Tesoro Explosion
7:43 am
Tue July 8, 2014

In Refinery Explosion, Who's Accountable?

It's been four years since a deadly explosion at an oil refinery shook the town of Anacortes, Washington. The question of who's responsible for seven workers' deaths still hasn't been answered fully. Refinery owner Tesoro agreed to pay millions to families of the dead, but the company is fighting accusations that it willfully put its workers in harm’s way. With multiple legal proceedings continuing to swirl around the accident, it remains unclear whether anyone will be held accountable for the human cost of Tesoro gasoline. John Ryan brings us part one of this KUOW investigation.

Charred towers and machinery at the Tesoro Corp. refinery in Anacortes, Washington, following the blast.
Charred towers and machinery at the Tesoro Corp. refinery in Anacortes, Washington, following the blast.
Credit Ted S. Warren / Associated Press

911 Operator: I'm calling the refinery [phone rings]…

Dave: Tesoro main gate, this is Dave.

911 Operator: This is Cindy at Skagit 911. Is everything okay out there?

Dave: No, we've got a small explosion and a fire. One moment. We're probably going to need some assistance out here. I don't have a whole lot of information.

That “small” explosion turned out to be the largest industrial accident in Washington state in half a century. Five Tesoro workers died that day in April 2010; two others held on for several days before succumbing to their burns.

After a six-month investigation, state officials said Tesoro had willfully broken the law 39 times. They hit Tesoro with the biggest workplace-safety fine in state history.

KING-TV tape: "...a $2.39 million fine, the largest penalty ever issued by the Department of Labor and Industries…"

That penalty made headlines, and it might sound like a strong deterrent to any company running a dangerous operation. But to a Fortune 100 company like Tesoro, a couple million is petty cash. The Texas firm brings in that much revenue in about half an hour.

Still, Tesoro attorneys have appealed the penalties, and they've been fighting them for the past three and a half years.

Jaffe: “Okay. We’re on the record. The purpose of this conference….”

That’s Judge Mark Jaffe. He rules on workplace-safety cases for a little-known state agency called the Board of Industrial Insurance Appeals.

The appeals board does much of its work on the phone, with lawyers arguing on conference calls.

Dew: “No good reason not to allow the department to take these depositions…”

Last year, Judge Jaffe overturned all but 11 of Tesoro’s 39 alleged willful violations of state law. He’s also slashed more than two-thirds off that record fine. It’s now down below $700,000 and could go lower.

Jaffe’s decisions from last fall aren’t final.

Lawyers are still duking it out over the phone, with attorneys for two Tesoro managers trying to delay the proceedings.

Attorneys for the Department of Labor and Industries have been trying to speed things up.

It’s par for the course for major industrial accidents in the United States. Companies are often able to whittle down or at least delay the consequences of their unsafe workplaces.

Judge Jaffe is expected to decide the Tesoro case some time next year. His decision can be appealed to the three-member board he works for.

Their decision can be appealed three more times, all the way to the state supreme court.

Rick Gleason lectures on workplace safety at the University of Washington.

Gleason: “It takes a long, long time for these ultimately to be resolved.”

Ryan: “Does that kind of leave people involved in limbo for a long time?”

Gleason: “Yes, it does. The appeals process can go on for many years.”

Among the penalties that Judge Jaffe has overturned? Seven of them, at $55,000 apiece, for not providing appropriate fireproof clothing.

Seven workers were tending to the superheated tank of petrochemicals when it blew up. Jaffe said there is no clothing appropriate for such a deadly explosion.

Attorneys and spokespeople for Tesoro and for the state declined to be interviewed.

Tesoro has owned the Anacortes refinery since 1998. Shell owned it before that. Within a year of the 2010 explosion, families of the victims sued both companies over the wrongful deaths of their loved ones. The big oil companies reached out-of-court settlements with the families. The details are still being negotiated.

But a lawyer for the families says the oil companies have paid them about $39 million. The companies’ insurance will cover an undisclosed portion of the bill.

You might be wondering why Tesoro would agree to pay out tens of millions of dollars but fight a much smaller fine? Apparently, several reasons.

Gleason: "It's about your national reputation. Any time you get cited for a penalty, that becomes a public record, and anyone in the world can see all of the penalties listed, the fact that they were willful violations, not just serious. So it's the worst category."

The families’ wrongful-death lawsuit could have let a jury of Skagitonians decide whether Tesoro had willfully caused the deaths of seven Skagit County residents.

Gleason: “This was a case where rather than let them prove willful, deliberate negligence, that they settled with the families.”

The amount of cash now on the line for Tesoro before the insurance appeals board is much smaller than its original two million fine, but the company still faces one of the largest penalties in state history.

The average fine for a serious workplace-safety violation in Washington is just $760. That's about half the national average.

Safety advocates have long complained that even the higher federal rates are too low to deter unsafe corporate behavior.

Business groups argue that government should focus on helping prevent accidents rather than penalizing businesses after the fact.

Whatever money the state does collect from Tesoro will go into a fund for widows and orphans of workplace-accident victims.

65 people died on the job in Washington last year.

While Tesoro declined to comment for this story, its annual filing with the Securities and Exchange Commission says the penalty –quote-- “will not have a material impact on our financial position.”

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