A federal grand jury has indicted Houston-based Phillips 66 on several charges related to alleged Clean Water Act (CWA) violations.

 

Phillips is charged with two counts of negligently violating the CWA and four counts of knowingly violating the CWA in incidents that allegedly discharged thousands of gallons of industrial wastewater from the Phillips Carson oil refinery into the Los Angeles County sewer system, after which the company failed to report the violations as required, according to a November 21, 2024, Department of Justice (DOJ) news release.

Phillips 66 officials have acknowledged the charges and stated the company is prepared to defend itself.

“Phillips 66 will continue its cooperation with the U.S. Attorney’s office and is prepared to present its case in these matters in court,” a Phillips 66 spokesperson said in an e-mailed statement. “The company remains committed to operating safely and protecting the health and safety of our employees and the communities where we operate.”

If convicted on all charges, Phillips 66 would face a statutory maximum sentence of 5 years’ probation on each count and up to $2.4 million in fines.

An arraignment for the company is expected over the next few weeks in the U.S. District Court for the Central District of California, located in Los Angeles.

“Protecting our environment is key to protecting our community,” U.S. Attorney Martin Estrada says in the DOJ press release. “Just like the rest of us, corporations have a duty to follow the law, so when companies contaminate, they must be held accountable. My office will continue to be vigilant in safeguarding our natural resources for all to enjoy.”

“Illegally discharging pollutants into the sewer system violates the [CWA],” Special Agent in Charge Kim Bahney of the EPA’s Criminal Investigation Division says in the DOJ’s release. “The charges today illustrate EPA’s commitment to protecting the environment and ensuring accountability for those that neglect or fail to abide by our nation’s environmental laws.”

According to the indictment, Phillips allegedly discharged industrial wastewater that contained a concentration of oil and grease more than 300 times the allowed limit in its permit into the county sewage system for two and a half hours on November 24, 2020.

The county sewage system is managed by the Los Angeles County Sanitation Districts (LACSD).  The indictment states the company’s facility in Carson, California, failed to inform the LACSD of its noncompliant wastewater discharge.

“During this approximately two-and-a-half-hour period, LACSD roughly estimated that the Phillips 66 facility in Carson discharged approximately 310,000 gallons of non-compliant industrial wastewater, which contained approximately 64,000 lbs. of oil and grease, to LACSD’s sewer system,” the DOJ press release adds. “The energy company’s industrial wastewater pretreatment system process controls and practices were inadequate to prevent or quickly address the non-compliant discharge.

“In December 2020, LACSD issued Phillips multiple notice of violations for discharging the industrial wastewater containing an excessive concentration of oil and grease, and failing to notify LACSD about the discharge, which adversely affected an LACSD facility. The following month, a Phillips manager wrote to LACSD, acknowledged its non-compliant industrial wastewater discharge, and noted that the company would ‘retrain operations personnel’ on such situations and the procedure to notify LACSD when it happens.”

The indictment also alleges that, in February 2021, the Carson refinery again discharged, for about five and a half hours, approximately 480,000 gallons of noncompliant industrial wastewater, which contained at least 33,700 pounds of oil and grease, into the LACSD’s sewer system.

“In March 2021, LACSD …  issued notices of violations to Phillips for discharging industrial wastewater which adversely affected an LACSD facility and for its failure to notify the LACSD about said wastewater discharge,” the DOJ’s release continues. “Again, a Phillips manager at its Carson facility wrote to LACSD and acknowledged the non-compliant industrial wastewater discharge and the company’s failure to notify authorities of the discharge.”

The EPA is currently investigating this matter.

Just last month, Phillips announced it will cease operations at its 650-acre refinery located in Carson and Wilmington by the fourth quarter of 2025. The location supplies about 8 percent of California’s gasoline, the Los Angeles Times reports.

The company stated it plans to work with the state of California to supply fuel markets and meet consumer demand.

“As the California Energy Commission’s analysis has indicated, expanding supply capabilities will be critical. Phillips 66 supports these efforts and will work with California to maintain current levels and potentially increase supplies to meet consumer needs,” states the company news release. “The company will supply gasoline from sources inside and outside its refining network as well as renewable diesel and sustainable aviation fuels from its Rodeo Renewable Energy Complex in the San Francisco Bay area.”

“The twin refinery facilities, about five miles apart and linked by pipeline, have operated for more than a century under Phillips 66 and several other owners,” the Times notes. “They have been cited repeatedly by local air regulators for releasing toxic chemicals, including two large fires in 2019 that resulted in plumes of smoke and hazardous chemicals drifting into nearby communities.

“In those 2019 fires, Regulators found that refinery workers had repaired a malfunctioning pump but failed to inspect the equipment after the repairs.  Phillips 66 was later cited by the EPA.”

In both incidents that are the subject of the six-count indictment Phillips is currently facing, the LACSD “managed to collect the contaminated water and prevent it from reaching the ocean,” the Times continues. “But the massive deluge of oil and grease presented a risk to workers at the plant as it could have resulted in a buildup of flammable methane and exploded.”

“This oil and grease is a dangerous, flammable substance that creates a hazard to the plant and all the staff working at the plant,” Estrada says in the Times article.

The LACSD is currently determining whether its Carson wastewater treatment plant sustained any permanent damage from the two incidents. According to the Times article, if lasting damage is found, Phillips will be held responsible for those damages.

“At this point, we don’t have an estimate,” Estrada says. “But we will work with the county, work with a lot of treatment facilities to determine what if any damage occurred, and to do everything we can to make sure they’re made whole.”

The U.S. attorney’s office says it’s confident in its case against Phillips and expects convictions.

“The case is one of the most noteworthy environmentally related criminal prosecutions by the U.S. attorney’s office in Los Angeles in recent memory,” according to the Times. “The office previously brought a felony [CWA] case against a Texaco subsidiary in 2001 for discharging oil-laden wastewater into Dominguez Channel. That company pleaded guilty and was fined $4 million.”