Valero Energy Corporation, et al. Clean Air Act Settlement

(Washington, D.C. – October 19, 2020) The United States Environmental Protection Agency (EPA) announced a settlement today with Valero Energy Corporation and a number of its subsidiaries and affiliates (Valero). The settlement resolves alleged Clean Air Act (CAA) violations regarding fuel quality standards and sampling, testing, and reporting requirements at 11 refineries and one import facility. Under the terms of the settlement, Valero will develop and implement a company-wide Fuels Management System (FMS) to help ensure its production of gasoline and diesel fuel complies with the CAA and its implementing regulations at 40 C.F.R. Part 80 (Fuels Regulations), implement a mitigation action to offset past emissions, and pay a $2.85 million civil penalty to the United States. Valero separately committed to completing two benzene reduction measures at its refinery in Corpus Christi, Texas that Valero estimates will result in emission reductions of 583 pounds per year and will cost the company $1.775 million to implement.

• Overview
• Violations
• Pollutant Impacts
• Injunctive Relief
• Mitigation
• Civil Penalty
• Opportunity Zones
• Comment Period
• Contact

Overview of Company 

Valero owns a diversified business portfolio in refining, marketing, and natural gas-related services. Valero has a refining throughput capacity of approximately 3.1 million barrels per day. 

Violations

This settlement resolves an EPA enforcement action against Valero for violations of the CAA and the Fuels Regulations involving its failure to comply with certain fuel quality standards and various sampling, testing, and reporting requirements at its refineries and import facilities located in Norco, Louisiana (St. Charles Refinery), Port Arthur, Texas (Port Arthur Refinery), Texas City, Texas (Texas City Refinery), Houston, Texas (Houston Refinery and KMI Houston Terminal), Sunray, Texas (McKee Refinery), Corpus Christ, Texas (Corpus Christi East Refinery), Memphis, Tennessee (Memphis Refinery), Perth Amboy, New Jersey (KMI Perth Amboy NJ Terminal), West Memphis, Arkansas (West Memphis Terminal), Hammond, Indiana (Hammond Terminal), and Queensbury, New York (Ultramar Energy). The EPA discovered the alleged violations during a 2015 compliance evaluation of Valero and from information self-disclosed by Valero. The fuel quality violations involve Valero’s:

1. Failure to comply with the Reid vapor pressure standards at the Port Arthur Refinery, St. Charles Refinery, Ultramar Energy, and Corpus Christi East Refinery in 2012, 2013, 2014, and 2017;
2. Failure to comply with its emissions performance reduction standards for volatile organic compounds (VOCs) at the Texas City Refinery, Houston Refinery, KMI Perth Amboy NJ Terminal, West Memphis Terminal, and KMI Houston Terminal in 2012, 2013, 2014, and 2018;
3. Failure to comply with the per-gallon sulfur standard for gasoline produced at the McKee Refinery in 2014;
4. Failure to comply with sampling and testing requirements for gasoline and diesel fuel at the Memphis Refinery, Houston Refinery, and Texas City Refinery; and
5. Failure to comply with reporting requirements at Hammond Terminal and KMI Perth Amboy NJ Terminal.  

Pollutant Impacts

The EPA estimates that Valero’s fuel quality standards violations resulted in about 29 excess tons of VOC emissions, including toxics such as benzene. Air toxics— also known as “hazardous air pollutants”— are those pollutants known or suspected to cause cancer or other serious health or environmental effects. VOCs are one of the primary causes of ground level ozone. Breathing ozone can trigger a variety of health problems including chest pain, coughing, throat irritation, and congestion, and can worsen bronchitis, emphysema, and asthma. Increased sulfur levels in gasoline reduces the ability of the catalyst to reduce nitrogen oxides and VOCs.

Valero also violated various sampling, testing, and reporting requirements. These programmatic requirements serve as the foundation of the EPA’s fuels programs. When companies do not comply with these requirements, they increase the likelihood that fuel fails to meet the fuel quality standards.

Injunctive Relief

The Consent Decree requires Valero to take actions to prevent future violations of the type at issue in this case by developing and implementing a company-wide FMS. The FMS will cover all gasoline and diesel production at 14 Valero refineries. Specifically, the FMS will include: (1) corporate procedures and protocols to ensure Valero’s compliance with the fuel quality standards and the requirements for sampling, testing, reporting, and recordkeeping; (2) training for all employees and contractors who work at Valero refineries and are involved with carrying out the FMS or ensuring compliance with the Fuels Regulations; (3) implementation of lab measurement system precision and accuracy monitoring software systems at Valero refinery laboratories that will automate real-time notifications of statistical quality control issues; (4) participation in a program to monitor laboratory performance by comparing test results to results from other laboratories; and (5) audits to evaluate each Valero refinery for compliance with the FMS and the Fuels Regulations.

Mitigation

The Consent Decree requires Valero to take action to mitigate harm to human health and the environment as a result of the excess emissions caused by the violations at issue in this case. Specifically, Valero will install geodesic domes on three gasoline storage tanks at its El Vista Terminal near the Port Arthur Refinery. The El Vista Terminal is located near an environmental justice community. Valero estimates that installation of the geodesic domes will result in VOC emissions reductions of 23 tons per year and will cost $3 million.

Civil Penalty

Valero will pay a civil penalty of $2.85 million 

Opportunity Zones

The KMI Perth Amboy NJ Terminal, Texas City Refinery, and West Memphis Terminal are three facilities affected by this settlement that are located within an Opportunity Zone. 

Comment Period

The proposed settlement, lodged in the United States District Court for the Western District of Texas, will undergo a 30-day public comment period and then be subject to final court approval. Information on submitting comment is available at the Department of Justice.

Contacts for Further Information

Melissa Schefski, Attorney-Adviser
Air Enforcement Division
Office of Civil Enforcement
U. S. Environmental Protection Agency
1595 Wynkoop Street (8MSU)
Denver, CO 80202
(303) 312-6842
[email protected]

John Connell, Environmental Protection Specialist
Air Enforcement Division
Office of Civil Enforcement
U. S. Environmental Protection Agency
1595 Wynkoop Street (8MSU)
Denver, CO 80202
(303) 312-7164
[email protected]