Item 3. LEGAL PROCEEDINGS

LITIGATION

We incorporate by reference into this Item our disclosures made in Part II, Item 8 of this report included in Note 1 of Notes to Consolidated Financial Statements under the caption “Legal Contingencies.”

ENVIRONMENTAL ENFORCEMENT MATTERS

While it is not possible to predict the outcome of the following environmental proceedings, if any one or more of them were decided against us, we believe that there would be no material effect on our financial position, results of operations, or liquidity. We are reporting these proceedings to comply with U.S. SEC regulations, which require us to disclose certain information about proceedings arising under federal, state, or local provisions regulating the discharge of materials into the environment or protecting the environment if we reasonably believe that such proceedings have the potential to result in monetary sanctions of $300,000 or more.

U.S. EPA (Fuels). In our Annual Report on Form 10-K for the year ended December 31, 2018, we reported that we had an outstanding Notice of Violation from the U.S. EPA related to violations from a 2015 Mobile Source Inspection. In the fourth quarter of 2020, we negotiated a final Consent Order with the U.S. EPA resolving the matter upon entry of the Consent Order on December 29, 2020.

U.S. EPA (Benicia Refinery). On December 11, 2020, the U.S. EPA issued a Notice of Potential Violations and Opportunity to Confer related to a series of inspections conducted by the U.S. EPA in 2019, arising out of the 2017 Pacific Gas and Electric Company power outage, and a 2019 emissions event. We are working with the U.S. EPA to resolve this matter.

Attorney General of the State of Texas (Texas AG) (Corpus Christi Asphalt Plant). In our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, we reported that we had received a letter and draft Agreed Final Judgment from the Texas AG related to a contaminated water backflow incident that related to the Valero Corpus Christi Asphalt Plant. The draft Agreed Final Judgment assessed proposed penalties in the amount of $1.3 million. We are working with the Texas AG to resolve this matter.

Texas AG (Port Arthur Refinery). In our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, we reported that the Texas AG had filed suit against our Port Arthur Refinery in the 419th Judicial District Court of Travis County, Texas, Cause No. D-1-GN-19-004121, for alleged violations of the Clean Air Act seeking injunctive relief and penalties. We are working with the Texas AG to resolve this matter.