Social Responsibility

• Policies, Beliefs and Expectations
• Emergency Preparedness
• Governance
• Environmental Stewardship
• Socio-Economic
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• Reporting
  • 2010 CSR Report
    • About This Report
    • Marathon At A Glance
    • 2010 CEO's Message
    • CSR in Context
    • Governance, 2010
      • Board Independence
      • Business Ethics and Transparency
      • Participating in Industry Campaigns
      • Political Contributions
      • Preventing Corruption
      • Public Advocacy and Lobbying
      • Shareholder Resolutions
      • Transparency of Payments to Foreign Governments
      • 2010 Issues Report
    • Environmental Stewardship, 2010
    • Socio-Economic, 2010
    • Workforce, 2010
    • Case Study - Emergency Preparedness
    • IPIECA/API and Global Compact Index
    • Report Glossary
  • 2009 CSR Report

2010 Issues Report (As of February 28, 2011)

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 on Form 10-K.

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. EPA in the U.S. District Court for the District of Wyoming. These actions sought a court order mandating the U.S. 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, the U.S. EPA approved Montana's 2006 regulations, and we amended our petition for review. The court stayed this case while the U.S. EPA mediated the matter between Montana, Wyoming and the Northern Cheyenne tribe. The mediation was unsuccessful; however the Court ultimately vacated the U.S. EPA's approval of the 2003 and 2006 Montana standards and remanded the matter to the U.S. 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.

New Mexico Air Quality Litigation

In December 2008, the State of New Mexico filed a state court suit against Marathon alleging violations of the New Mexico Air Quality Control Act. The lawsuit arose out of a February 2008 notice of violation issued to our Indian Basin Natural Gas Plant. We believe there has been no adverse impact to public health or the environment, having implemented voluntary emission reduction measures over the years. We have finalized a consent order and the court has approved it. The order required a cash penalty of $610,560 plus plant compliance projects and supplemental environmental projects estimated to cost over $5 million. We paid the cash penalty of $610,560 and entered into a Supplemental Consent Decree, approved by the court on July 30, 2010, pursuant to which we would pay $2.7 million as a civil penalty in lieu of one of the proposed supplemental environmental projects. All of these payments were made on August 11, 2010. Installation of the plant compliance projects was completed on November 15, 2010, by the current operator of the plant. We were the operator and part owner of the plant through June 2009. We are working with the other plant owners to obtain reimbursement for their share of these costs. The State of New Mexico has agreed the case should be dismissed and the consent decree terminated. A draft joint motion to the court has been prepared and was submitted to the New Mexico Environment Department (NMED) for approval. On March 9, 2011, the New Mexico state court dismissed this matter, finding that Marathon had complied in full with the terms and conditions of the Supplemental Consent Decree. The Supplemental Decree has also been terminated by the March 9, 2011, order of the court. 

Powder River Basin U.S. BLM Record of Decision

The U.S. Bureau of Land Management ("U.S. BLM") completed multi-year reviews of potential environmental impacts from coal bed methane development on federal lands in the Powder River Basin, including those in Wyoming. The U.S. BLM signed a Record of Decision ("ROD") on April 30, 2003, supporting increased coal bed methane development. Plaintiff environmental and other groups filed suit in May 2003 in federal court against the U.S. BLM to stop coal bed methane development on federal lands in the Powder River Basin until the U.S. BLM conducted additional environmental impact studies. We 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 U.S. BLM continued to process permits to drill under the ROD. During the last quarter of 2008, the Court ruled in U.S. BLM's favor, finding its environmental studies and stewardship were adequate and protective under federal law. Plaintiffs appealed this ruling to the 10th Circuit Court of Appeals, which affirmed the district court's decision on June 18, 2010. Plaintiffs did not seek certiorari from the Supreme Court of the United States in this matter. Thus, this matter is concluded.

Pipeline Enforcement Matters

The U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration ("PHMSA") issued a Notice of Probable Violation ("NOPV"), Proposed Civil Penalty, and Proposed Compliance Order to Marathon Pipe Line LLC ("MPL") related to the March 10, 2009, incident at St. James, Louisiana. PHMSA has proposed a civil penalty in the amount of approximately $1 million. PHMSA granted MPL extensions in which to respond to the Notice of Probable Violation. On January 25, 2011, MPL filed its request for a hearing in response to the NOPV.

CERCLA and Related Waste Site Clean-ups

Claims under CERCLA and related state acts have been raised with respect to the clean-up of various waste disposal and other sites. CERCLA is intended to facilitate the clean-up of hazardous substances without regard to fault. Potentially responsible parties ("PRPs") for each site include present and former owners and operators of, transporters to and generators of the substances at the site. Liability is strict and can be joint and several. Because of various factors including the difficulty of identifying the responsible parties for any particular site, the complexity of determining the relative liability among them, the uncertainty as to the most desirable remediation techniques and the amount of damages and clean-up costs and the time period during which such costs may be incurred, Marathon is unable to reasonably estimate our ultimate cost of compliance with CERCLA.

Additional projections of spending for and/or timing of completion of such projects are provided in Marathon's Form 10-K. Please see this document (link at top of page) for details. As indicated, these are forward-looking statements, based on certain assumptions including, but not limited to, the factors provided in the preceding paragraph. To the extent that these assumptions prove to be inaccurate, future spending for and/or timing of completion of environmental projects may differ materially from the information contained in the Form 10-K.

New Source Review Consent Decree

During 2001, Marathon entered into a New Source Review consent decree and settlement of alleged Clean Air Act 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 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"). Pursuant to a modification to our New Source Review consent decree, we have agreed with the U.S. Department of Justice and the U.S. 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 Clean Air Act violations relating to benzene waste NESHAPS. This modification was finalized as of June 30, 2010, and the civil penalty has been paid.

U.S. OSHA National Emphasis Program

OSHA previously announced a National Emphasis Program to inspect most domestic oil refineries. The inspections began in 2007 and focused on compliance with the OSHA Process Safety Management requirements. OSHA or state-equivalent agencies have conducted inspections at Marathon's Canton, Robinson, Catlettsburg, Detroit and Texas City 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. An inspection occurred at Garyville in 2010; however no enforcement action by OSHA has resulted.

U.S. EPA Motor Fuels Allegations

In January 2011, the U.S. EPA notified Marathon of 18 alleged violations of various statutory and regulatory provisions related to motor fuels, some of which we had previously self-reported to the U.S. EPA. No formal enforcement action has been commenced and no demand for penalties has been asserted by the U.S. EPA in connection with these alleged violations. However, it is possible that U.S. EPA could seek penalties in excess of $100,000 in connection with one or more of the alleged violations.