Oil Refiners to Reduce Air Pollution at Six Refineries Under Settlement with EPA and Department of Justice

News Release from US Department of Justice, July 18, 2016

The Department of Justice and the U.S. Environmental Protection Agency (EPA) today announced a $425 million settlement with subsidiaries of Tesoro Corp., and Par Hawaii Refining that resolves alleged Clean Air Act violations and protects public health by reducing air pollution at six refineries. Under the settlement, the two companies will spend about $403 million to install and operate pollution control equipment, and Tesoro will spend about $12 million to fund environmental projects in local communities previously impacted by pollution. Tesoro will also pay a $10.45 million civil penalty.

“This settlement, achieved in partnership with states, will benefit the air quality in communities across the Western United States,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “It uses cutting edge technology to address global environmental issues like climate change by controlling flaring and provides important reductions of harmful air pollution in communities facing environmental and health challenges.”

“The advanced technologies Tesoro and Par are required to implement are the future for protecting people from toxic air emissions,” said Assistant Administrator Cynthia Giles for EPA’s Enforcement and Compliance Assurance.  “This settlement puts new enforcement ideas to work that will dramatically cut pollution and protect communities.” 

Today’s settlement, a consent decree lodged in U.S. District Court for the Western District of Texas, includes provisions that resolves ongoing Clean Air Act violations at refineries in Kenai, Alaska; Martinez, California; Kapolei, Hawaii; Mandan, North Dakota; Salt Lake City, Utah; and Anacortes, Washington.  Of the $10.45 million civil penalty that Tesoro will pay, the United States will receive $8,050,000, and co-plaintiffs including the states of Alaska and Hawaii, and the Northwest Clean Air Agency will share $2.4 million.

Once the companies install the pollution controls required by the settlement, annual emissions reductions at the six refineries will total an estimated 773 tons of sulfur dioxide, 407 tons of nitrogen oxides, 1,140 tons of volatile organic compounds, 27 tons of hazardous air pollutants, 20 tons of hydrogen sulfide and the equivalent of 47,034 tons of carbon dioxide, which is a greenhouse gas.  A large number of the emissions reductions will occur in areas with impaired air quality and protect populations at risk for respiratory illnesses.  In particular, this settlement will reduce greenhouse gas emissions from flaring at the subject refineries by over 60 percent.

The settlement addresses a range of alleged leak detection and repair and flaring violations under the Clean Air Act at all six refineries as well as violations of the Act’s Prevention of Significant Deterioration, Non-Attainment New Source Review, New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants at certain refineries.  The settlement also addresses various violations of state clean air laws, programs and permits.

Refineries process crude oil into products like gasoline, diesel fuel, kerosene, jet fuel, asphalt and liquefied petroleum gas and emit pollutants from a number of different sources.  At the refineries subject to this settlement, fluid catalytic cracking units, sulfuric acid plants, heaters, boilers and sulfur recovery units, are substantial emitters of nitrogen oxides (NOx) and sulfur dioxide (SO2).  Flaring results in emissions of SO2, greenhouse gases and toxic air pollutants, including volatile organic compounds (VOCs) and hazardous air pollutants.  Fugitive emissions of VOCs result from leaking valves and pumps and can result in numerous health effects, including eye, nose and throat irritation, headaches, loss of coordination, nausea and damage to liver, kidney and the central nervous system, among other effects.

Leaks, flares, and excess emissions from refineries emit hazardous air pollutants, or air toxics, that are known or suspected to cause cancer, birth defects, and seriously impact the environment.  SO2 and NOx have numerous adverse effects on human health and are significant contributors to acid rain, smog and haze.  Refineries also emit greenhouse gases that contribute to climate change, as well as fugitive VOCs.

The settlement incorporates the latest technological approaches to reducing flaring and making the flaring that does occur as efficient as possible.  And in addition to installing pollution control equipment, the settlement requires Tesoro to use a series of state-of-the-art Next Generation Compliance tools to monitor pollution.  Tesoro will use infrared gas-imaging cameras at four refineries to supplement the company’s enhanced leak detection and repair program.  These cameras are able to locate fugitive VOC emissions that may not be otherwise detected and to address these fugitive emissions and in doing so protect refinery employees from them.  Tesoro will also pay for third-party auditing of compliance with the enhanced leak detection and repair requirements at all six facilities.  EPA’s Next Generation Compliance strategy works to advance the use of state-of-the-art technology to identify and reduce pollution

Under the settlement, Tesoro will also spend about $12.2 million to fund three pollution mitigation projects.  In addition to installing infrared cameras, Tesoro will install ultra-low NOx burners on a furnace at its Salt Lake City refinery.  Tesoro estimates that the cost of this mitigation project is $10.8 million and is expected to result in significant quantifiable reductions in NOX emissions.  Tesoro will also contribute $1 million to fund the replacement of old diesel school buses in Contra Costa County, California, with new compressed natural gas (CNG) school buses. Replacing existing school buses that run on diesel with vehicles that are powered by CNG decreases emissions of NOX, SO2, PM, greenhouse gases and other air pollutants.

This settlement is part of EPA’s National Enforcement Initiative to control harmful emissions from large sources of pollution, which includes refineries, under the Clean Air Act’s Prevention of Significant Deterioration requirements.  The total combined SO2 and NOx emission reductions secured from all settlements under this initiative will exceed 2 million tons each year once all the required pollution controls have been installed and implemented.

Tesoro Corp., is headquartered in San Antonio, Texas, and its subsidiaries, Tesoro Alaska Company LLC, Tesoro Logistics L.P. and Tesoro Refining & Marketing Company LLC operate five of the refineries covered by this settlement.  Par Pacific Holdings, Inc., formerly known as Par Petroleum Corp. and a parent corporation of Par Hawaii Refining, purchased the Kapolei refinery from Tesoro in 2013.

There will be a 30 day public comment period on the consent decree lodged today.  Information on how to comment on the consent decree will be available in the Federal Register and on the Department of Justice’s website: www.justice.gov/enrd/consent-decrees.

For more information on the settlement or to read the consent decree, go to: https://www.epa.gov/enforcement/tesoro-and-par-clean-air-act-settlement.

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Par Pacific Holdings Enters Into Consent Decree and Will Install Air Pollution Control Equipment During Planned Hawaii Refinery Turnaround

Consent decree mandates additional capital investments at Par's refinery in Hawaii

Tesoro will reimburse Par Pacific for consent decree-related capital expenditures and fines

News Release from Par Pacific Holdings

HOUSTON, July 18, 2016 -- Par Pacific Holdings, Inc. (NYSE MKT: PARR) ("Par" or "Par Pacific") announced that its wholly-owned subsidiary, Par Hawaii Refining, LLC, entered into a consent decree with subsidiaries of Tesoro Corporation ("Tesoro"), the United States Environmental Protection Agency, the United States Department of Justice and other state governmental agencies (the "Consent Decree").  The Consent Decree concerns alleged violations of the federal Clean Air Act by a subsidiary of Tesoro that occurred prior to the acquisition of that entity by Par in September 2013 (the "Acquisition Date"). 

Tesoro will reimburse Par for all reasonable third party capital expenditures incurred for the Consent Decree to the extent related to acts or omissions prior to the Acquisition Date.  Tesoro is obligated to pay all applicable fines and penalties related to the Consent Decree.  Par Pacific estimates the cost of compliance with the Consent Decree to be approximately $30 million.

As previously announced, the Company is currently completing a refinery turnaround to execute routine maintenance.  As a result of the Consent Decree, the Company has expanded the turnaround to undertake additional capital improvements to reduce emissions of air pollutants, to provide for certain nitrogen oxide and sulfur dioxide emission controls and monitoring, and to install certain leak detection and repair equipment required by the Consent Decree.

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SA: EPA reaches $425M settlement over Par Hawaii, Tesoro refineries

R: Tesoro, Par Hawaii settle with U.S. over air quality violations