Social Responsibility

• Policies, Beliefs and Expectations
• Emergency Preparedness
• Governance
• Environmental Stewardship
• Socio-Economic
• Workforce
• Reporting
  • 2010 CSR Report
  • 2009 CSR Report
    • About This Report
    • Marathon-At-A-Glance
    • 2009 CEO's Message
    • CSR in Context
    • Governance, 2009
      • Anti-Corruption
      • Board Independence
      • Business Ethics
      • Political Engagement
      • Shareholder Resolutions
      • Transparency
      • 2009 Issues Report
    • Environmental Stewardship, 2009
    • Socio-Economic, 2009
    • Workforce, 2009
    • 2009 IPIECA/API Index
    • Report Glossary

2009 Issues Report (As of 2/26/10)

Marathon is involved in various legal and environmental proceedings, summarized here.
For additional information concerning other legal and environmental proceedings, please see Marathon's Annual Report and Form 10-K.

MTBE Litigation

Marathon, along with other refining companies, settled a number of lawsuits pertaining to methyl tertiary-butyl ether ("MTBE") in 2008. Currently, we are a defendant, along with other refining companies, in 27 cases in four states alleging damages for MTBE contamination. Like the cases that we settled in 2008, 12 of the remaining cases are consolidated in a multi-district litigation in the Southern District of New York for pretrial proceedings. The other 15 cases are in New York state courts (Nassau and Suffolk Counties). Plaintiffs in 26 of the 27 cases allege damages to water supply wells from MTBE contamination of groundwater, similar to the damages claimed in the cases settled in 2008. In the remaining case, the New Jersey Department of Environmental Protection is seeking the cost of remediating MTBE contamination and natural resources damages allegedly resulting from MTBE contamination of groundwater. We are vigorously defending these cases. We have engaged in settlement discussions related to the majority of these cases. Marathon voluntarily discontinued producing MTBE in 2002.

Product Contamination

A lawsuit filed in the U.S. District Court for the Southern District of West Virginia alleged that our Catlettsburg, Kentucky, refinery distributed contaminated gasoline to wholesalers and retailers for a period prior to August 2003, causing permanent damage to storage tanks, dispensers and related equipment, resulting in lost profits, business disruption and personal and real property damages. Following the incident, we conducted remediation operations at affected facilities and there was no permanent damage to wholesaler and retailer equipment. Class action certification was granted in August 2007. The court approved a settlement of the case on March 18, 2009, payment was made and the case was dismissed with prejudice.

U.S. EPA Montana Water Quality Ruling

In 2006, Marathon and other oil and gas companies joined the State of Wyoming in filing a petition for review against the U.S. Environmental Protection Agency ("EPA") in the U.S. District Court for the District of Wyoming. These actions seek a court order mandating the EPA to disapprove Montana's 2006 amended water quality standards, on grounds that the standards lack sound scientific justification, are arbitrary and capricious, and were adopted contrary to law. The water quality amendments at issue could require more stringent discharge limits and have the potential to require certain Wyoming coal bed methane operations to perform more costly water treatment or inject produced water. Approval of these standards could delay or prevent obtaining permits needed to discharge produced water to streams flowing from Wyoming into Montana. In February 2008, EPA approved Montana's 2006 regulations, and we amended our petition for review. The court stayed this case while the EPA mediated the matter between Montana, Wyoming and the Northern Cheyenne tribe. The mediation was unsuccessful; however, the Court ultimately vacated the EPA's approval of the 2003 and 2006 Montana standards and remanded the matter to the EPA with instructions for reconsideration. The federal government filed a Notice of Appeal, but subsequently filed a voluntary Motion to dismiss which was granted by the District Court. In sum, the EPA must now decide whether to approve or disapprove Montana's 2006 water quality standards consistent with the Court's remand instructions.

Colorado Storm Water

In 2008, the State of Colorado, through its Department of Public Health and Environment, filed a state court suit against Marathon and others alleging violations of storm water requirements in and around an upstream production facility. The matter was resolved in the third quarter of 2009 with the parties paying a penalty of $280,000 of which our share was $98,000.

Powder River Basin BLM Record of Decision

The U.S. Bureau of Land Management (BLM) completed multi-year reviews of potential environmental impacts from coal bed methane (CBM) development on federal lands in the Powder River Basin, including those in Wyoming. The BLM signed a Record of Decision ("ROD") on April 30, 2003, supporting increased CBM development. Plaintiff environmental and other groups filed suit in May 2003 in federal court against the BLM to stop CBM development on federal lands in the Powder River Basin until the BLM conducted additional environmental impact studies. Marathon intervened as a party in the ongoing litigation before the Wyoming Federal District Court. As these lawsuits to delay energy development in the Powder River Basin progressed through the courts, the Wyoming BLM continued to process permits to drill under the ROD. During the last quarter of 2008, the Court ruled in BLM's favor, finding its environmental studies and stewardship were adequate and protective under federal law. The plaintiffs have appealed this ruling to the 10th Circuit Court of Appeals and are currently awaiting oral arguments.

New Source Review Consent Decree

During 2001, Marathon entered into a New Source Review consent decree and settlement of alleged Clean Air Act ("CAA") and other violations with the U.S. EPA covering all of our refineries. The settlement committed us to specific control technologies and implementation schedules for environmental expenditures and improvements to our refineries over approximately an eight-year period, which are now substantially complete. In addition, we have been working on certain agreed-upon supplemental environmental projects as part of this settlement of an enforcement action for alleged CAA violations and these have been completed. As part of this consent decree, we were required to conduct evaluations of refinery benzene waste air pollution programs (benzene waste "NESHAPS"). Subject to entering a formal consent decree or further amendment of the New Source Review consent decree to memorialize our understanding, Marathon agreed with the U.S. Department of Justice and EPA to pay a civil penalty of $408,000 and conduct supplemental environmental projects of approximately $1 million, as part of a settlement of an enforcement action for alleged CAA violations relating to benzene waste NESHAPS. We anticipate entering into a formal consent decree or amendment to resolve these matters in 2010.

U.S. OHSA National Emphasis Program

The U.S. Occupational Safety and Health Administration ("OSHA") previously announced a National Emphasis Program to inspect most domestic oil refineries. The inspections began in 2007 and focused on compliance with OSHA Process Safety Management requirements. OSHA or state-equivalent agencies have conducted inspections at Marathon's Canton, Robinson, Catlettsburg, Detroit, Texas City and St. Paul Park refineries with agreed-to penalties of $321,500 and $135,000 imposed in Canton and Texas City, respectively. No penalties were imposed as a result of the other inspections. Inspections may occur at Garyville in 2010 and further enforcement action by OSHA or an equivalent state agency may result.