{"id":1090437,"date":"2023-06-16T14:29:51","date_gmt":"2023-06-16T14:29:51","guid":{"rendered":"https:\/\/jacobin.com\/2023\/06\/suncor-refinery-air-pollution-stock-buybacks-hedge-fund-colorado\/"},"modified":"2023-06-16T14:29:51","modified_gmt":"2023-06-16T14:29:51","slug":"for-fossil-fuel-company-suncor-stock-buybacks-come-before-environmental-cleanup","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2023\/06\/16\/for-fossil-fuel-company-suncor-stock-buybacks-come-before-environmental-cleanup\/","title":{"rendered":"For Fossil Fuel Company Suncor, Stock Buybacks Come Before Environmental Cleanup"},"content":{"rendered":"\n \n\n\n\n

While Suncor has failed to make basic improvements to a Commerce City, Colorado, refinery that is polluting the area, the company has massively increased payouts to shareholders \u2014 at the urging of one of the world\u2019s largest hedge funds.<\/h3>\n\n\n
\n \n
\n Suncor oil refinery in Commerce City, Colorado, on January 3, 2023. (Hyoung Chang \/ the Denver Post<\/cite>)\n <\/figcaption> \n<\/figure>\n\n\n\n\n \n

An oil refinery is poisoning the air in Colorado due to poor maintenance and inspection, according to a new report from federal environmental regulators. But instead of devoting money to deal with the problems, the refinery\u2019s owner, Suncor Energy, has massively increased payouts to shareholders \u2014 at the urging of one of the world\u2019s largest hedge funds.<\/p>\n

The case illustrates how Wall Street\u2019s investments in fossil fuels directly threatens the health of local residents and, in particular, vulnerable populations.<\/p>\n

The Canadian oil and gas giant Suncor has made headlines in recent years for a series of chemical releases and air quality violations at its ninety-two-year-old refinery<\/a> just outside Denver. In its new report<\/a>, the Environmental Protection Agency (EPA) found that the problems are systemic.<\/p>\n

\u201cThe Suncor petroleum refinery in Commerce City, Colorado, may experience more air quality incidents because of inadequacies in preventative maintenance, testing and inspection of liquid level control systems and electrical equipment,\u201d the EPA declared<\/a> last week.<\/p>\n

The inadequacies persist despite repeated fines and investigations<\/a> from state and federal regulators. While Suncor has failed to make basic improvements to the refinery\u2019s procedures and staffing, the company has delivered more than $12 billion to shareholders since the start of 2022.<\/p>\n

In response to aggressive pressure from Elliott Management, a hedge fund headed by the Republican mega-donor and ruthless speculator Paul Singer, Suncor last year increased its stock buybacks by more than 120 percent to $5.1 billion, and its dividends by 67 percent to $2.6 billion.<\/p>\n

Suncor and Elliott did not respond to our requests for comment.<\/p>\n

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Taken from Suncor\u2019s 2022 annual report<\/a>.<\/figcaption><\/figure>\n\n \n\n \n \n \n

Poison for Profit<\/h2>\n \n

Suncor \u2014 a $39 billion<\/a> company based in Calgary, Alberta \u2014 operates the only major refinery in Colorado. The facility is based in Commerce City, a low-income Denver suburb that has a large Hispanic population<\/a>.<\/p>\n

The Denver area has the sixth-worst<\/a> air quality among US cities for ozone, a pollutant that damages the tissue of the respiratory tract and is correlated<\/a> with a high incidence rate of asthma and decreased respiratory functions. Air quality advocates say that Suncor\u2019s refinery has been a significant contributor<\/a> to the region\u2019s dangerously high ozone levels.<\/p>\n

\u201cIt doesn\u2019t surprise me that Suncor is choosing their dividends and profits despite the harm they have caused to our community,\u201d said Ean Tafoya, a Denver-based environmental activist. \u201cIt\u2019s time for a just transition \u2014 planned retirement for this facility and for remediation. Not only do communities get poisoned, they are also locking us into long-term climate change. I\u2019m disgusted that we have a system that allows oil companies to do this, even though they lied<\/a> to the public about the dangers of climate change.\u201d<\/p>\n

In May, state health officials sent out alerts<\/a> to Commerce City residents near the refinery directing them to close their doors and windows and stay inside after an accidental toxic chemical release by Suncor, for the second time in a month. Commerce City residents typically avoid<\/a> drinking the tap water due to the impacts of the Suncor refinery.<\/p>\n

Suncor has been repeatedly fined for safety and health violations at its facilities in the United States, generating more than $6.5 million in penalties since 2008, according to data reviewed by us. That includes a record $4 million in fines for air quality violations issued<\/a> by Colorado environmental regulators in 2020 for the Commerce City refinery.<\/p>\n

As Suncor poisoned the community, the firm increased its dividends after Elliott Management, a $55 billion<\/a> hedge fund, launched a pressure campaign last year targeting the company\u2019s management \u2014 and specifically, the company\u2019s decision to cut its dividend shortly after the start of the COVID-19 pandemic, when the firm was facing<\/a> a multibillion dollar quarterly loss.<\/p>\n

Elliott and other so-called activist hedge funds employ a similar playbook: they purchase a block of stock and then target<\/a> a company\u2019s management and seek to cut costs and increase dividends and stock buybacks, generating profits for the firm and other shareholders.<\/p>\n

As part of its campaign, the hedge fund declared<\/a> that Suncor\u2019s dividend reduction \u201cshook investor confidence.\u201d<\/p>\n

Elliott\u2019s campaign materials further called<\/a> on Suncor to \u201cincrease capital return to shareholders from 50 to 80 percent of discretionary cash flow after dividends,\u201d and asserted that stock buybacks \u2014 when a company repurchases its own stock from shareholders to artificially drive up share prices \u2014 would be an \u201cattractive use of capital.\u201d<\/p>\n

Since the start of Elliott\u2019s campaign<\/a>, Suncor has significantly increased its dividends and stock buybacks. The company repurchased $5.1 billion in stock last year, according to its annual report, up from $2.3 billion in 2021.<\/p>\n

Elliott has now appointed four of the thirteen members of the company\u2019s board of directors, despite holding just 0.75<\/a> percent of the outstanding shares of the company, suggesting that Elliott\u2019s slash-and-burn tactics have support from the company\u2019s major shareholders, which mainly<\/a> include mutual funds like Dodge & Cox and the Royal Bank of Canada\u2019s asset-management arm.<\/p>\n

Mutual funds typically invest in a broad range of stocks, paying investors reliably higher dividends, and usually don\u2019t interfere in the companies in which they invest.<\/p>\n

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Archived Elliott Management Website, RestoreSuncor.com<\/a><\/figcaption><\/figure>\n

While Elliott attacked Suncor\u2019s safety record as part of its shareholder campaign, the company\u2019s efforts to boost Suncor\u2019s payouts to shareholders means the company has less money to invest in the workers and technology it needs to resolve the air quality problems identified by the EPA.<\/p>\n

These problems appear to be part of a pattern. The EPA\u2019s report on the consistent inadequacies at Suncor\u2019s Commerce City refinery follows<\/a> the company\u2019s 2020 settlement with the state over more than one hundred air quality violations at the facility.<\/p>\n

In March 2020, Suncor entered<\/a> into a $9 million settlement with the Colorado Department of Public Health and Environment (CDPHE) over the refinery, the largest penalty against a single facility in state history. Of that sum, $4 million went toward fines and community projects, while $5 million was reserved for a consulting company to investigate problems at the facility.<\/p>\n

That consultant\u2019s report was partially used by the EPA to come to its sweeping conclusions about the safety of the Suncor refinery. According to the EPA, \u201cfrom 2016\u20132020, Suncor had the greatest number of tail gas incidents that caused releases of excess sulfur dioxide,\u201d compared to eleven other refineries. State permits for the Suncor refinery in Commerce City were repeatedly delayed<\/a> after they expired, allowing the refinery to operate unpermitted. The EPA vetoed<\/a> an initial permit from the CDPHE last March, before issuing<\/a> a revised permit in September with expanded monitoring and toxic chemical release disclosure requirements.<\/p>\n\n \n \n \n\n \n \n

You can subscribe to David Sirota\u2019s investigative journalism project, the\u00a0Lever<\/i>,\u00a0here<\/a>.<\/p>\n\n\n\n

This post was originally published on Jacobin<\/a>. <\/p>","protected":false},"excerpt":{"rendered":"

An oil refinery is poisoning the air in Colorado due to poor maintenance and inspection, according to a new report from federal environmental regulators. But instead of devoting money to deal with the problems, the refinery\u2019s owner, Suncor Energy, has massively increased payouts to shareholders \u2014 at the urging of one of the world\u2019s largest [\u2026]<\/p>\n","protected":false},"author":138,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"_links":{"self":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1090437"}],"collection":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/users\/138"}],"replies":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/comments?post=1090437"}],"version-history":[{"count":1,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1090437\/revisions"}],"predecessor-version":[{"id":1090438,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1090437\/revisions\/1090438"}],"wp:attachment":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/media?parent=1090437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/categories?post=1090437"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/tags?post=1090437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}