Tesoro, U.S. sign $425 million deal to make refineries pollute less

Texas oil company Tesoro and the purchaser of one of its refineries have agreed to spend $403 million to reduce air pollution at oil refineries in six western states under an agreement announced by the Justice Department on Monday.

Tesoro has also agreed to pay a $10.45 million penalty and fund about $12 million of environmental projects that could lessen impacts on the low-income communities downwind of its facilities.

"There's going to be tens of thousands of tons of pollution reduced every year because of this consent decree," Justice Department assistant attorney general John Cruden said.

Dennis McLerran with the Environmental Protection Agency said the agreement would keep 188 tons of volatile organic compounds out of the air around Tesoro's Anacortes refinery each year, including 9 tons of toxic chemicals like hexane and benzene.

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The agreement also covers plants in Kenai, Alaska; Martinez, California; Kapolei, Hawaii; Mandan, North Dakota; and Salt Lake City, Utah. Tesoro sold its Hawaii refinery to Par Pacific Holdings in 2013, after negotiations over the refineries' alleged violations of the Clean Air Act were under way.

Over the past 15 years, the Environmental Protection Agency has reached agreements with most of the nation's oil refineries to reduce the pollution their high-energy, high-temperature operations emit.

Tesoro is one of the last companies to fall in line.

"Tesoro was the holdout, so EPA went and investigated Tesoro," Justice Department attorney Elizabeth Loeb, who negotiated the agreement, said.

The EPA investigators found lots of alleged air pollution violations at six Tesoro refineries, then turned the cases over to the Justice Department.

After five years of negotiations, Tesoro and Par Hawaii Refining reached the agreement with the federal government, the states of Alaska and Hawaii, and the Mt. Vernon-based Northwest Clean Air Agency.

Federal officials say smog and childhood asthma will be reduced in six states as a result.

“We take compliance with environmental regulations very seriously and are pleased to have reached agreement on this consent decree," Tesoro vice president Keith Casey said in a statement emailed by Tesoro media relations. “We are dedicated to operating in a safe and responsible manner that reduces the impact on the environment.”

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The Texas company's statement also said it has already completed most of the pollution fixes required under the agreement.

Loeb said that's because the Justice Department insisted on it, early in the years-long negotiations.

"We said, 'this is going to take a long time, and we don't want to wait until the court orders this. We want you to do it,'" she said.

Government officials said they do not expect the agreement to have any effect on gasoline prices. They said many of the agreed-upon fixes to keep petrochemicals out of the air — like compressors that recapture flare gas instead of burning it off — could even be profitable for Tesoro.

"For every volatile compound that doesn't go into the air, it stays in their system and can be converted into something that they can sell," Mark Asmundson with the Northwest Clean Air Agency said. His agency will receive $250,000 of Tesoro's penalty.

Tesoro has also been fighting a record $2.4 million workplace-safety fine imposed by the Washington Department of Labor and Industries after an explosion killed seven refinery workers in Anacortes in 2010.

A judge with the Washington Board of Industrial Insurance Appeals will hear closing arguments in that nearly six-year-long case on Thursday.