Bay Area Air District Hits Valero's Benicia Refinery With 'Historic' $82 Million Fine

Updated 11:35 a.m. Thursday

Regional and state air pollution regulators have hit oil company Valero with a penalty of $82 million for at least 15 years of unreported toxic emissions and other alleged air quality violations by its refinery in the Solano County town of Benicia.

The penalty, part of a settlement involving the Bay Area Air Quality Management District, the California Air Resources Board and Texas-based Valero, is the largest ever levied by the district and is among the biggest imposed nationwide as the result of refinery operations.

The agreement calls for $64 million of the settlement amount to be used for projects that will address the refinery’s air pollution impacts in Benicia, a city of 26,000 on the northern shore of the Carquinez Strait. The air district said those projects would be chosen in a process involving residents, community groups, advocates and elected officials. Some $16 million of the penalty will be devoted to projects in other Bay Area communities identified by regulators as “overburdened” by air pollution.

“This penalty sends a strong message; adherence to air quality standards is both necessary and expected, and failure to do so can lead to significant fines,” Steve Young, Benicia mayor and member of the air district board, said in a statement. “Benicia residents need to know that air quality violations are taken seriously.”

The 32-page settlement (PDF) released Thursday details dozens of alleged violations of air district regulations and state law, including a long history of unreported emissions of toxic chemicals that began in 2003 or earlier but were not discovered by the air district until 2019.

The air district said the refinery systems that generate and channel hydrogen throughout the facility emitted substances, including organic compounds that worsen smog and particulate pollution, as well as benzene, toluene and other compounds that cause cancer, reproductive harm and other health concerns.

Regulators also accused the refinery of releasing an estimated 8,400 tons of these substances between 2003 and 2019. That’s about 2.7 tons for each day on which violations occurred, or 360 times the legal limit, the district said, adding that refinery management knew for years that its system contained the harmful contaminants “but did not report them or take any steps to prevent them.”

Valero said in the settlement document that it aimed to avoid litigation and that it “does not admit or necessarily agree with” the allegations against it.

In an online statement, the company said it had “endeavored to comply with federal rules associated with the hydrogen system; however, the district has much more stringent regulations.” The company characterized the releases as “trace levels of organic compounds” and added that the air district’s own health risk assessment found they posed only “negligible” health risks.

As first reported by KQED in 2022, the air district aroused the anger of Benicia residents and elected officials by failing to alert the community about the emissions for nearly three years after they became aware of it.

In a statement, Philip Fine, the air district’s executive officer, called the settlement “historic” and said it shows “the air district’s unwavering commitment to holding polluters accountable and safeguarding the health of those living in refinery communities.”

The air district’s initial failure to alert Benicia residents to the refinery’s unreported emissions was “frustrating and disturbing,” Mayor Young said in an interview Thursday. The Valero settlement “will go a long way to rebuilding that faith and trust in the air district’s operations going forward,” he said.

In addition to the monetary penalties, the settlement gives Valero 30 months to design, get permits for and install systems to prevent toxic releases from its hydrogen units. The company also agreed to train key employees on the air district regulations for the refinery’s various processes.

The Valero settlement is the latest in a series of high-profile enforcement actions the district has undertaken against Bay Area refineries.

In February, the agency hit Chevron with $20 million in penalties for 678 violations of air district regulations at its Richmond refinery. The district also won an agreement from the oil company to drop its opposition to new regulations that require refineries to clean up particulate emissions. Chevron could face further penalties — more than $80 million — if it fails to implement measures to meet particulate emission standards within four years of a 2026 deadline.

Earlier this month, the agency fined the Marathon Martinez refinery $5 million for 59 air quality violations.