Oil Refiner Valero to Pay Penalty, Reduce Pollution

Leading independent oil refiner Valero Energy Corp. has agreed to spend $700 million to cut pollution at its refineries, the Justice Department and the Environmental Protection Agency said Thursday.

Valero also has agreed to pay a $5.5-million civil penalty and spend an additional $5.5 million to further cut emissions and to support environmental projects in communities where its refineries are located, federal regulators said.

A similar settlement was reached Thursday between refiner Sunoco Inc. and the EPA.

Refineries covered by Valero’s agreement are in California, Colorado, Louisiana, Oklahoma and Texas. Refineries affected by Sunoco’s agreement are in Ohio, Oklahoma and Pennsylvania.

Those states were also parties to the settlement.

Valero’s agreement is part of the EPA’s Petroleum Refinery Initiative, which began in 1998 to bring U.S. refineries into compliance with the Clean Air Act. The settlements are negotiated under a lawsuit brought by the Justice Department.

The EPA said it had negotiated settlements with companies operating 65% of U.S. refining capacity.

Valero Chief Executive Bill Greehey said the vast majority of issues covered by the settlement with the EPA were problems with permits that preceded Valero’s purchase of the refineries.

“We’re happy to have the agreement completed, and we’re looking forward to working with the EPA and the states to implement it,” Greehey said. “Our emphasis was on providing proven state-of-the-art hardware and technology to reduce emissions, rather than focusing on operational restrictions to achieve emission reduction targets.”

San Antonio-based Valero has expanded rapidly since 1998 by purchasing 13 refineries in the U.S., Canada and Aruba. The company agreed to acquire rival Premcor Inc., which operates four refineries, for $6.9 billion this year. That deal is awaiting approval by the Federal Trade Commission.

Philadelphia-based Sunoco agreed to spend $285 million on pollution-reducing equipment at its refineries and pay a $3-million civil penalty as well as $3.9 million on other environmental projects.

As part of the Valero agreement, Tesoro Corp., which purchased Valero’s Golden Eagle refinery in Martinez, Calif., in 2002, will pay for projects to reduce emissions there.

The projects at the Valero refineries will be phased in over the next seven years and have been included in capital budget planning by the company, Greehey said.