Valero racked up $3.4M in N.J. fines

As Valero Energy completed the sale of its Paulsboro refinery last month, the company was in talks with the state to address $2.3 million in pollution violations.

The violations included the discharge of "slurry oil" that reached Paulsboro High School property and a residential area where it could flow into state waters, as well as emissions of pollutants above the allowable limit at various times between 2006 and 2010.

In August, for example, stack emission tests of an oil-processing unit at the refinery showed the release of particulate matter, which can irritate lungs, at 59 percent above the allowable rate.

In the end, the Texas oil giant will pay just one-third of the penalties. The New Jersey Department of Environmental Protection agreed to reduce them to $796,040 in two consent orders signed in December and January, within weeks of Valero's completing its sale of the refinery to PBF Energy of Connecticut, according to a review of state documents by The Inquirer.

Including the most recent case, Valero leaves New Jersey with a record of at least $3.4 million in state fines in the last six years - in addition to federal penalties - for pollution violations. The refinery, however, substantially reduced emissions of major pollutants after regulatory action.

Valero spokesman Bill Day declined to say which company would pay the fines, writing in an e-mail that terms of the sale are confidential. He did not answer further questions about the company's record of violations.

Last year, Valero signed an agreement with Delaware to pay $1.95 million for about 200 pollution violations over a decade at its refinery in Delaware City. That agreement also was made at the time the company sold the facility, its only other refinery on the East Coast, to PBF Energy.

"We're working cooperatively with the new owner of the refinery and working with them to make sure that all issues at the refinery are taken care of," said Ed Choromanski, an acting director at the DEP.

The Paulsboro refinery releases multiple pollutants as it produces 185,000 barrels of oil a day. They include volatile organic compounds, sulfur dioxide, and nitrogen oxides, which can cause asthma and other respiratory problems. Sulfur dioxide and nitrogen oxides also cause acid rain, and all three can contribute to smog.

In a settlement announced by the DEP in 2005, Valero agreed to pay nearly $800,000 in fines and install equipment to reduce those emissions.

And they fell, overall. From that year through 2009, the latest year for which records are available, emissions of volatile organic compounds fell 25 percent to 327 tons, nitrogen oxides 41 percent to 702 tons, and sulfur dioxide 84 percent to 171 tons.

Yet violations in the recent case cited the refinery for heaters, boilers, and other units releasing pollutants above state limits, and found that the refinery sometimes failed to monitor those emissions properly. Nearly all of those instances occurred between 2007 and 2009.

Violations also detailed emissions over the limit for carbon monoxide, a poisonous gas. Emissions have increased yearly at the refinery, which released 237 tons in 2009, up 62 percent from 2005.

Choromanski said sometimes in reducing nitrogen oxides as far as possible, there was a trade-off in the amount of carbon monoxide released.

Still, he said, "we don't want to see anything go up."

Emissions of a type of particulate matter called PM-10 also have risen since 2005, by 41 percent to 227.7 tons.

The December consent order, which carried $117,500 in fines, detailed how the refinery exceeded emission limits for particulate matter in tests between 2007 and 2010. The agreement calls for the refinery to shut down in April and evaluate an oil-processing unit considered to be the source.

"Fine particulates do cause respiratory problems, and New Jersey is in the process of eliminating them as much as possible" at these types of facilities, Choromanski said.

Valero, like other major oil companies, has a history of enforcement actions.

Most recently, the Environmental Protection Agency fined it $47,869 in September for continuing to use equipment at the refinery that allowed leaks of chlorinated fluorocarbons in 2003 and 2004. A corporate securities filing disclosed that the agency originally had proposed a penalty of $211,000.

In summer 2009, federal environmental regulators hit the refinery with $990,000 in fines - half of which were paid to the New Jersey DEP - for a leak of acid gas that lasted over five weeks in 2008. Records state that 46 tons of sulfur dioxide were released.

Other enforcement actions include a $1.8 million settlement with the DEP in 2008 for exceeding emission standards and the accidental release of a cloud of oil droplets that sprayed hundreds of vehicles and properties.

In 2006, the agency reached an agreement with Valero to preserve four properties totaling 615 acres in South Jersey as compensation for groundwater pollution at the refinery.

The standard today is more stringent, and the operation is cleaner than it's ever been, said Paulsboro Mayor John Burzichelli, who was not aware of the recent fines. "Can it get better? I think they'll tell you it probably can."

DEP spokesman Larry Hajna wrote in an e-mail that in arriving at the settlement amount the agency had considered cooperation by the refinery to comply in a timely way with issues cited in enforcement orders, and that some were paperwork violations or initially issued in error.

Choromanski said it might look as if there were a lot of violations, but "Valero at the time would have rather had us do it in a large bunch because this way they could take care of business all in one shot."

David Pringle, campaign director of the New Jersey Environmental Federation, said that it could be cheaper for the state to settle for fewer fines if it cost more to collect the penalty in court, but that the penalty should reflect the cost of the pollution.

"It shouldn't be the cost of doing business. . . . Unfortunately, it's pretty standard operating procedure in both Democratic and Republican administrations to make settlements for significantly less than the assessed penalty," he said.