Phillips 66 Faces Pollution Charges over Wastewater from CA Refinery

Phillips 66 faces potential fines of up to $2.4 million under charges accusing it of illegally dumping hundreds of thousands of gallons of wastewater from a refinery in California that the company earlier said would cease production by next year.

The six-count indictment by a federal grand jury alleges that Houston, Texas-based Phillips 66 breached the Clean Water Act by discharging on two occasions in November 2020 and February 2021 a total of about 790,000 gallons of non-compliant industrial wastewater into the Los Angeles County sewer system. The company reportedly failed to report these incidents, which the indictment said contained excessive amounts of oil and grease, to the authorities.

After Phillips 66 had been informed of the first incident, the company responded it would “retrain operations personnel” and review the procedure for notifying the authorities, the Attorney's Office for the Central District of California said in a statement. However, the second incident involved an even greater volume of wastewater, according to the statement published on the Justice Department’s website.

“If convicted of all charges, Phillips 66 would face a statutory maximum sentence of five years’ probation on each count and up to $2.4 million in fines”, the statement said.

In a statement sent to Rigzone, a company spokesperson said, “Phillips 66 will continue its cooperation with the U.S. Attorney’s office and is prepared to present its case in these matters in court”.

“The company remains committed to operating safely and protecting the health and safety of our employees and the communities where we operate”, the spokesperson added.

Special Agent in Charge Kim Bahney of the U.S. Environmental Protection Agency’s (EPA) Criminal Investigation Division said, “The charges today illustrate EPA’s commitment to protecting the environment and ensuring accountability for those that neglect or fail to abide by our nation’s environmental laws”.

The facility under probe, located in Carson, is one of the two facilities comprising Phillips 66’s over-a-century-old Los Angeles refinery, the other being the Wilmington facility. The Carson facility serves as the refinery’s frontend, processing crude oil, while the Wilmington facility serves as the backend by upgrading the intermediate output to finished products.

Last month Phillips 66 announced it will cease production at its Los Angeles refinery by the end of 2025, with chief executive Mark Lashier citing uncertainty from “market dynamics”.

The refinery, which has a five-mile pipeline linking its two facilities, can produce up to 85,000 barrels per day (bpd) of gasoline and 65,000 bpd of distillates, according to the company.

The closure would affect not only California but also Arizona and Nevada, though Phillips 66 said it “will work with California to maintain current levels and potentially increase supplies to meet consumer needs”.

About 600 employees and 300 contractors run the refinery, according to Phillips 66.

“With the long-term sustainability of our Los Angeles Refinery uncertain and affected by market dynamics, we are working with leading land development firms to evaluate the future use of our unique and strategically located properties near the Port of Los Angeles”, Lashier added.

Phillips 66 said it has engaged real estate firms to evaluate “potential commercial development options that support the regional economy and other key stakeholder objectives”.

The decision comes after Governor Gavin Newsom signed off on legislation that provides an indirect fuel price control mechanism. The new law asks the California Energy Commission to come up with regulations that impose minimum inventory levels of feedstocks and blending components, as well as require refineries to demonstrate plans to backfill maintenance losses. Proponents said the law will help prevent spikes in prices at the pump while industry players said it will achieve the contrary by creating new operational costs.

To contact the author, email jov.onsat@rigzone.com