Tesoro To Pay $27.5M For Violating Court Order At Martinez Refinery

MARTINEZ, CA — Tesoro Refining and Marketing Company will pay a $27.5 million penalty for violating a 2016 court order that it must reduce air pollution at its petroleum refinery in Martinez, federal officials with the U.S. Environmental Protection Agency and the U.S. Department of Justice announced Thursday.

In particular, according to Thursday's settlement agreement, Tesoro failed to limit air emissions of nitrogen oxides — NOX — a pollutant that contributes to smog, the federal agencies said.

The settlement requires Tesoro to adhere to strict pollution controls at the facility. Currently, the facility is undergoing conversion into a renewable fuels plant that will use renewable sources such as vegetable oils to produce fuels instead of crude oil. The settlement also sets up a framework for additional pollutant reductions, including significant climate co-benefits, the EPA said in a news release.

Specifically, the settlement requires Tesoro to forego hundreds of annual emission credits that it could otherwise sell to area sources who could then increase their emissions.

According to the EPA, Tesoro did not meet the consent decree pollution limit because it did not install adequate pollution controls.

“As this settlement shows, EPA will seek substantial penalties when companies delay installing appropriate pollution controls to meet environmental obligations,” said Larry Starfield, acting assistant administrator for the EPA's Office of Enforcement and Compliance Assurance.

The U.S. Department of Justice's Environment and Natural Resources Division said Tesoro is being held accountable for its failure to implement court-ordered pollution controls.

“This settlement requires Tesoro to forfeit substantially more air emission credits than the excess emissions associated with its violations, resulting in cleaner air for those who live and work in the San Francisco area,” said Assistant Attorney General Todd Kim.

The EPA said it is now taking firm action to hold Tesoro accountable.

“This settlement ensures that Tesoro complies with stringent air pollution limits, to protect neighboring communities regardless of fuel type,” said Martha Guzman, the EPA's Pacific Southwest regional administrator.

Tesoro suspended operations in May 2020 at the Martinez refinery, then announced its plan to convert the refinery to a renewable fuels plant. Under Thursday's agreement, Tesoro is also required to limit air pollution from its future renewable fuels plant, according to the EPA.

The agreement does not prohibit Tesoro from resuming petroleum refining, but if it does so, Tesoro must install specific air pollution control technology, at an expected cost of $125 million, to ensure stringent NOX emission limits are met, the EPA said.

To mitigate pollution that resulted from its violation of the 2016 consent decree, Tesoro agreed to surrender most of its existing NOX emission trading credits. Tesoro also agreed Thursday to forgo almost all trading credits from the shutdown of petroleum refining equipment should it convert to a renewable fuels plant.

According to the EPA, a company such as Tesoro can receive emission credits by shutting down equipment. A company can then apply such credits to offset emissions from new projects or trade such credits to other companies for their use. By requiring Tesoro to surrender existing credits and forgo petroleum-related shutdown credits if it converts to a renewable fuels plant, the settlement prevents Tesoro and other local sources from using these credits. Thus, the settlement filed Thursday will limit emissions in the San Francisco Bay Area, the EPA said.

Specifically, if Tesoro resumes petroleum refining, the settlement requirements will reduce annual air emissions by about 261 tons of NOX. If Tesoro moves forward with converting the facility to a renewable fuels plant, the settlement will result in annual air emissions reductions of about 440 tons of NOX, 327 tons of sulfur dioxide, 697 tons of carbon monoxide, 69 tons of volatile organic compounds, 301 tons of fine particulate matter, and the equivalent of 1,342,025 metric tons of carbon dioxide.

The terms of a 2016 federal consent decree, which resolved Clean Air Act violations at the Martinez refinery and five other refineries nationwide, established emission limits for multiple pollutants including NOX. The settlement announced Thursday will modify the 2016 settlement and includes new requirements that apply whether Tesoro chooses to reopen the Martinez facility as a petroleum refinery or a renewable fuels plant.

Marathon Petroleum Corp., the parent company of Tesoro, sent this comment to Patch regarding the settlement: "Marathon has a demonstrated history of continually improving our environmental performance across our operations, and we are committed to protecting the environment we all share. The origins of this matter predate Marathon Petroleum Corporation’s acquisition of the Martinez refinery, and we are glad to have resolved this matter with the U.S. government."

There will be a 30-day public comment period on the modification to the 2016 settlement. Information on how to submit comments will be available in the Federal Register and on the Department of Justice’s website.

See completed information on Thursday's settlement and the 2016 federal consent decree at: 2023 Tesoro Martinez Clean Air Act Settlement Information Sheet | US EPA.