By Sarah N. Lynch and Laura Sanicola
WASHINGTON (Reuters) - A subsidiary of BP plc (LON:BP) will pay a record-setting $40 million penalty to settle civil U.S. charges that its Indiana-based oil refinery violated federal laws aimed at curbing emissions of cancer-causing benzene in wastewater and other harmful pollutants, the U.S. Justice Department said on Wednesday.
The DOJ will require the oil major to make significant investments to curb benzene pollution at its 134 year old Whiting, Indiana refinery, which has a history of violating federal regulations limiting benzene in refinery wastewater streams.
The settlement between BP (NYSE:BP) Products North America Inc., the Justice Department and the Environmental Protection Agency will also require the company to invest approximately $197 million in new technology and other capital improvements to reduce air pollution.
Those improvements are expected to reduce benzene by an estimated seven tons per year, other hazardous air pollutants (HAP) by 28 tons per year, and volatile organic compound emissions (VOC) by 372 tons per year at its Whiting Refinery in Indiana, the Justice Department said.
“This settlement sends an important message to the refining industry that the United States will take decisive action against illegal benzene and VOC emissions,” Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division said in a statement.
“Under the settlement, the refinery will implement controls that will greatly improve air quality and reduce health impacts on the overburdened communities that surround the facility.”
BP said the capital investments agreed upon will be done in close coordination with state and federal regulators over the next several years.
"As we move forward, our commitment to safe, compliant and reliable operations remains unwavering at Whiting and everywhere we operate," spokesperson Christina Audisho said in a statement.
BP Plc’s 435,000 barrel-per-day Whiting, Indiana, refinery is the sixth-biggest by capacity in the United States and the company's largest in the nation, according to the U.S. Energy Information Administration.
The company reported a record profit of $28 billion for 2022, joining other oil majors in blockbuster profits after energy prices surged in the wake of Russia's invasion of Ukraine.
The EPA had previously uncovered benzene problems in Whiting's wastewater from 2003-2008. The BP refinery near Lake Michigan released nearly 16 times the legal limit of benzene allowed by the Clean Air Act, the EPA said in 2009.
Following the EPA's investigation, BP spent about $4 billion to expand the Whiting refinery to process heavy Canadian crude. The expansion and upgrade project had drawn opposition in the Chicago area because of the increased pollution that would result.
BP said at the time that the expansion included $1.4 billion in environmental improvements that would enhance the performance of the wastewater treatment plant.
Many U.S. refineries also violate the Clean Air Act by releasing high levels of benzene at refinery fencelines.
Nine U.S. Gulf Coast refineries exceeded the federal regulatory action level between 2018 and 2020 for pollution from benzene, according to a study by the Environmental Integrity Project (EIP) released in May of last year.
The nine are among 56 U.S. refineries with high benzene levels, the study said.
The latest settlement terms, filed in a proposed consent decree in the U.S. District Court for the Northern District of Indiana, will require approval from a federal judge.
BP also agreed to undertake a $5 million supplemental environmental project to reduce diesel emissions in the communities surrounding the Whiting Refinery and install 10 air pollutant monitoring stations.