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Independent refiner Tesoro Corp. (TSO - Analyst Report) – along with two of its subsidiaries – has agreed to shell out $1.1 million to settle claims with the Environmental Protection Agency (EPA) regarding the infringement of federal air pollution laws.

In its complaint, the environmental watchdog has accused the company of failing to come up with adequate checks and balances to ascertain for any harmful pollutants during the production of gasoline. As per the agency, Tesoro has violated the Clean Air Act at four refining units – Salt Lake City (Utah), Mandan (North Dakota), Anacortes (Washington) and Kenai (Alaska) – that manufactures gasoline.   

The EPA added that Tesoro was unable to comply with vital safeguards like record-keeping, reporting, sampling and testing standards under the former’s fuel program. This may lead to unhealthy emissions in violation of U.S. standards and deteriorate the nation’s air quality.

Apart from the monetary penalty, Tesoro will have to put into practice a plan to prevent any such future lapses.

San Antonio, Texas-based Tesoro is an independent refiner and marketer of refined petroleum products in the western U.S. The company operates in two segments: Refining (accounts for bulk of the company’s operating income) and Retail.

The Refining segment manufactures and sells gasoline and gasoline-blend stocks, jet fuel, diesel fuel, and other refined products to customers, primarily in the mid-continental and the western U.S. This segment also markets liquefied petroleum gas, petroleum coke, and asphalt.

Tesoro currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at Alon USA Energy Inc. (ALJ - Snapshot Report), Ferrellgas Partners L.P. (FGP - Analyst Report) and Phillips 66 (PSX - Analyst Report) as good buying opportunities. These oil refiners and marketers – sporting a Zacks Rank #2 (Buy) – have solid secular growth stories with potential to rise from current levels.

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