Valero to pay $345,000 for air quality violations at Benicia refinery in 2017

BENICIA – Valero Energy has agreed to pay $345,000 for 17 alleged air quality violations at its Benicia refinery in 2017, the bulk of which stemmed from a May 2017 incident when a power outage sent black plumes of smoke into the air and thousands of pounds of toxic gas, the Bay Area Air Quality Management District announced on Thursday.

That amount is on top of $191,500 Valero agreed to pay in November for another 14 alleged air quality violations in 2017 and is unrelated to an abatement order recently issued by the air district after discovering 20 years or more of continued violations in 2019.

The 2017 amount is more than double other recent annual settlements for violations. For example, in 2018, Valero paid $266,000 for 22 alleged air quality violations from 2016.

It also exceeds Valero’s estimates for its 2017 fines, as it disclosed in a 2019 filing with the U.S. Securities and Exchange Commission that it expected it would have to pay at least another $100,000 in fines just to the Bay Area air district for the May 2017 incident.

The incident started at around 6:45 a.m. on May 5, 2017, when an unplanned power outage shut down processing units, resulting in the plant releasing gasses and triggering emergency flares and large plumes of smoke.

At the time, Benicia police told some residents to shelter in place — including two elementary schools — and issued an evacuation order for an industrial park near the refinery.

Valero released more than 74,000 pounds of sulfur dioxide over the next 14 days and 350 pounds of carbonyl sulfide, a highly toxic and extremely flammable gas.

A California Public Utilities Commission investigation found that a failed coupling capacitor voltage transformer at PG&E’s Bahia Substation north of the refinery led to the power outage. It concluded that PG&E had failed to maintain the transformer and also failed to provide adequate training to equipment operators.

Valero sued PG&E in 2017 for causing the power outage. The lawsuit was settled in June of 2017 but the terms were not disclosed.

The settlement specifies that Valero does not admit to wrongdoing,

Valero is also facing substantial penalties for ongoing violations that were discovered in 2019 regarding a hydrogen vent that was discovered to have been releasing about 4,000 pounds of hydrocarbons per day, far more than state regulations allow.  

Overall, the air district estimated Valero released more than 10,000 tons of excess hydrocarbons over 16 years, including 138 tons of toxic air contaminants benzene, ethylbenzene, tolyrene and zolerine.

Valero has taken steps to address those longstanding excess emissions, but has still not completely controlled them, leading the air district to obtain an abatement order from its hearing board, a quasi-judicial body that hears complaints and appeals. The air district has faced criticism for its handling of the investigation as it took more than two years to publicly disclose the violations.

Valero was also sued by the environmental group San Francisco Baykeeper earlier this month for alleged petcoke pollution at the port of Benicia, where Valero transports the substance by rail for export overseas. That lawsuit, which also names port operator Amports, is ongoing.

The Benicia refinery was built in 1968 and was acquired by Valero in 2000. It employs 430 people and can process 165,000 barrels of oil per day, according to its website, which also says the refinery produces jet fuel, diesel, gasoline, petcoke and accounts for 45% of the asphalt supply in Northern California.

The company says that 25% of Benicia’s general fund comes either from Valero or the industrial park associated with the refinery.