Citgo Petroleum and Subsidiary Found Guilty of Environmental Crimes

WASHINGTON — A federal jury in Corpus Christi, Texas, found CITGO Petroleum Corp., and its subsidiary, CITGO Refining and Chemicals Co. (collectively CITGO) guilty of two felony criminal violations of the Clean Air Act, the Justice Department announced today.

CITGO was convicted on two counts of operating two huge open top tanks, tanks 116 and 117, without installing the proper emission controls required by federal law at its Corpus Christi East Plant Refinery. The tanks were used as oil water separators but were not equipped with either a fixed-roof, vented to a control device or a floating-roof. Oil water separators upstream of the tanks never worked to remove the oil from the wastewater before the oil entered the tanks. CITGO learned within months after the two tanks went into operation that the upstream oil water separators did not work.

For nearly 10 years, CITGO removed oil from the surface of tanks with vacuum trucks and did not take the steps necessary to install proper emission control equipment to prevent the emission of volatile organic compounds, including benzene, from the tanks. Hundreds of thousands of barrels of oil were vacuumed from the two tanks over the years. During an unannounced inspection by Texas Commission on Environmental Quality (TCEQ), a ten foot layer of oil was discovered in tank 116 and a 7.5 foot layer of oil in tank 117. TCEQ determined that there was 4.5 million gallons of oil in the tanks.

“CITGO violated the law when it failed to install and operate proper emissions control equipment,” said Ronald J. Tenpas, Acting Assistant Attorney General for the Environment and Natural Resources Division. “Today’s convictions are a strong signal to the industry that emissions controls are not optional and those who knowingly disregard the regulations will face the consequences.”

“CITGO failed to install required emissions controls, which emitted benzene, a known carcinogen, into the air,” said Granta Y. Nakayama, EPA’s Assistant Administrator for the Office of Enforcement and Compliance Assurance. “Today’s jury conviction sends a clear message that neither the public nor the government will allow corporations to knowingly break the law and pose a risk to the local community and the environment.”

CITGO was indicted along with environmental manager Philip Vrazel by a federal grand jury in Corpus Christi on Aug. 9, 2006. The indictment contained 4 felony counts of violations of the Clean Air Act (CAA), one felony count of false statements and 5 misdemeanor counts of the Migratory Bird Treaty Act (MBTA). The MBTA charges were severed and Vrazel and the company will be tried on July 9, 2007. The court has yet to determine whether government will be able to go forward on the false statement charge. An indictment contains only allegations. The defendants are presumed innocent unless and until proven guilty. Sentencing for CITGO is scheduled for Oct. 18, 2007. The company faces fines of up to $500,000 per count or twice the gross economic gain (whichever is greater) and five years of probation.

This case is being prosecuted by Senior Litigation Counsel Howard P. Stewart and Trial Attorney Lary Larson of the Justice Department’s Environmental Crimes Section and William R. Miller, Special Assistant U.S. Attorney for the Southern District of Texas. The case is the result of an investigation by the Texas Environmental Crimes Task Force including the EPA, the U.S. Fish and Wildlife Service, the Federal Bureau of Investigation, the Texas Parks and Wildlife Division, and the TCEQ.