Environmental Proceedings from Edgar online

Environmental Proceedings
EPA Region VI v. Diamond Shamrock Refining Company, L.P. (McKee Refinery andThree Rivers Refinery). On September 15, 1998, UDS was notified by theDepartment of Justice (DOJ), on behalf of the EPA, of alleged violations at theMcKee Refinery and Three Rivers Refinery of various record-keeping and reportingrequirements and certain other alleged operating and permitting violations ofthe Clean Air Act, Clean Water Act and RCRA. A Consent Decree was entered by thefederal district court on September 20, 2001 to settle this matter. Pursuant tothe settlement, in November 2001, Diamond Shamrock Refining Company, L.P. paid apenalty of $1.2 million and funded a supplemental environmental project in theamount of $625,000.
EPA Region V v. Total Petroleum, Inc. (Alma Refinery). This enforcement actionbegan in September 1997. The allegations pertain to a refinery at Alma,Michigan, owned by Total Petroleum, Inc. (TPI) and include alleged Clean Air Actviolations relating to emissions monitoring, reporting and inspection. Otherallegations included alleged RCRA violations relating to maintenance ofwastewater ponds, storage of hazardous waste, and disposal of wastes. UDSacquired TPI in 1997, and in December 1999, UDS closed the Alma Refinery. InApril 2000, TPI settled the EPA enforcement action, which required the fundingof $9.9 million of specific environmental and economic development projects andthe payment of $4.0 million in penalties. A Consent Decree reflecting thesettlement was entered by the district court on March 27, 2001. These settlementamounts were fully accrued as of March 31, 2001. Valero is still negotiating theterms of a corrective-action agreement with the Michigan Department ofEnvironmental Quality as required by the Consent Decree.
EPA Region VI v. Diamond Shamrock Refining and Marketing Company (Albuquerqueproducts terminal). On December 30, 1998, the EPA issued a notice of violationalleging noncompliance with certain Clean Air Act fuel loading procedures,inspection and leak detection requirements, record-keeping provisions,throughput limitations on certain tanks and VOC emissions limitations. In 2000,the EPA referred the enforcement to DOJ. On March 7, 2001, the DOJ served noticeof claims for the alleged air permit violations at the UDS Albuquerque productsterminal. Valero is negotiating with the DOJ to resolve this matter.
EPA Region VIII vs. Ultramar Diamond Shamrock Corporation (certain undergroundstorage tank systems in Colorado and Wyoming). In 2000, the EPA and stateregulators inspected certain retail facilities with underground storage tanksfor compliance with federal and state rules and regulations at such facilities.On April 3, 2001, UDS received an administrative complaint from the EPA seekingpenalties in connection with alleged violations and non-compliance issuesarising primarily prior to October 1999. This matter was settled in November2001 upon payment of $126,764 in penalties.
California Environmental Protection Agency Department of Toxic SubstancesControl. Valero received a Draft Enforcement Order on July 17, 2001 pertainingto its Benicia Refinery. The Order alleged noncompliance with several state andfederal waste management requirements. Valero entered into discussions with theagency to resolve the matter, and the agency modified its allegations andreduced the stated penalties to an amount less than $100,000.
New Mexico v. General Electric, et al., United States District Court for theDistrict of New Mexico (served January 5, 2000). The South Valley ofAlbuquerque, New Mexico has been designated as a federal Superfund site under
20CERCLA. Under various state and federal administrative orders, EPA and the Stateof New Mexico have been directing the cleanup of certain groundwatercontamination plumes that are alleged to impact the groundwater supply ofAlbuquerque. In 1999, the State of New Mexico sued several companies, includingGeneral Electric and UDS, seeking recovery of natural resource damage underCERCLA and certain New Mexico environmental laws. General Electric, the singlelargest potentially responsible party, filed cross claims against several otherparties, including UDS, seeking contribution. Trial is scheduled for the fall of2002.
Texas Natural Resource Conservation Commission (TNRCC) (Corpus Christi WestPlant). Valero received notices of enforcement from the TNRCC on May 1, 2001;June 22, 2001; August 30, 2001; and December 7, 2001, for alleged noncompliancewith certain TNRCC air upset, air emission and record-keeping requirements.Valero has asked the TNRCC to consolidate all pending enforcement actions forthis refinery into one enforcement order. The TNRCC has not yet issued anenforcement order related to these notices, and no penalties have been assessed.
TNRCC (Houston Refinery). On December 5, 2001, the TNRCC issued a notice ofenforcement action for alleged noncompliance with certain TNRCC airupset/maintenance regulations and certain air emission and record-keepingrequirements. TNRCC seeks penalties in the amount of $276,499, but Valero isnegotiating with TNRCC and expects the penalties to be reduced.
TNRCC (McKee Refinery). UDS received notices of enforcement from the TNRCC onMay 4, 2001 and June 5, 2001, for alleged noncompliance with certain emissionsmonitoring and record-keeping requirements. Valero also received a notice ofenforcement dated February 21, 2002 from the TNRCC for alleged noncompliancewith certain emissions and property line requirements. The TNRCC is developingan enforcement action for these alleged violations, and no penalties have beenassessed to date. Valero is negotiating to resolve these issues.
TNRCC (Texas City Refinery). Valero received a notice of enforcement from theTNRCC on July 7, 2001, for alleged noncompliance with certain TNRCC airupset/maintenance regulations. Valero is contesting most of the TNRCC'sallegations in this notice. The TNRCC has not yet issued an enforcement orderrelated to this notice, and no penalties have been assessed. Valero alsoreceived a notice of violation on January 2, 2002 regarding a sulfur recoveryunit upset that occurred on November 7, 2001. No penalties have been assessed.Valero is contesting this notice.
TNRCC (Three Rivers Refinery). A notice of enforcement from the TNRCC was issuedon August 31, 2001 for alleged noncompliance with certain air upset/maintenanceregulations and record-keeping requirements. The TNRCC has not issued anenforcement order related to this notice, and no penalties have been assessed.Valero also received a notice of violation on February 11, 2002 for allegednoncompliance with air upset/maintenance regulations, record-keepingrequirements and flaring regulations. The TNRCC has not issued an enforcementorder related to this notice, and no penalties have been assessed.
MTBE Litigation. Valero has been named as defendant in several cases allegingMTBE contamination in groundwater in New York, Texas and California. Complaintsin the three New York cases - including those in Berisha and O'Brien v. AmeradaHess Corporation, et al., Case No. MDL 1358, Master File C.A. No. 1:00-1898[SAS], United States District Court for the Southern District of New York -allege that the gasoline suppliers produced and/or distributed gasoline that isalleged to be defective because it contained MTBE. The four Texas cases arebased on the alleged discharge of gasoline into East Caddo Creek in Hunt County,Texas on March 9, 2000 when a pipeline belonging to Explorer Pipeline Companyruptured. Valero was named in City of Dallas v. Explorer Pipeline Company, Inc.,Valero

21

Energy Corporation, et al., 160th State District Court, Dallas County, Texas(filed May 14, 2001) and related private landowner cases. The three Californiacases are primarily based on a product liability/product defect theory. In theNew York, Texas and California cases, the plaintiffs generally seek individual,unquantified compensatory and punitive damages and attorneys' fees. Valerobelieves it is unlikely that the final outcome of any one of these claims orproceedings would have a material adverse effect on its results of operations orfinancial position, but that an adverse result in a majority of these casescould have a material adverse effect on its results of operations and financialposition.

The Rest @ Edgar Online