[Note from BenIndy: Take the $1.2 million penalty Valero must pay for major flaring incidents at the Benicia Refinery in 2017 and 2019, for example. These incidents directly impacted the health and safety of Benicia residents, and yet it’s possible that Benicia may never see a dime of that penalty. Why? What can be done to ensure that communities directly, immediately, and tangibly impacted by negative health and safety situations created by refineries are directly, immediately, and tangibly compensated? Frequent BenIndy Contributor Kathy Kerridge got in touch with the following.]
ATTENTION to everyone who would like to see refinery penalties go to the community
We’ve all been waiting for the time when we can have input about how penalty fines from refineries can get back to the local community.
On Thursday, January 18, at 6:00 pm, the Community Advisory Council of the Bay Area Air Quality Management District (Air District) will hear from the Air District staff about possibilities.
This is your chance to weigh in on what should happen to the fines the refineries pay when they pollute our air, and how much of the fines will be returned to the local community.
Here is the link to information about the meeting:
The meeting will be both in person in SF and on Zoom. I hope that people who are concerned about this can go into the meeting in person. If not, please plan to attend by Zoom.
This is particularly important for all refinery communities. These fines have been substantial, and we want to make sure that the communities that have been harmed at least benefit from some these penalties.
Please spread the word. Contact email@example.com if you have questions or if you would like to try to carpool or go together on BART.
BCAMP Board Member
Good Neighbor Steering Committee
Progressive Democrats of Benicia Chair
[Note from BenIndy Contributor Nathalie Christian: This is a complicated subject for a lot of Benicia residents. If you scroll past Ashton’s editorial, you can see alternative opinions. Reach out to us at firstname.lastname@example.org if you would like to add your opinion to our growing body of commentary on the topic.]
Opinion: To check Valero’s influence and beat a budget meltdown, Benicia leaders must walk a fine line
By Ashton Lyle, June 7, 2023
Benicia will not always be a sleepy town on the edge of the Bay. Like Walnut Creek, Vallejo, and other neighboring cities before us, change is on the horizon. Today, I’m considering what would make the town more livable for its current and future residents.
First among the forces impeding a successful future is the city’s long-term budget crisis, as evidenced by a recent debate in the Benicia Herald. The city council approved its last two budgets with a substantial deficit, an obviously unsustainable situation over the long term. Bret Prebula, the Assistant City Manager, believes that the budget can be balanced. However, if the town wants to maintain the standard of services Benicia residents have come to expect,“new tax revenue is a must.”
Meanwhile, the budget is in need of serious balancing. If Benicia is to throw off the weight of oil town politics, development in either residential or commercial sectors is needed if we wish to maintain our beloved services (such as an independent police force, library, and parks) over the long term. One only has to look atthe ongoing rehabilitation of Vallejo’s city financesin the past decade to see the potential of a growing residential tax base. Additionally, if we want to finally free Benicia from reliance on a corporate giant, the town needs a larger slice of the growth from the Bay Area’s professional economy to increase property tax revenue and reduce the city’s dependence on income from Valero. In the age of remote work, accessible housing is essential tocompeting with local towns and bring knowledge workers to Benicia.If we want to ensure that Benicia’s future is not bound by corporate interests, the long-term answer is embracing new neighbors.
Equitable growth of the town’s housing stock is equally necessary to welcome more of Benicia’s workers to join our community full-time. The employees working in the city’s restaurants, shops, and industrial park have earned the option to settle down in the town they work in, but serious work is needed to ensure this possibility. Even after a recent decline in housing prices, Benicia’s median home is priced at$746,000. This means that, under aggressive calculations, a new resident looking to purchase a home would require no less than $175,000 in annual income. How will the workers who make Benicia and its downtown so special afford to live and work here if we do not build more homes?
These problems, undue industrial influence, a budget crunch, and a lack of affordable housing have a simple, but not easy answer. The housing crisis which extends far beyond Benicia’s borders necessitates new construction in our city. Considering where new housing can be built at scale in Benicia leaves residents with limited options. Due to the restrictions of the democratically decided Urban Growth Boundary, which prevents construction north of Lake Herman Road, there is simply not much remaining developable land within city limits. Unfortunately, the area which provides the greatest opportunity for essential housing will lead the city into a complicated alliance.
Seeno Developers own a large portion of Benicia’s undeveloped land and is now partnering with the city in a “Community-Led Visioning Process” process which aims to develop a Specific Plan for their land, in effect rezoning the currently undeveloped property from industrial to mixed commercial and residential use.As detailed by former Mayor Elizabeth Pattersonthis process is a reduced version of the coalition of community and experts who wrote Benicia’s last Master Plan. However, it is worth noting that this is only the first step in a multi-year process that will require approval by the expert-led Planning Commission and publicly elected City Council, with multiple opportunities for public comment which began in November of 2022 and will continue until approval, likely several years from now. This “Community-Led Visioning Process” is the beginning of a public and extremely rigorous process.
Unfortunately, Seeno has owned the land that is the subject of the North Study Area for over 35 years, and they do not appear interested in selling. The mortgage is likely paid off meaning Seeno is investing very few resources to maintain ownership, and it’s plausible that the value of the land has grown considerably since its purchase. It’s also worth considering the potential for Seeno to invoke California’s builder’s remedy if the city chooses not to engage in good-faith discussion, as Benicia’s housing element is not yet approved by the Department of Housing and Community Development. Even if the goal is to remove Seeno from our city, creating a Specific Plan for the land is the most likely path to success, as attaching a Specific Plan to a property can raise its value to potential buyers, especially if it changes the property from industrial to mixed-use. This increase in valuation could drive Seeno to sell portions if not the entirety of the property to other developers,which has occurred in other Bay Area developments.
These conditions place Benicia residents in a particularly difficult position, in effect forcing a choice between desperately needed housing constructed with an undesirable partner, or the continued risk to Benicia’s services and future budget, not to mention the unmitigated economic and political influence of Valero.Given the revelations of recent years, it is clear that Valero has proven to be one of the worst actors in Benicia community life. Proactively implementing a mixed-used Specific Plan for the North Study Area will create the best opportunity for a sustainable and equitable Benicia. By working to develop the North Study Area in a controlled, sustainable manner, we can increase our tax base, make our housing market more accessible to new families, and reduce corporate influence over Benicia’s politics.
This process should be watched carefully by community members and media outlets to ensure City Council and Planning Commission members are held accountable for the results, especially because Seeno is known to be a difficult partner. Equally important is that Seeno needs to be made responsible for covering the cost of expanding the city’s essential services to the area, as they will be rewarded with millions in additional profit due to the zoning change. Benicia residents must take advantage of their ability to participate in the planning process via public comment at community, planning commission, and city council meetings. Any development is an investment in the future of our town, and the process of writing a Specific Plan deserves extensive thought, public debate, and democratic accountability to effectively plan for the growth of Benicia in the next decade.
Statewide forces, from the affordability crises to the housing element requirement mean that change is coming to Benicia and to some of its undeveloped land. Failing to act proactively puts the city in danger of Valero’s continued influence, fiscal crisis, or a reduction in city services. Let’s make sure our council members come into any Seeno partnership with eyes open, while also allowing for viable growth that will bring new families to Benicia.
Author’s Note: In the spirit of full transparency, I am related to the recently appointed Planning Commissioner for the City of Benicia. That said, the opinions expressed in this piece are fully my own, they were not unduly influenced by our relationship, and should not be taken to represent his or anyone else’s opinion.
[BenIndy Contributor Nathalie Christian – Texas-based Valero raked in about $11.5B of profit in 2022 — and that’s pure profit. While this fine represents progress, it also represents less than 1 hour of Valero’s 2022 profits. That’s right — in 2022, Valero made more than $1M just in profit per hour, 24 hours a day, for 365 days (Valero doesn’t stop profiting just because it’s a holiday or weekend). It’s clear Valero treats fines like these as fees; they represent just another minor cost of doing business in Benicia. Examples of fines from recent years: Valero Benicia Refinery was fined $266,000 in 2018, $122,500 in 2016 and $183,000 in 2014. It is rare for fines like these to actually financially benefit Benicia. The full text of the EPA News Release is available below this article from the Chronicle.– N.C.]
U.S. EPA hits Valero’s oil refinery in Benicia with $1.2 million penalty for two toxic flaring incidents
Oil refining giant Valero must pay a $1.2 million penalty for major flaring incidents at its Benicia facility that spewed dark plumes of pollutants into neighborhoods, the U.S. Environmental Protection Agency announced Wednesday.
The “significant chemical incidents” occurred in 2017 and 2019 and forced people, including schoolchildren, to shelter in place because of the risk of exposure to harmful chemicals, according to the agency.
Following a federal investigation, Valero executives agreed to make specific changes to their Benicia operations and pay a penalty totaling $1,224,550 in a settlement reached with the EPA. Martha Guzman, regional administrator for the EPA in California, Nevada and New Mexico, said the changes will help protect Valero workers, Benicia residents and the environment.
The EPA’s announcement is the latest investigation into problems at the Bay Area’s oil refineries. Earlier this year, health officials in Contra Costa County warned people living near the Martinez Refinery run by PBF Energy to avoid eating foods grown in surrounding neighborhoods, four months after the facility sent 20 tons of dust into the community that coated cars, homes and backyards in a mysterious fine white powder.
Last year, the Bay Area Air Quality Management District announced it had found Valero had been releasing unlawful and potentially harmful amounts of hydrocarbons from its hydrogen stacks — undetected — from 2003 to 2019. Valero said it also hadn’t detected the releases and took steps to end them.
On Wednesday, Valero didn’t immediately respond to requests for comment about the federal fines.
“We have concerns that we’re being left in the dark and only find out well after the fact,” Young said.
Oil refineries sometimes burn off flammable gases through tall stacks to keep careful equilibrium within pipes and other equipment and avoid disasters like explosions. But flaring is a highly regulated activity meant to be used sparingly because of the risks those burned gases and other pollutants pose to people nearby.
One major pollutant generated by these flares is sulfur dioxide, which can harm human respiratory tracts, exacerbating problems like asthma, and worsen pollution from particulate matter and acid rain.
On May 5, 2017, Valero stacks began shooting flames and churning out dark plumes of pollutants when the facility unexpectedly lost power. The emissions coated cars in an oily substance and sent employees at a nearby musical instrument factory to the emergency room, according to the EPA. More than 1,000 people were evacuated, including staff and students at both Robert Semple and Matthew Turner elementary schools. Ultimately, more than 10,000 pounds of flammable materials and 74,420 pounds of sulfur dioxide were released from the facility, according to the EPA.
Valero reported the flaring caused more than $10 million in damage to its facility, according to EPA records. The company later sued Pacific Gas and Electric Co. for the outage.
Then on March 11, 2019, another flaring incident led Solano County health officials to warn residents with respiratory issues to stay indoors. Some businesses sheltered in place. An investigation revealed more than 15,000 pounds of sulfur dioxide were released.
The EPA inspected the facility following both incidents and in 2019 found “several” cases where the company was violating the law.
“Valero failed to immediately report releases of hazardous substances, update certain process safety information, adequately analyze certain process hazards, and develop and implement certain written operating procedures,” the EPA said.
The agency found the company had violated the federal Clean Air Act’s regulations for preventing chemical accidents.
Valero is based in San Antonio and operates 15 petroleum facilities in the United States, Canada and the United Kingdom.
In a press release, Larry Starfield, with the EPA’s enforcement division, said the settlement “sends a clear message that EPA will prosecute companies that fail to expend the resources needed to have a compliant, well-functioning Risk Management Plan to the fullest extent of the law.”
SAN FRANCISCO (April 5, 2023) – The U.S. Environmental Protection Agency (EPA) announced a settlement with Valero Refining-California to resolve violations of the Clean Air Act’s Chemical Accident Prevention regulations at their Benicia Refinery. The company will pay a $1,224,550 penalty and make changes to improve process safety at the refinery.
“This settlement sends a clear message that EPA will prosecute companies that fail to expend the resources needed to have a compliant, well-functioning Risk Management Plan to the fullest extent of the law,” said Acting Assistant Administrator Larry Starfield for EPA’s Office of Enforcement and Compliance Assurance.
“Failure to properly manage hazardous materials can pose serious risks to our California communities,” said Martha Guzman, Regional Administrator of EPA Region 9. “This settlement will help protect Valero workers, the Benicia community, and the environment more broadly.”
After significant chemical incidents at the Benicia Refinery in 2017 and 2019, a 2019 EPA inspection at the facility identified several areas of noncompliance, including that Valero failed to immediately report releases of hazardous substances, update certain process safety information, adequately analyze certain process hazards, and develop and implement certain written operating procedures.
Under the terms of the settlement, Valero has agreed to make significant chemical safety improvements at the Benicia Refinery. The company has already made several of these changes, related to chemical safety, in response to EPA’s inspection. These improvements include updating and modifying process hazard analyses, modifying operating procedures, modifying reporting policies, and improving employee training. The settlement also requires Valero to modify several pressure-relief valves and update process hazard analyses to consider hazards of power loss at the facility. As part of the settlement, Valero will continue to implement safety improvements through June 2025.
The Benicia Refinery is one of thousands of facilities nationwide that make, use, and store extremely hazardous substances. Reducing the risk of accidental releases at industrial and chemical facilities like the Benicia Refinery is one of EPA’s National Enforcement and Compliance Initiatives. Catastrophic accidents at these facilities can result in death or serious injuries; impacts to the community, including orders to evacuate or shelter-in-place; and other harm to human health and the environment. The Clean Air Act requires that industrial and chemical facilities that store large amounts of hazardous substances develop and implement a Risk Management Plan to reduce the risk of accidental releases.
Los Angeles, CA—Valero raked in $11.5 billion in 2022 profits, beating its $930 million for the previous year by a dozen times. However, Governor Newsom’s call for a special session in October to deal with price gouging appears to be having an impact on gouging in California as California-reported refinery margins were lower than any other region for the first time this year and in line with historic margins.
“Valero reported profits per gallon of gasoline in California during the fourth quarter at below 50 cents, a red line marker for price gouging,” said Consumer Watchdog Liza Tucker. “It reported per gallon profits off California gas at 36 cents, a reasonable profit in line with what the refiner earned here for the last 20 years. Meanwhile margins elsewhere remained high.
“The threat of a legislative penalty on gasoline price gouging that Governor Newsom called for appears to be reining in gas prices in California already,” said Tucker. “Clearly, California lawmakers should enact that penalty.”
Consumer Watchdog has called for 50 cents as a demarcation line on profits per gallon above which refiners will pay a penalty. SBX 1 2, introduced by Senator Nancy Skinner (D-Berkeley) will set a penalty on California refiners when gas prices and the profits refiners make per gallon off consumers become abnormally high. The legislature has yet to set a profit level for the penalty.
Five refiners control California’s gasoline market by making 97% of the state’s gasoline. They usually report higher profit margins per gallon of gasoline for the US West Coast than any other region in which they operate, said Tucker. Valero’s 4th quarter profits were the first indication the price gouging penalty has impacted the companies’ policies. In addition, November and December gasoline prices in California were more in line with the typical spread between average US and California prices of a little more than a dollar.
“Just raising the price gouging penalty has significantly curbed Valero’s profit taking in California and made gasoline more affordable for Californians and in particular the most vulnerable in the state who were paying as much as 20% of their after-tax income for gasoline,” said Jamie Court, President of Consumer Watchdog. “Imagine how much Californians will save once a penalty is enacted.”
Valero tripled its fourth quarter profits to $3.1 billion from $1 billion. But Valero reported West Coast refining margins per barrel—the difference between what crude oil costs a refiner compared to the wholesale charge for the finished product—that were the lowest among its regions of operation. Since Valero only has Western refineries in California, the margins are California-specific.
Valero reported a margin of $15.43 for the West Coast, compared to $18.88 for the US Mid-Continent, $22.68 for the Gulf Coast, and $29.66 for the North Atlantic. Consumer Watchdog divides margin per barrel numbers to arrive at a per gallon profit. That translated into a profit of 36 cents per gallon in California, 44 cents in the US Mid-Continent region, 54 cents on the Gulf Coast, and 70 cents in the North Atlantic.
In contrast, Valero bagged price gouging profits per gallon in the second and third quarters of 2022. In the second quarter of 2022, Valero reported an 83 cent per gallon profit at the pump and, in the third quarter, a 60 cent per gallon profit in the third quarter, according to Consumer Watchdog research. See refiner profit per gallon chart here.
According to Gary Simmons, Valero’s executive vice president, profits were buoyed by a continued tight market for crude. Simmons said that bad weather also interfered with the restocking that normally occurs at this time of the year. “That sets up the year nicely from the refinery margin perspective,” he said.
As it was, California’s big five oil refiners posted overall profits of $67.6 billion in the first nine months of 2022 – nearly quadruple the profits recorded for the same period in 2021. Chevron reports its fourth quarter and annual earnings tomorrow. It controls 30% of California’s gasoline market.