Tesoro To Pay $425M To Settle Lawsuit Alleging Its Oil Refineries Violated Clean Air Act

MARTINEZ (CBS) -- Tesoro Corp.'s Martinez Refinery is one of six Tesoro oil refineries nationwide covered by a federal court settlement announced Monday in which the company will pay $425 million to reduce air pollution.

The agreement was announced by the U.S. Justice Department and Environmental Protection Agency and was filed in U.S. District Court in San Antonio, Tex., the city where Tesoro is headquartered.

The pact resolves a lawsuit filed at the same time by the Justice Department on behalf of the EPA. The lawsuit charged Tesoro with numerous violations of the U.S. Clean Air Act and related regulations.

Under the agreement, Tesoro will pay $403 million for improved equipment to control harmful air pollutants such as nitrogen oxides, sulfur dioxide and volatile organic compounds.

The company will also pay $10.45 million in civil penalties and $12.2 million on community projects to mitigate the effects of pollution.

In one project, Tesoro will pay $1 million to enable the Mount Diablo Unified School District to buy at least four new school buses to replace old buses that burn polluting diesel fuel.

The new buses will run on cleaner compressed natural gas.

The other refineries are in Alaska, Hawaii, North Dakota, Utah and Washington state. Tesoro sold their Hawaii refinery to Par Pacific Holdings Inc. in 2013; the consent decree indicates that Tesoro is responsible for paying for the improvements there and Par Pacific Holdings is responsible for complying with the settlement.

The agreement will have a 30-day public comment period before it is final.

EPA Assistant Administrator Cynthia Giles said in a statement, "The advanced technologies Tesoro and Par are required to implement are the future for protecting people from toxic air emissions.

"This settlement puts new enforcement ideas to work that will dramatically cut pollution and protect communities," she said.

The settlement states Tesoro denies violating the Clean Air Act and regulations. The company said in a statement that it is pleased to have reached the agreement.

"We are dedicated to operating in a safe and responsible manner that reduces the impact on the environment," the company said.

Tesoro's Martinez Refinery occupies 2,200 acres, employs 650 people and can refine up to 166,000 barrels of crude oil per day into gasoline, diesel fuel, heavy fuel oils and other petroleum products, according to its website.