Valero 2015 Annual Report Download - page 21

Table of Contents
recognize gain in an amount equal to the excess of the fair market value of shares of CST common stock distributed to our holders on
the Spin-off date over our tax basis in such shares of CST common stock. Moreover, we could incur significant U.S. federal income tax
liabilities if it ultimately were determined that certain internal transactions undertaken in anticipation of the Spin-off were taxable.
Under the terms of the tax matters agreement we entered into with CST in connection with the Spin-off, we generally are responsible for
any taxes imposed on us and our subsidiaries in the event that the Spin-off and/or certain related internal transactions were to fail to
qualify for tax-free treatment. However, if the Spin-off and/or such internal transactions were to fail to qualify for tax-free treatment
because of actions or failures to act by CST or its subsidiaries, CST would be responsible for all such taxes. If we were to become liable
for taxes under the tax matters agreement, that liability could have a material adverse effect on us. The Spin-off is more fully described
in Note 3 of Notes to Consolidated Financial Statements.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 3. LEGAL PROCEEDINGS
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We incorporate by reference into this Item our disclosures made in Part II, Item 8 of this report included in Note 11 of Notes to
Consolidated Financial Statements under the caption “Litigation Matters.”
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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 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 will result in monetary sanctions of $100,000 or more.
People of the State of Illinois, ex rel. v. The Premcor Refining Group Inc., et al. , Third Judicial Circuit Court, Madison County (Case
No. 03-CH-00459, filed May 29, 2003) (Hartford Refinery and terminal). The Illinois EPA has issued several Notices of Violation
(NOVs) alleging violations of air and waste regulations at Premcor’s Hartford, Illinois terminal and closed refinery. We are negotiating
the terms of a consent order for corrective action.
Bay Area Air Quality Management District (BAAQMD) (Benicia Refinery). We currently have multiple outstanding Violation Notices
(VNs) issued by the BAAQMD. These VNs are for various alleged air regulation and air permit violations at our Benicia Refinery and
asphalt plant. In the fourth quarter of 2015, we entered into an agreement with BAAQMD to resolve various VNs and continue to work
with the BAAQMD to resolve the remaining VNs.
South Coast Air Quality Management District (SCAQMD) (Wilmington Refinery). We currently have multiple NOVs issued by the
SCAQMD. These NOVs are for alleged reporting violations and excess emissions at our Wilmington Refinery. In the fourth quarter of
2015, we entered into an agreement to resolve various NOVs, and we continue to work with the SCAQMD to resolve the remaining
NOVs.
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