Scott Pruitt’s Superfund adviser holds stake in company responsible for major contamination

Former banker Albert Kelly holds financial stakes in several fossil fuel companies.

EPA Administrator Scott Pruitt named former SpiritBank CEO Albert Kelly, who the FDIC banned for life from banking, as a senior adviser for the agency's Superfund program. CREDIT: C-SPAN/screenshot
EPA Administrator Scott Pruitt named former SpiritBank CEO Albert Kelly, who the FDIC banned for life from banking, as a senior adviser for the agency's Superfund program. CREDIT: C-SPAN/screenshot

A disgraced banker who Environmental Protection Agency (EPA) Administrator Scott Pruitt hired to advise him on the nation’s toxic waste cleanup program holds as much as $75,000 in financial stakes in several fossil fuel companies, including a company responsible for contaminating a bayou in southwestern Louisiana and a stretch of river in Oregon.

Albert Kelly — who was banned from the banking industry for life for violating federal banking laws — has holdings in Phillips 66, according to a financial disclosure report.

The EPA deemed Phillips 66 responsible for contaminating Bayou Verdine in 2010, which is located in the Calcasieu estuary in Lake Charles, Louisiana. And more recently, in 2016 Phillips 66 was among a group of companies forced to pay to clean up the Portland Harbor Superfund site — a process which is expected to take 30 years.

Kelly had never worked in the environmental field or developed environmental policy prior to being named last April as an adviser to Pruitt and head of the EPA’s Superfund Task Force. His home city of Bristow, Oklahoma, though, has a Superfund site and several other contaminated sites.

The Bayou Verdine contamination incident that Phillips 66 was involved in stretched back decades and it led to the area getting designated as a Superfund site. In 1999, the EPA began studying the Calcasieu Estuary and found high levels of metals and hazardous chemicals. Phillips 66 and a partner operate a petroleum refinery and a petrochemical complex that contaminated the bayou with cancer-causing toxins and heavy metals. In a separate Superfund action, ConocoPhillips, which owned Phillips 66 until 2012, spent $12 million in 2003 to clean up another section of the bayou south of Mossville, Louisiana.

Under the terms of a settlement reached with the EPA and the U.S. Department of Justice in 2010, Phillips 66 and Sasol North America agreed to reimburse the EPA Superfund program more than $4.5 million and pledged to spend about $10 million to clean up Bayou Verdine within the Calcasieu estuary.

“It is important that polluters help pay for cleanup,” then-EPA Region 6 Administrator Al Armendariz said in a statement at the time. “Recovering more than $4.5 million is another milestone in our ongoing work to address historical pollution problems in this area of Louisiana.”

Phillips 66 removed contaminated sediments and put them in a containment cell on its refinery property. The company also reinforced parts of the bayou shoreline, which runs through its refinery property, to prevent future erosion. It completed the cleanup in 2014.

ConocoPhillips was created in 2002, after the merger of Conoco Inc. and Phillips Petroleum Co., making it the fifth-largest oil company in the world. In 2012, ConocoPhillips decided to spin off its Phillips 66 subsidiary as an independent refining company. Aside from Bayou Verdine, other areas contaminated by facilities owned by ConocoPhillips and Phillips 66 have been added to the EPA’s Superfund program.

Kelly also has holdings between $1,001 and $15,000 in Alliance Resources Partners, Chesapeake Energy, NGL Energy Partners, and Phillips 66 subsidiary Phillips 66 Partners, Politico reported Wednesday. Among his other income, Kelly disclosed in a financial form filed with the U.S. Office of Government Ethics that he is the sole proprietor of a ranch that has earned him $40,000 in oil, gas, and mineral rent and royalties on lands in Oklahoma, Kansas, Texas, and Alberta, Canada, according to Politico.

Kelly sold ConocoPhillips stock worth between $1,001 and $15,000 last April, two days after his appointment to the EPA. Politico said it is unclear whether the sale included all or a portion of the stock.

Pruitt appointed Kelly to lead an effort to streamline the Superfund program. Around the same time, the Federal Deposit Insurance Corporation (FDIC) fined Kelly $125,000 over banking violations. That was followed by a ruling in July by the FDIC to ban Kelly from banking for life, The Intercept reported in December. The FDIC determined that Kelly’s actions showed his “unfitness to serve as a director, officer, person participating in the conduct” of a bank, according to documents obtained by E&E News.

The EPA had not responded to a request for comment on Kelly’s financial holdings at the time this article was published.

Kelly worked for 33 years at Oklahoma-based SpiritBank. He served as president and CEO from 1990 to 2014 and chairman from 2012 up to this year. Kelly’s bank lent money to a partnership, which included Pruitt, that bought a minor league baseball team in Oklahoma City in 2003.

During his first year as EPA administrator, Pruitt has vowed on multiple occasions to make the federal government’s hazardous site clean-up across the nation, known as the Superfund program, one of his top priorities. But the Superfund program has come under attack by the Trump administration over the past year.

In 2017, the administration proposed to cut $330 million from of the nearly $1.1 billion Superfund program, 30 percent reduction to a program already struggling to keep up with a growing inventory of hazardous areas that pose dangers to public health and the local environment. In his FY’19 budget plan, Trump sought a roughly $327 million cut to the Superfund program, but the funds have been added back into the budget proposal.