L.A.’s Flawed Oil Oversight System

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May 1, 2014 · Posted in Commentary 
Parkland section of Freeport-McMoRan Murphy Drill Site, facing 27th Street. Under LA Planning Department conditions in place since 1961 this is to remain undeveloped. December 2013 Zoning ruling, now being appealed, allows Freeport to build a 29 foot high enclosure 60 feet long by 25 feet deep up against the ivy covered wall at the far back.

Parkland section of Freeport-McMoRan Murphy Drill Site, facing 27th Street. Under LA Planning Department conditions in place since 1961 this is to remain undeveloped. December 2013 Zoning ruling, now being appealed, allows Freeport to build a 29 foot high enclosure 60 feet long by 25 feet deep up against the ivy covered wall at the far back.

Leslie Evans

Three oil company drill sites in the West Adams section of South Los Angeles, operating more than 100 underground wells, have been the center of recent citizen protests, ramped up government inspections, a City Attorney lawsuit, and complaints that the city’s Zoning Administration has violated municipal code and possibly state law in fast-tracking oil company expansion plans. These events have raised broader questions as to the competence of the city’s oversight of an industry that deals in toxic, explosive, and flammable materials but has been allowed, from the days in the late nineteenth century when there were few zoning rules, to establish thousands of wells in residential neighborhoods throughout the city. Since the early 1960s most of these have been slant drilled underground, with scores of pipes emanating in all directions from anonymous compounds hidden behind high walls.

The recent West Adams complaints first arose in 2010-11 around Allenco Energy’s drill site at 814 W. 23rd Street in the University Park neighborhood north of USC, adjacent to Mount St. Mary’s College. Allenco purchased the operation in 2009 and boosted production 400%. Soon, neighbors began experiencing chronic nosebleeds, respiratory problems, headaches, and nausea. By late 2013 the South Coast Air Quality Management District (SCAQMD) had received 251 complaints. Community protest meetings drew several hundred people. The federal Environmental Protection Agency (EPA) sent inspectors, who were made ill and determined that leaks of petroleum fumes from badly maintained equipment were the cause. Allenco voluntarily shut down on November 22, under pressure from U.S. Senator Barbara Boxer. On January 7, Los Angeles City Attorney Mike Feuer filed a lawsuit to prevent Allenco from reopening until they comply with all applicable health and safety regulations.

Subsequently, two drill sites acquired last year by the giant Freeport-McMoRan Oil and Gas company became the subject of community complaints.

Freeport-McMoRan took over a number of Los Angeles oil properties in June 2013 through its acquisition of the Plains Exploration company (PXP). The largest of these was the massive Inglewood Oil Field, mainly on County land in Baldwin Hills, but two smaller properties are in West Adams: the Jefferson Drill Site at 1349-1375 Jefferson Blvd. and the Murphy Drill Site at 2126 W. Adams Blvd.

Plains Exploration in February 2013 began discussions with the City Planning Department to approve new drilling at both of its West Adams sites.

The Jefferson Blvd. site application eventually went to Associate Zoning Administrator (AZA) Sue Chang, who called a public hearing on September 25, 2013. By that time Freeport-McMoRan was the owner. Community members from several local block clubs and a church attended, complaining that the company’s heavy trucks broke up the sidewalks; they illegally painted extensions of the red curbs to keep them open for their trucks; left graffiti unpainted; and did not pick up trash. AZA Chang reprimanded the company for inadequate notification to the community – some property owners had not been sent hearing notices and no renters had. More serious, she discovered that the “mother case” numbers, which match specific wells with their location, permits, and conditions of use, were totally confused in Freeport’s application and, even worse, in the Planning Department’s files.

The application listed two wells the company was asking to redrill, but placed them in the wrong oil district and under the wrong mother case number, which had different limits and rules for such drilling. Freeport was asking to drill one new well, but this should have required a new case number, as the one they were using did not permit that type of well. ZA Chang postponed the hearing. When she announced a new date, for January 25, the company asked for a postponement. We are still awaiting a new hearing date.

Freeport-McMoRan’s Murphy Drill Site

Meanwhile attention shifted to Freeport’s Murphy site. Freeport owns the facility but rents the land from the Catholic Church. As news reports of the health problems at Allenco spread, neighbors near the Murphy site heard about a gas leak there and neighbors who were smelling petroleum fumes. New drilling (seemingly without proper permits) at the site in November also raised concerns. A January 11, 2014, protest meeting at the Holman United Methodist Church on Adams Blvd. drew more than 300 residents and was attended by City Council President Herb Wesson and U.S. Congress member Karen Bass. Wesson afterward got the City Council to put a temporary moratorium on new drilling at the site, but pumping at the 33 existing underground wells continues uninterrupted.

Research by concerned residents revealed that there were a number of irregularities in the permit process for Freeport’s Murphy site. Plains Exploration in an April 16, 2013, letter asked the Planning Department as a combined package for authorization for three new wells, and also for an unspecified upgrading of its natural gas production section of the site.

The case was assigned to Associate Zoning Administrator David Weintraub, who delegated it to Case Manager Jack Chiang (who is not a zoning administrator). Mr. Chiang met with PXP’s Contract Land Advisor Rae Connet on May 14, 2013, and signed his approval on the company’s April 16 letter.

The gas plant expansion, which is not detailed in the April 16 letter, was to consist of a large new walled enclosure on the south side of the land PXP, and now Freeport-McMoRan, rents, outside of its existing walled facility. This large undeveloped part of the property has for fifty-two years, as a condition of oil company occupancy, been reserved as landscaped parkland. The new enclosure was to house a new CEB 800 waste gas burner.

Weintraub and Chiang, unlike Sue Chang, did not hold a public hearing, even though Freeport’s proposed changes at the Murphy site were far more extensive than at the Jefferson site. Jack Chiang in an email to Rae Connet the day after their May 14 meeting, retrieved by residents in 2014 as a public document, told the PXP representative:

“I spoke to David Weintraub this morning about the gas diffuser at Murphy Facility located on Adams Boulevard. He agrees that this can be done as an Approval of Plan without a case filing.”

The Planning Department has two levels of approval for new projects. What Jack Chiang calls an Approval of Plan and David Weintraub calls in his determination letter of late 2013 a Review of Plans is the lowest level and does not require a formal application or review. The next level, a Plan Approval case, requires the issuance of a new case number, a full review and noticing of all concerned parties including nearby residents and businesses.

It is debatable if a Review of Plans is adequate for drilling new wells. The wells were approved in a full review back in 2007, but permits explicitly expire after 90 days, much less after six years. Certainly a full Plan Approval case should be required for installation of major new equipment and expanding the facility into parkland explicitly and repeatedly reserved for landscaping for the previous fifty-two years.

Plainly Jack Chiang had no idea what the equipment was that he was approving, as he refers to it as a “gas diffuser.” A gas diffuser is a device that spreads out the flow of gas in a wide spray instead of a tight stream, used in welding nozzles and some chemical processes. The CEB (Clean Enclosed Burner) 800 is a special furnace that burns off industrial waste gas at a temperature of 2000 degrees Fahrenheit. Also, nowhere in his correspondence with Weintraub do either of them indicate they have any knowledge of the previous long-standing conditions on preserving the open parkland. One has to conclude that they are making decisions without reading the case file on this property.

Chiang, and David Weintraub who assigned him to this task, should have notified other parties including local residents, should have called the file to see what prior conditions existed, should have checked to see if conditions in the file were being met. It is pretty clear Chiang did none of that.

For example, in 2004 there was a zoning case on the Murphy site in which the then-owner, BSI, asked that a number of then-existing conditions on the property be lifted. Among others the company’s attorney asked that the city’s prohibition on such sites generating their own electricity be rescinded, revealing that they had installed five gas burning microturbines to use some of their natural gas to generate electricity. The ZA responded that the turbines were a violation of code and the company would have to ask for a full Plan Approval case if they wanted to keep them. They never did so, leaving the microturbines as a zoning violation.

Nine years later, Rae Connet, now working for Freeport-McMoRan, at a November 7, 2013, meeting of the United Neighborhoods neighborhood council, motivated the installation of the CEB 800 gas burner as nothing new but just a replacement for the existing microturbines, now innovatively described as used to burn waste natural gas. This revealed that the site is still not in compliance with its existing conditions, which Chiang and Weintraub should have looked up. And if the “existing” equipment is a code violation, it does not provide a precedent for some new piece of equipment that actually has a different function anyway.

On June 18, 2013, Jack Chiang approved PXP’s site plan. PXP’s proposal was to erect a new rectangular walled addition, extending from their existing walled compound out into the parkland that slopes down to 27th Street on the south. From PXP’s site drawings at the Planning Department this structure would use the existing wall as its north side, then run 60 feet wide and 25 feet deep, at a height of 29 feet 9 inches. However, under the conditions the Planning Department placed on the property when the site was first authorized for oil production back in 1961, this portion of the parcel was always reserved for landscaping. That condition was reaffirmed in three subsequent reviews. An added clause in 2007 required the oil operator and the property owner, the Archdiocese of Los Angeles, to explore mechanisms to allow public access. This was never done.

There doesn’t seem to be a good reason for such a large structure even if the gas burner should prove to be justified. The CEB 800 is a very small device, with a 4’8″ X 6’5″ footprint. The site plan for the existing facility shows more than ample space where an object of this size could be located.

The Planning Department Changes Its Position – Twice

On October 22 an email went out from Planning to Certified Neighborhood Councils announcing that the new wall had been approved for construction. Laura Meyers, the Planning and Zoning chair for the United Neighborhoods neighborhood council, fired off  a complaint to Shannon Ryan, a planner in the city’s Historic Preservation Overlay Zone unit, demanding to know why the neighborhood council was not informed before the case was approved and why it did not warrant a Plan Approval case. In a further email the next day she pointed out that this permanent structure is almost thirty feet high, the height of a three-story building, and will sit on the top of a hill overlooking the Jefferson Park residential neighborhood.

Her communications set off a flurry of email exchanges within the Planning Department. Michelle Levy, the head of the HPOZ  unit, emailed Chief Zoning Administrator Linn Wyatt and AZA David Weintraub, asking why it had not rated a Plan Approval case. Wyatt asks Weintraub to look into it. He in turn emails Jack Chiang, saying “It appears that the wall and its landscaping required a Plan Approval to the ZA-1959-15227-(PA4). (Need to file ZA-1959-15227-(PA5).”

In the Planning Department’s system a change at a property that requires a full case review gets a mother case number based on the earliest case, adding one increment to the final PA number. There had been four previous Plan Approval cases (PA1-4). A new Plan Approval for the new wall and burner would thus get a case number ending in PA5.

Planning then withdrew Jack Chiang’s approvals and logged the case as “pending.”

Jack Chiang, who was out of the country, heard the news and emailed David Weintraub, saying, “I remember this exhaust vent [he still doesn’t know what the equipment he approved was] requires a soundwall and we agreed that it can be an approval of plan as informed by the applicant that it was not controversial.” So he explains that they adopted the routine level where no one had to be told about the – to-him – mysterious equipment or its giant wall because the applicant told him it wasn’t controversial.

Rae Connet on October 24 sent David Weintraub a shocked email:

“I received a call yesterday from our construction engineer . . . who informed me that you had called him yesterday to tell him the approval of plans signed by Jack Chiang has been reversed and we cannot proceed with the project. He said you indicated that a ‘PA5’ should have been applied for and that you did not know why Jack had approved this project as it was presented.”

Weintraub seems to be throwing Jack Chiang under the bus here, as several documents already cited pretty clearly show that it was Weintraub who proposed the Approval of Plans designation, which was the reason for the revocation.

Connet added that Freeport had already spent more than $700,000 on the project, for which they did not yet have permits.

Whatever happened over the next two months does not appear to be documented, but on December 26 David Weintraub issued a letter defining the gas burner and its high wall as a mere Review of Plans and approved them as-is under the old PA4 case number. Further, he defined his letter as a “communication,” insisting that it was too routine to be subject to appeal.

Shortly after this Jack Chiang in a January 8, 2014, email to City Council President Herb Wesson’s staff declared that the only ruling on the matter was Weintraub’s December 26, 2013, letter, and his own signatures with the word approved on the April 2013 PXP proposal letter and on the proposed site plan that June were not intended to decide policy. So Freeport-McMoRan had spent its $700,000 on the basis of signatures that carried no authority.

Freeport now decided to stop waiting and started drilling. They did not apply to Building and Safety for the required permit for the temporary sound wall. On November 15 without permits they put up a temporary sound wall around their existing facility. This was almost a month after Rae Connet acknowledged being told that the project was put on hold, and more than a month before Weintraub finally approved it.

Building and Safety was not pleased. On November 26 they cited Freeport for construction without permits and shut down the drilling, but not before two of the three wells had been completed.

Note: Building and Safety does not issue permits for drilling wells. If the wells are approved by Zoning, LADBS then issues a permit to build the temporary sound wall.  So the citation was for building a sound wall without permits and for “oil and gas well drilling performed without the required permits and approvals for a temporary sound wall.”

Weintraub in his letter makes a point that the November 7, 2013, meeting of the United Neighborhoods neighborhood council, following a presentation by Rae Connet, voted to endorse the burner and sound wall. At that time they had not had the opportunity to review the Murphy case file, which contains the several rulings requiring the landscaping. They did not know the size of the CEB 800 burner, and were misinformed that it was a replacement for existing waste gas burning equipment.

In a five-page April 18, 2014, letter to the Planning Department the UNNC states that it has reversed its position on the project and is now opposed to the CEB 800 installation and the new wall. They say they have “learned many material new facts regarding this project, and the drilling of new wells. UNNC has also learned information that makes us concerned about the process and procedures at the Planning Department; and in addition we have heard from many of our stakeholders.”

Evading the California Environmental Quality Act

There is a longer-term issue in this case for both the well drilling and the gas burner and expansion into the parkland. That is how it relates to the California Environmental Quality Act. CEQA was adopted in 1970 and for many construction projects requires an obligatory Environmental Impact Report. Zoning cases on the Murphy Drill site simply ignored CEQA for the first fifteen years. Then in a case in 1985 the ZA ruled that the project qualified for what is called a Categorical Exemption from the EIR requirement. David Weintraub in his December 26, 2013, letter cites this precedent and declared a Categorical Exemption from CEQA’s EIR requirement. There is reasonable grounds to question whether the Murphy expansions qualify.

Under CEQA rules no project can be exempted from a mandatory Environmental Impact Report if it may damage a historic resource or have even a small risk of serious environmental damage. The Murphy Drill Site is not only in the middle of a city official historic district (HPOZ), but it is immediately across the street from UCLA’s historic William Andrews Clarke Memorial Library with its priceless collection of 17th and 18th Century manuscripts. The sidewalks abutting the Clarke split open from the November 2013 well drilling. Certainly any operation involving piping and burning large amounts of natural gas has some potential for environmental risk. And except for the misdirection about the versatile microturbines, the site has never in its fifty-two years of operation routinely burnt off large amounts of excess natural gas.

The original 1961 Plan Approval case forbade venting petroleum products and byproducts. The 1985 and 2008 approvals for adding the gas production plant never mention the burning of waste gas. In the 2004 Review of Conditions case, the then-operator admitted they had violated conditions by installing the existing microturbines, for use as gas fired electrical generators. In that same review the operator claimed that any and all byproducts of gas production were and would be mixed back into petroleum pumped out of the facility for refining elsewhere. There was to be no venting of waste gas or byproducts. So there is a question whether the new gas burner is legal without a full Environmental Impact Report.

Appeals, Rulings, and Systemic Problems

Given all these questions, Weintraub’s insistence that his December 26 ruling couldn’t be appealed seems high handed and bureaucratic in the extreme. There were enough protests by residents and community organizations for the City Attorney to intervene, insisting that appeals be permitted. Weintraub then announced that he was changing his December 26 letter from a “communication” to a “determination” and that appeals would be accepted.

Two local residents filed separate appeals on the enclosure, the expansion of the drill site perimeter, and the installation of the waste gas burner. They say that oil operation expansions under city code require a formal review, which was not conducted.

As of this writing a public hearing on the appeals is to take place on Tuesday, May 20, at the Constituent Service Center, 8465 S. Vermont Avenue, Zoning case ZA-15227(O)PA4.

Regarding the University Park site that first triggered the community’s series of concerns, the EPA on April 24 announced that it had reached a settlement with Allenco in which the company must undertake some $700,000 in repairs and upgrades, including fully enclosing an open trench used to store water mixed with oil residues. The EPA requires 15-day advance notice of the company’s reopening date to make its own reinspection. The company still faces the City Attorney lawsuit in Superior Court aimed at preventing them from reopening on health grounds.

In each of the three cases here in West Adams the city’s oversight system has fallen short. For Allenco it took an intervention by Senator Boxer and the Federal government to clean up the mess that had been sickening neighbors for years. The hearing on Freeport’s Jefferson site exposed the jumble in the city’s Planning Department records on the rules governing these volatile urban industrial operations. Freeport’s Murphy site revealed an astonishing disregard for nearby residents, previous Planning Department rulings, or conformity with the city’s own Municipal Code.

* * *

The problems at the Jefferson site were caught by a sharp public servant, but the Murphy site received routine approvals that seem to ignore city and state review requirements. Allenco is an example of the risks for residents of weak oversight. The city used to have a Petroleum Department. When oil prices fell to $16 a barrel in the 1990s, many wells were plugged. Thinking the oil business was fading away in Los Angeles, the city ceased appointing a Petroleum Administrator, though the duties remain in the city code. When oil prices skyrocketed to $100 a barrel after 2005, the oil business expanded big time. There are now 5,000 active oil wells in the city and thousands more inactive but remaining a potential risk. This is a $2.7 billion a year business operating with highly flammable and explosive materials, prone to health-threatening fume leaks, scattered throughout residential blocks. There is even an oil well under Beverly Hill High School. There have been two significant leaks in just the past few months. On November 24, 2013, a Freeport-McMoRan pipeline from its big Inglewood Oil Field in Baldwin Hills burst under La Cienega Blvd. at Fairfax Avenue, spilling 300 gallons of toxic waste water, laced with oil and methane. On March 17, an abandoned Phillips 66 underground pipeline in Wilmington ruptured, spilling thousands of gallons of oil, left in the pipe to keep it from corroding, onto a residential street. It would seem the city needs to restore at least the level of specific oversight it exercised in the 1960s and 1970s.

A key problem is that there is no longer anyone in overall charge of the city’s oversight of oil operations. The former Petroleum Administrator as their sole job were supposed to focus on this massive industry and to have the authority to call in specialist technicians if needed. Zoning Administrators handle every variety of zoning-related case and are not trained or instructed in how oil production works and the risk points involved. Moreover, each ZA is on their own to devise rules for whatever particular oil operation happens to come before them. Except for the limited treatment this subject gets in the city’s Municipal Code, there is no centralized data system in the Planning Department that brings together their own rulings on oil production by different ZAs for different locations. At best there is a cumbersome paper trail, when the records are at least kept straight, for each individual property. And even those become so lengthy and cumbersome that ZAs, at least in the Murphy Drill Site case, don’t seem to take the time to read them.

The United Neighborhoods neighborhood council (formally: United Neighborhoods of the Historic Arlington Heights, West Adams and Jefferson Park Communities Neighborhood Council, UNNC for short), in whose territory the Murphy Drill Site is located, has drafted and adopted a one-page policy statement calling for a systematic review of the city’s administration of oil properties. It is circulating this document to other neighborhood councils for adoption. Below is the full text of their statement.

*  *  *

[Policy statement of the United Neighborhoods neighborhood council calling for a full public review of Los Angeles regulations of oil operations in the city.]

 

EXECUTIVE SUMMARY: The Need to Review and Modernize Los Angeles City’s Regulatory Framework for Oil and Gas Extraction

 

Recent events involving three oil and gas well sites in the greater West Adams area have made many residents and community groups newly concerned about oil and gas production in our neighborhoods and across Los Angeles in general. In the middle of many different and sometimes conflicting concerns expressed by diverse members of the community, we believe there is at least one set of issues on which a consensus or near consensus should be achievable:

 

The City of Los Angeles’s regulatory framework for coping with the extraction of oil and gas in the midst of a densely settled urban environment has not been reviewed systematically for many decades, if it ever has been. It is high time for such a review.

 

1. Regulation that is Unsystematic, Assembled by Patchwork, and Outdated

The City’s regulation of oil and gas production is spread over several departments and through several different sections of the City’s codes. Small parts of the code have been added, deleted, or amended over the years in patchwork fashion due to changing circumstances, including the growth of the City, emergency needs during World War II, declining production in the 1990s due to falling real prices, and the boom in production since 2005 due to increased prices for oil.

 

2. The Collapse of the City’s Regulatory Framework since the 1990s

The City’s regulation of oil and gas production has never been systematic enough or public enough or subjected to overall review, but the surge in oil and gas production since 2005 confronts us with a special challenge. The City allowed essential parts of its regulation of oil extraction to become moribund in the 1990s, and budget cuts since the Great Recession began in 2007-08 have contributed to greater disarray.

 

3. There used to be a City Petroleum Administrator

Through the 1960s, the City maintained a Petroleum Department. Up until about 1990, the Office of the City Administrator of Los Angeles included a Petroleum Administrator with broad powers to oversee all City Departments and Bureaus with functions pertaining to oil production. Moreover, the City Administrator had ultimate power to review all permit and approval cases, review and make recommendations on all City regulations pertaining to oil, and to hire technical experts to investigate and report on any facet of oil and gas production that the City Council or any Department might require.

 

4. No One is in Charge, but the Responsibilities are still in the City Codes

Since approximately 1990 there has not been a Petroleum Coordinator in the City Administrator’s office, though the City’s Administrative Code still gives the City Administrator all of the powers described above. A half dozen telephone conversations with staff in the City Administrator’s office could not even find someone who knew that there used to be such a person.

 

5. Oil Extraction is too Consequential to the Environment and the Economy to Allow the City’s Negligence to Continue

We need to engage a broad civic discussion about this state of affairs and its alternatives. One possible alternative is next door to us in the Baldwin Hills, where the County’s Community Standards District provides what appears to be the strongest and most publicly open regulatory framework for urban oil production in the U.S.

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