California oil refinery violated pollution agreement, plans to pay $27.5 million

The operators of a San Francisco Bay Area oil refinery have agreed to pay $27.5 million for violating a 2016 agreement to reduce air pollution at the facility, federal regulators announced Thursday.

Tesoro Refining and Marketing Co. of Los Angeles was penalized for violating a consent decree at its refinery in Martinez, the U.S. Environmental Protection Agency and U.S. Department of Justice said in a statement.

Tesoro failed to install adequate pollution controls and failed to limit emissions of nitrogen oxides (NOX) that contribute to smog, the agencies said.

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The settlement will reduce emissions of nitrogen oxides and other air pollutants by hundreds of tons each year, regulators said.

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

Tesoro was acquired by Marathon Petroleum Corp. in 2018.

"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 company said in a statement. ""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."

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The penalty is part of a settlement that requires the refinery to adhere to strict pollution controls and to give up emission credits, which companies can use to offset their pollution or trade to other companies to use.

The Martinez plant, which is about 30 miles northeast of San Francisco, had a refining capacity of approximately 161,000 barrels of oil per day and was the fourth-largest petroleum refinery in California, the EPA said.

The plant suspended operations in 2020. It is being converted to produce fuels from renewable sources such as vegetable oils. The refinery is expected to come online this year and produce up to 48,000 barrels of renewable fuels per day, 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 statement said.