Delaware City Refinery fined $150K for crude oil shipments

State regulators on Friday issued a $150,000 fine to Delaware City Refining Co. for violating a DNREC order that limits where the company can ship crude oil by barge.

That order, issued in 2013 by Colin O'Mara, then-secretary of the Delaware Department of Natural Resources and Environmental Control, allowed refinery owner PBF Energy to ship crude oil from its Delaware City-area plant for the first time, but limited the destination of those shipments only to another refinery the company owns in Paulsboro, New Jersey.

A recent DNREC review of the company's internal documents revealed the refinery sent 17 barges – collectively totaling 35.7 million gallons of oil – to three other destinations during 2014. Those destinations included Philadelphia Energy Solutions on the Schuylkill River; Bayway Refinery in Linden, New Jersey; and the Trainer Refinery on the Delaware River.

PBF Energy "concealed" those illegal shipments from DNREC and later misrepresented how many shipments had occurred when finally confronted by state regulators, current DNREC Secretary David Small determined.

"They certainly didn't disclose all of the facts initially," Small said when asked Friday if PBF Energy had misled state officials. "I won't speculate on why that is."

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Refinery officials have since acknowledged they made "inaccurate" statements, but have steadfastly maintained they did not "intentionally or knowingly provide incorrect information."

Those "inaccurate" statements were provided when DNREC first confronted refinery officials over shipments to other destinations in late 2015. That meeting occurred after a whistleblower at a refinery in Philadelphia tipped off Attorney General Matt Denn's office that crude oil barges were arriving there from Delaware City in violation of O'Mara's order.

At that time, refinery officials assured DNREC officials that they had made only a single, "atypical" shipment to a destination other than Paulsboro – a claim they repeated to The News Journal in late 2016.

Refinery officials have maintained they did nothing wrong by making those shipments, arguing the permit that adjoined O'Mara's order did not place any restrictions on the destination of their barge shipments. PBF Energy has repeatedly told shareholders it has the ability to ship crude oil from Delaware City to anywhere in the world.

“It’s our position that we are not limited to where the destination of the cargo goes,” John Deemer, the refinery’s health, safety and environmental manager, told The News Journal last year.

Despite disagreeing with those claims, Small chose not to sanction the refinery then based on those claims, even as the state Department of Justice expressed concerns about the refinery's actions.

A story published by The News Journal in December detailed how the state took no action against the refinery for making that "one-time" shipment, which reportedly arrived at the Philadelphia Energy Solutions Refinery in the fall of 2013.

Just days before that article was published, the refinery informed DNREC and the Delaware Department of Justice it had actually made two shipments – both in 2014 and both involving multiple barges. The letter PBF sent to the state did not detail exactly how many barges were sent or where they arrived.

Less than a week after receiving that letter, DNREC issued a violation notice to PBF Energy and demanded the company hand over documents and other information relating to its crude-by-barge shipments.

Environmentalists cheered the fine levied against the refinery on Friday.

"I think it was certainly the right thing to do," longtime activist Amy Roe said. "We've been asking DNREC about this issue for a very long time, and I'm delighted it has finally come to some sort of resolution."

Delaware Audubon Society submitted a Freedom of Information Act request about the refinery's third-party shipments last summer that DNREC still has not fulfilled, Roe said.

"Ultimately, it was The News Journal's coverage that brought some transparency to the situation," she said.

The News Journal has sought additional information through the Freedom of Information Act about how state officials dealt with the refinery's initial claims about shipments made to destinations other than Paulsboro. In December, a FOIA request was submitted seeking copies of emails between top ranking DNREC officials and the office of then-Gov. Jack Markell referencing those shipments.

The Delaware Department of Justice on Friday ruled those emails are exempt from the state’s public records disclosure law. Chief Deputy Attorney General LaKresha Roberts said the emails are “investigatory files compiled for civil or criminal law enforcement purposes and, as a result, are not ‘public records.’”

That determination came after DNREC initially denied the FOIA request claiming the emails were outside the bounds of the public records law because of attorney-client privilege and other exemptions.

"Without personally searching and reviewing every email within the scope of the request, I would expect to find that lawyers were included, and that the communications were privileged," Deputy Attorney General Ralph Durnstein said. “Given the unknown but potentially serious magnitude of the violations, DNREC has engaged with its lawyers at every step of the investigation."

David Ledford, The News Journal's executive editor, said the newspaper would continue to fight for information sought in the FOIA.

Small said the $150,000 fine he handed down to the refinery on Friday is based on the $10,000 per day maximum fine allowed by law and the 15 days in which the illegal shipments occurred.

"I think it's terrific DNREC is exercising its full authority," Roe said. "But the question is whether the $10,000 per day cap goes far enough. I think DNREC should be given more latitude for dealing with this kind of infraction."

The refinery has 30 days to appeal the penalty.

Refinery spokeswoman Lisa Lindsey said the company is evaluating its options.

"We disagree with DNREC’s conclusion that violations occurred," she said. "The shipments to other locations did occur. However, the refinery believed and still believes that the shipments were permissible under the permit and order."

If PBF Energy believes that is the case, the company should have sought a status decision from DNREC, Small said.

"The order Secretary O'Mara issued was based on representations the refinery made," he said. "Now as then, if the facts or circumstances changed, they should seek a ruling based on those new facts."

Such a determination likely would not be made by Small, who soon could be out as DNREC secretary. Gov. John Carney, elected in November, nominated Shawn Garvin, a former Environmental Protection Agency regional administrator, to head the department just before the new year.

Republicans in the state Senate effectively blocked Garvin's confirmation a month later. Democrat Stephanie Hansen won a special election to fill newly elected Lt. Gov. Bethany Hall Long's Senate seat on Feb. 25, giving the party a one-vote advantage in the Senate. A vote on Garvin's confirmation is expected Wednesday.

Small said DNREC officials have discussed instituting additional oversight protocols to ensure the refinery follows the 2013 order, including periodic disclosures and additional monitoring. But, he said, no final decision has been made.

"I think it behooves the agency to stay in close communication with the refinery on this issue," Small said. "The next secretary certainly will have some discretion to pursue that, and there may well be a system put in place, but there is not one yet."

Contact business reporter Scott Goss at (302) 324-2281, sgoss@delawareonline.com or on Twitter @ScottGossDel. Contact Karl Baker at kbaker@delawareonline.com or (302) 324-2329. Follow him on Twitter @kbaker6.