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Settlement Reached in Air Pollution Lawsuit Against Pasadena Refinery

Pasadena Refining System has agreed to new pollution controls, upgraded hurricane planning and fines to fund an electric vehicles program.

Dave Fehling
Petrobras’s Pasadena Refining System

A Brazilian-owned oil refinery near Houston has agreed to a $3.5 million settlement in an air pollution lawsuit brought by Texas environmental groups.

Environment Texas and the Sierra Club's Lone Star chapter had accused Pasadena Refining System, Inc. of repeatedly violating federal pollution limits over a five-year period. They claimed the refinery violated the Clean Air Act thousands of times, releasing sulfur dioxide, nitrogen oxide and other pollutants above hourly and annual limits. Pasadena Refining is a subsidiary of Brazil's state-controlled oil company Petrobras.

Under the settlement, which still has to be approved by a federal court, the refinery will install new pollution controls, strengthen its efforts to reduce flaring and avoid emission spikes during hurricanes, among other measures.

The bulk of the fines the company will pay – $3,175,000 – will go to the Houston-Galveston Area Council for a "vehicle emission reduction fund" to help local governments and school districts purchase electric or hybrid vehicles.

In a statement, Petrobras said the settlement is "in the best interest of all parties, and will provide a direct benefit to our community."

"Our priorities have always been on safety, and on reliable and efficient operations that comply with the company’s Commitment to Life Program as well as all local, state and federal regulations," the company said. "Through this agreement, we commit to further improvements for the facility and its operations, both of which are part of our objectives."

The environmental groups described the settlement as a victory for communities near the refinery.

"These so-called ‘emission events' have released millions of pounds of illegal air pollution into surrounding neighborhoods," said Neil Carman, head of the Texas Sierra Club's clean air program.

Brian Zabcik, with Environment Texas, said the settlement also includes stricter enforcement measures for future pollution.

“If the plant does report any future emissions events that are above its limits, it will automatically be fined,” he said.

Earlier this year, Petrobras announced plans to sell the Pasadena refinery after the facility became entangled in a broader corruption scandal involving the parent company, as the Houston Chronicle reported at the time:

Petrobras, through a series of transactions starting in 2006, bought the refinery for $1.2 billion from the Belgian company Astra Oil, which, a year earlier, had paid only $42.5 million to acquire it.

The huge appreciation led to an investigation by Brazilian regulators who found that Petrobras deliberately overpaid as part of a broader kickback scheme that benefited company employees, politicians, contractors and others. Brazil’s Federal Audit Court last year fined two former Petrobras executives millions of dollars for their role in the deal.

Zabcik said the settlement will be binding for whoever purchases the Pasadena refinery from Petrobras.

The settlement comes one day after the Texas Commission on Environmental Quality fined the refinery about $907,000 for separate air and water quality violations between 2011 and 2013.

Last year, the environmental groups involved in the lawsuit won an almost $20 million penalty against oil giant ExxonMobil in a similar air pollution case, though the company is appealing that decision.

Correction: a previous version of this story stated the groups involved in the Pasadena lawsuit reached a settlement last year with ExxonMobil in an air pollution case. That settlement was in fact with the Environmental Protection Agency, and was part of a separate case.

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