the planning or black-boxed out of it. Phillips 66 announced at the time of closure that it had hired two development companies, Catellus Development Corporation and Deca Companies, to propose a plan – which is not exactly a setup for robust community involvement.
The City of Carson, to its credit, took immediate steps to put the brakes on development with a 10-month moratorium and a requirement that any development be accompanied by a new “Specific Plan” – a municipal planning device that functionally guarantees that any new development will be subject not only to CEQA but a host of site-specific requirements.
In Wilmington, the development companies have already jumped in with a massive proposed redevelopment – and it remains to be seen whether the City of LA will take the reins and ensure full and robust community visioning and input as part of its decision-making process, before a mostly-baked proposal is sent out for CEQA review. It likewise remains to be seen how the City, the developers, and the Water Board will mesh the proposed redevelopment with the massive site cleanup, which could take decades – because there is currently no system in place to facilitate their coordination, and the developers’ proposal is largely silent on the matter.
These issues – the heavily contaminated site, the workers scrambling for the exits, and the community trying not to be shut out of redevelopment planning – will surface again and again as cars grow increasingly efficient, clean energy grows cheaper, and refineries diminish as a staple of our energy system.
The new “Before the Last Drop” report sets out a series of recommendations for regulatory and citizen action to ensure that California is prepared for future refinery closures:
- Address contaminated site cleanup. The problem at refinery sites is not just that they’re a colossal environmental mess, but that regulators, lawmakers and the public don’t have a blueprint for how they’re going to be cleaned up. For one thing, we don’t even have basic information about how much it’s going to cost – although we can safely guess that it’s easily in the hundreds of millions if not more for each site. While ordinarily, a publicly-traded company has to tell the Securities and Exchange Commission in its regular filings the extent of its asset retirement obligations – the cost of ending the life of equipment – refiners have exploited an obscure accounting loophole enabling them to do nothing to publicly quantify such cost until they actually announce closure. And even if we did know the cost of cleanup, there’s no assurance that cost will be covered – because refineries, unlike most other parts of the energy sector (think nuclear plants, oil wells, wind farms, and what have you) aren’t required by law to have a plan or funds in place for decommissioning and site remediation.
The report proposes (1) requiring disclosure of refinery asset retirement obligations, and (2) requiring a system of financial assurance for cleanup costs.
- Support workers. The immediate problem of workers leaving in droves could be blunted by refinery operators providing better incentives for them to stay, and planning in advance to keep the refinery running safely as people start to leave. But right now, although there are state (and some local) industrial safety rules in place, those laws don’t directly address refinery closure so as to clearly mandate these types of steps. Additionally, after a refinery closes, we need to have means in place to help the workers who were not able to find comparable new jobs – which will frequently be the case, as comparably well-paid union jobs that don’t require a college degree are scarce.
The report proposes (1) changes to industrial safety laws to specifically address staffing and safety in the runup to refinery closure, (2) development of a set of standards and best practices for worker retention following a closure announcement, and (3) transition assistance for displaced workers.
- Ensure robust community input in redevelopment. Ensuring that communities have a say in what’s done with former refinery sites requires proactive intervention. The default setup – playing out right now in Wilmington – is that developers (possibly after some informal listening sessions with locals, which Catellus did) will formally propose their plans, setting the bureaucratic machinery in motion. What’s needed is a way to slow things down in favor of a full visioning process with early and robust community input.
The report proposes (1) use of local zoning and planning powers (as the City of Carson has started to do) to put some bounds around redevelopment; and (2) encourage use of community benefit agreements to ensure that communities benefit from development plans and are protected from their impacts.
The time is now to start taking these steps – not when a refinery announces closure, at which point it may be too late to take careful and deliberate action to address the problems and potential crises that may unfold. Regardless of what we may do in the short term to stabilize transportation fuel supply, in the long run, refineries are going to fade in our collective rear-view mirror. Whether one loves the idea or not, the end of oil is approaching, and we’d do well to be ready for it.
Ann Alexander, Principal of Devonshire Strategies, is a policy consultant with over 30 years of legal and policy advocacy leadership experience. Previously, she was a Senior Attorney with the Natural Resources Defense Council, Environmental Counsel to the Attorney General of Illinois, and a Clinical Professor with the Rutgers Environmental Law Clinic.
