DNREC reaches settlement with Delaware City Refinery over $150,000 fine

State regulators and the Delaware City Refinery have reached a settlement in their legal fight over where the company can ship crude oil – a battle that last year resulted in a $150,000 fine.

The two sides have agreed to a deal "in principle" but declined to release any details on Friday.

"The parties are continuing to work together to finalize the agreement, which DNREC will share when it is finalized," agency spokesman Michael Globetti said.

News of the settlement comes just days before a state board was slated to hear arguments in the refinery's appeal of the fine. That hearing before the Environmental Appeals Board was removed from the state's public meeting calendar on Friday.

"We do not comment on active, pending legal matters," refinery spokeswoman Lisa Lindsey said.

The recent turn of events marks the latest chapter in a convoluted, five-year dispute among refinery owner PBF Energy, state regulators and environmentalists that has spanned two governors and three heads of the Delaware Department of Natural Resources and Environmental Control.

State officials and environmentalists both maintain a 2013 order issued by former DNREC Secretary Collin O'Mara limited crude oil barge shipment from the Delaware City Refinery to another facility PBF Energy owns in Paulsboro, New Jersey.

Refinery officials, meanwhile, insist they have the right to ship crude from Delaware City to anywhere in the world.

The dispute first came to a head in late 2015 after a whistleblower at a refinery in Philadelphia informed the Delaware Department of Justice that the Delaware City Refinery had sent an oil barge up the Schuylkill River in defiance of O'Mara's order.

For more than a year, refinery officials told state regulators the shipment occurred in 2013 and was the one and only time they sent crude by barge to anywhere other than Paulsboro. They later repeated that assertion to The News Journal.

Attorney General Matt Denn’s office strongly encouraged then-DNREC Secretary David Small to confront PBF Energy about the shipment.

But, as detailed in a 2016 News Journal article, the refinery's assertion that there had only been a "one-time shipment" helped to convince Small not to impose any sanctions against PBF Energy.

That claim proved to be untrue, however.

Just days before The News Journal published its article, PBF Energy quietly informed state officials that it had actually sent 17 barges to sites outside of Paulsboro – all during a two-week period in 2014.

The refinery has never publicly offered an explanation for the discrepancy. But PBF officials and their lawyers have characterized the prior claims as "a factual misstatement." They also insist the refinery never "strategically undertook to intentionally deceive DNREC." 

Yet, the sudden reversal convinced Small to issue a $150,000 fine – the maximum allowed for the infraction – during his final days in office.

PBF Energy filed an appeal of that fine in May, just months after newly elected Gov. John Carney took office and appointed Shawn Garvin, a former regional administrator with the U.S. Environmental Protection Agency, as the new head of DNREC.

Since then, Carney has repeatedly come to the defense of PBF Energy. Earlier this month, he wrote a letter to EPA Administrator Scott Pruitt on PBF's behalf asking to have Delaware removed from federal renewable fuel mandates that are costing the refinery millions in profit.

Garvin, meanwhile, has not handed down a single fine against the refinery despite the company racking up at least dozen permit violations since the start of 2016 – the most violations incurred by any one company during that time period.

Carney also infuriated many environmental and civic groups by signing a bill last year that amended the Coastal Zone Act, the state's landmark environmental law, for the first time in its nearly 50-year history.

Activist Amy Roe said she is disappointed the state has agreed to a settlement rather than hold the refinery accountable.

"It's not very transparent and, to me, it indicates that Carney will do whatever the refinery asks," she said. "This fine could have brought some closure around what the refinery is and is not allowed to do. We'll have to see the settlement, but I'm sure we're not going to get that now."

Contact reporter Scott Goss at (302) 324-2281, sgoss@delawareonline.com or on Twitter @ScottGossDel.

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