California regulatory agency recently announced that oil giant Valero has been fined nearly $82 million for alleged air pollution at its Benicia refinery in the Bay Area.
The case was filed jointly by the California Air Resources Board (CARB) and the Bay Area Air Quality Management District (BAAQMD), setting a record for the largest fine ever imposed by the agency.
Philip Fine, the Executive Officer of the Air District, emphasized in a statement on October 31st that the unprecedented fine against Valero underscores the agency’s firm commitment to holding polluters accountable and protecting the health of refinery community residents.
According to the announcement, over $64 million of the funds will be used to help local communities reduce exposure to air pollution. These organizations stated that nearly $80 million of the fine will be reinvested into the Bay Area communities.
An inspection in 2019 led to the fine against Valero for undisclosed emissions from the hydrogen system at the Benicia refinery, which was found to contain prohibited “hazardous compounds” such as benzene, xylene, and other compounds known to cause cancer and reproductive system diseases.
According to the complaint, inspectors found that the management had known about the toxic emissions since at least 2003 but failed to report it to the state government. Regulatory authorities estimated that the facility released 8,400 tons of organic compounds, exceeding legal limits by more than 360 times. Investigators also discovered that the refinery had neither installed emission reduction equipment nor maintained existing equipment.
However, Valero stated in a release that the issue arose due to stricter regional regulations compared to federal regulations. The company claimed to have always complied strictly with the relevant federal regulations.
Executives discussed California regulations and their impact on the industry during a conference call with investors on October 24th.
CEO Lane Riggs of Valero stated that the recent balance sheet showed a loss of $99 million in revenue for the third quarter in the California refineries compared to its other assets.
“This (Benicia refinery) is clearly our highest-cost operating facility,” he said. “The regulatory environment and supply situation on the West Coast are always challenging, which is very different from our operations in some other areas.”
He pointed out that concerns over profitability were exacerbated by strict regulations, stating, “Clearly, the regulatory environment in California puts pressure on operators within the state, affecting their future operational considerations.”
The Air District has already fined three cases, including the $5 million fine against Marathon refinery announced in October and the $20 million fine against Chevron’s Richmond refinery in February.
The Air District stated that these significant fines should raise awareness among refineries and other industry operators.
A state legislator mentioned that refinery closures, including Phillips 66’s announced closure of its operations in Southern California in October, are a result of California regulatory policies, including a newly passed state law that sets minimum reserve limits for refineries in order to increase supply and reduce price volatility.
State Senator Shannon Grove stated in an email to Epoch Times on October 31st that the war on gasoline will make California more dependent on importing fuel from out-of-state, leading to increased expenses for every Californian who relies on gasoline to commute or take their children to school. He said, “These policies have made California one of the most unaffordable states in the country, when it didn’t have to be this way.” ◇