$23.7 Million Motiva Settlement Brings 'Tragic Chapter' to Close

Oct. 28, 2005
Oil giant Motiva Enterprises LLC has agreed to pay $12 million to settle a joint federal-state civil lawsuit stemming from a 2001 explosion at the company's former Delaware City, Del., refinery that killed one employee, injured several others and caused massive environmental damage.

In addition to the $12 million civil penalty, Motiva will finance a series of environmental projects valued at more than $4 million and reimburse the United States and Delaware for more than $170,000 in response costs. The settlement resolves claims against Motiva for violations of the Clean Air Act, the Clean Water Act, CERCLA (the Superfund statute) and numerous state environmental statutes.

"Motiva's conduct was inexcusable," Delaware Attorney General Jane Brady said. "Nothing we do can undo the harm to the workers and their families, but I trust all companies will take a lesson from this civil matter and our criminal prosecution and realize that we will not tolerate this type of behavior in Delaware."

The combined total of nearly $23.7 million in civil penalties, environmental projects, injunctive relief and response costs is one of the largest settlements in an enforcement action involving violations of environmental laws at one facility.

The civil penalty is the largest ever collected in Delaware for environmental violations.

"In addition to Motiva paying a substantial penalty, [the] settlement requires Premcor, the current owner of the refinery, to take immediate concrete steps to ensure compliance with environmental and safety regulations so that the tragic events of July 2001 will never be repeated," said Donald Welsh, EPA regional administrator for the mid-Atlantic region.

In 2004, Motiva sold the Delaware City refinery to the Premcor Refining Group Inc., which has agreed to join the settlement and to institute a series of controls valued at approximately $7.5 million to improve safety at the refinery.

In a statement from Motiva, a spokesperson said Motiva "profoundly regrets the events of July 17, 2001, and the resulting fatality, injuries and environmental impact."

"We have worked openly and cooperatively with investigating agencies, and have accepted responsibilities for our mistakes," the spokeperson said. "We take these matters very seriously and have worked in good faith to reach this agreement and to close this difficult chapter in Motiva's history."

Motiva Fined $10 Million in March After Guilty Pleas

Houston-based Motiva Enterprises, which is a 50-50 joint venture between Shell Oil Co. and Arab Refining Inc., has paid a steep price for the 2001 accident.

  • In March, a federal judge ordered Motiva to pay a $10 million fine after the company pleaded guilty to negligently endangering workers at its former Delaware City refinery. The company also pleaded guilty to discharging pollutants into the Delaware River and negligently releasing sulfuric acid into the air, both in violation of the Clean Air Act. All guilty pleas were part of a criminal plea agreement with the Department of Justice.
  • In January 2002, OSHA issued willful violations and proposed penalties that Motiva later settled for a total of $132,000.
  • In July 2003, Motiva pleaded no-contest to criminally negligent homicide and assault charges brought by the state attorney general. As a result, the presiding state judge ordered the company to pay $296,000 in penalties.
  • In September 2003, Motiva agreed to pay $36.4 million to the widow and family of the worker who died. The amounts of settlements Motiva reached with other injured employees have not been made public.

Delaware Gov. Ruth Ann Minner said the Sept. 20 settlement "closes a tragic chapter in the history of the Delaware City refinery."

"While nothing can erase the human and environmental impacts resulting from this event, we have made a number of changes on a state level as a result, including the enactment of Delaware's Above Ground Storage Tank Act and our enforcement action requiring enhancements to the refinery's mechanical integrity programs," Minner said. "Those, in addition to the improvements that will come from this settlement, will help ensure that this facility operates more safely. It also shows that negligent behavior can have dire consequences and will not be tolerated in Delaware."

The tank explosion led to the passage of Delaware's Jeffrey Davis Above Ground Storage Tank Act and a state enforcement action requiring an audit of and improvements to the refinery's mechanical integrity programs. Jeffrey Davis was the worker killed in the explosion.

EPA: Inspection and Repair Program Likely Would Have Averted Accident

On July 17, 2001, Tank 393 a 415,000-gallon tank at the Delaware City refinery exploded while containing spent sulfuric acid, a mixture of sulfuric acid, water and hydrocarbons. In addition to killing Davis and injuring several others, more than 1 million gallons of sulfuric acid were released from the tank farm and approximately 100,000 gallons spilled into the Delaware River, killing an estimated 2,400 fish and 240 crabs.

Following the explosion, EPA criminal investigators gathered evidence indicating that Tank 393 had a long history of problems. Among other things, Tank 393 had numerous localized corrosion and leaks during the previous 8 years, including six leaks from June 1998 to May 2001.

Company inspectors repeatedly recommended that Tank 393 should be taken out of service as soon as possible for an internal inspection, but no internal inspection was conducted after 1994. Motiva also switched Tank 393 from storing fresh sulfuric acid to spent sulfuric acid without conducting a full engineering review (known as a management of change review) that would have required technical experts to analyze the changes to account for the flammable hydrocarbons in spent sulfuric acid.

Shortly before the explosion, according to the statement of facts in the criminal proceedings, Motiva had several warnings from its own employees about Tank 393's problems. Nevertheless, workers were sent to the acid tank farm to repair the catwalk connecting the tanks on July 17, 2001, and a hot works permit was issued for the job.

During the afternoon of that day, flammable vapors from Tank 393 reached a heat source, and the resulting explosion causedTank 393 to separate from its foundation pad.

Davis's body was never recovered. Approximately 99,000 gallons of sulfuric acid drained into the Delaware River for days after the explosion.

"This accident likely would have been averted by a stringent tank inspection and repair program," said Rudolph Contreras, civil chief, U.S. Attorney's Office for the District of Delaware. "Although Motiva saved thousands of dollars in putting off the inspection of Tank 393, it has now paid more than $58 million as a consequence of its actions. This fact alone should be a clear message to other companies that cutting corners on safety and the environment makes no economic sense."

Motiva Projects to Include Purchase of Hybrid Transit Buses

As part of the agreement announced Sept. 20, Motiva will undertake a number of environmental projects in Delaware.

Among these projects, Motiva will:

  • Purchase and maintain three hybrid transit buses;
  • Construct native-species shellfish beds in the Delaware River;
  • Fund the installation and operation of a water quality monitoring station in the Delaware River;
  • Purchase approximately $165,000 of emergency equipment for the Delaware City Fire Company; and
  • Construct a meteorologic station for DNREC near the refinery to help assess wind and weather conditions if there are future accidents.

In addition, Premcor will undertake a number of measures at the refinery designed to address issues raised by the investigations into the causes of the July 2001 incident, including improved hot-work-permitting procedures.

Premcor also will grant a conservation easement over 285 acres of ecologically significant land near the refinery that will end the land's current agricultural use and restrict further use of the area in perpetuity.

Motiva will spend at least $447,500 on restoration activities, such as the planting of trees and the suppression of weeds and non-native species, which are designed to allow the area to grow back to its natural state. The lands surround Dragon Run an important natural area and tributary of the Delaware River and will provide a protective buffer for the waterway and its associated wetlands.

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