EPA Press Office:

Tesoro to Pay $27.5 Million For Violating Previous Court Order Requiring Them to Reduce Air Pollution at Their Martinez, Calif. Refinery

Settlement Will Result in Cleaner Air Due to Tesoro’s Forfeiture of Air Emission Credits

WASHINGTON (April 27, 2023) – The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice today announced that Tesoro Refining and Marketing Company will pay a $27.5 million penalty for violating a 2016 consent decree ordering the company to reduce air pollution at its petroleum refinery in Martinez, Calif. In particular, according to today’s settlement, Tesoro failed to limit air emissions of nitrogen oxides (NOX), a pollutant that contributes to smog.

The settlement requires Tesoro to adhere to strict pollution controls at the facility. The facility is currently undergoing conversion into a renewable fuels plant, which will use renewable sources such as vegetable oils to produce fuels instead of crude oil. The settlement also sets up a framework for additional pollutant reductions, including significant climate co-benefits. Specifically, the settlement requires Tesoro to forego hundreds of annual emission credits that it could otherwise sell to area sources who could then increase their emissions.

“Tesoro did not meet the consent decree pollution limit because it did not install adequate pollution controls,” said Acting Assistant Administrator Larry Starfield for EPA’s Office of Enforcement and Compliance Assurance. “As this settlement shows, EPA will seek substantial penalties when companies delay installing appropriate pollution controls to meet environmental obligations.”

“Today, we are holding Tesoro accountable for its failure to implement court-ordered pollution controls,” said Assistant Attorney General Todd Kim for the Justice Department’s Environment and Natural Resources Division. “This settlement requires Tesoro to forfeit substantially more air emission credits than the excess emissions associated with its violations, resulting in cleaner air for those who live and work in the San Francisco area.”

“Tesoro failed to meet its requirement to reduce air pollution at the Martinez refinery, and EPA is now taking firm action to hold Tesoro accountable,” said EPA Pacific Southwest Regional Administrator Martha Guzman. “This settlement ensures that Tesoro complies with stringent air pollution limits, to protect neighboring communities regardless of fuel type.”

In May 2020, Tesoro suspended operations at the Martinez refinery and then announced its plan to convert the refinery to a renewable fuels plant. Today’s agreement includes requirements to limit air pollution from the future renewable fuels plant. 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.

To mitigate pollution resulting from its violation of the 2016 consent decree, Tesoro agreed to surrender most of its existing NOX emission trading credits. Tesoro also agreed to forego almost all trading credits from the shutdown of petroleum refining equipment should it convert to a renewable fuels plant. A company can receive emission credits by shutting down equipment and then apply such credits to offset emissions from new projects or trade such credits to other companies for their use. By requiring Tesoro to surrender existing credits and forego petroleum-related shutdown credits if it converts to a renewable fuels plant, the settlement prevents Tesoro and other local sources from using these credits. Thus, the settlement filed today will limit emissions in the San Francisco Bay Area.

Specifically, if Tesoro resumes petroleum refining, the settlement requirements will reduce annual air emissions by about 261 tons of NOX. If Tesoro converts the facility to a renewable fuels plant, the settlement will result in annual air emissions reductions of about 440 tons of NOX, 327 tons of sulfur dioxide, 697 tons of carbon monoxide, 69 tons of volatile organic compounds, 301 tons of fine particulate matter, and the equivalent of 1,342,025 metric tons of carbon dioxide. 

The terms of a 2016 federal consent decree, which resolved Clean Air Act violations at the Martinez refinery and five other refineries nationwide, established emission limits for multiple pollutants including NOX. The settlement announced today, which will modify the 2016 settlement, includes new requirements that apply whether Tesoro chooses to reopen the Martinez facility as a petroleum refinery or a renewable fuels plant.

There will be a 30-day public comment period on the modification to the 2016 settlement. Information on how to comment on the modification 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 2016 federal consent decree and today’s agreement, go to 2023 Tesoro Martinez Clean Air Act Settlement Information Sheet | US EPA.