A similar settlement between Northeastern US refiner Sunoco and the EPA was announced on Thursday morning.

Valero's agreement is part of the EPA's Petroleum Refinery Initiative, which began in 1998 to bring US refineries into compliance with the US Clean Air Act. The settlements are negotiated under a lawsuit brought by the Justice Department.

So far, the EPA has negotiated settlements with companies operating 65 percent of US refining capacity, according to the statement.

Valero Chairman and Chief Executive Bill Greehey said the "vast majority" of issues covered by the settlement with EPA were problems with permits that occurred before Valero purchased the refineries.

"We're happy to have the agreement completed and we're looking forward to working with the EPA and the states to implement it," Greehey said. "Our emphasis was on providing proven state-of-the-art hardware and technology to reduce emissions, rather than focusing on operational restrictions to achieve emission reduction targets."

Valero has expanded rapidly since 1998 by purchasing 13 refineries in the United States, Canada and Aruba. The company agreed to purchase rival Premcor Inc., which operates four refineries, for $6.9 billion earlier this. That agreement is awaiting approval by the US Federal Trade Commission.

Sunoco agreed to spend $285 million on pollution-reducing equipment at its refineries and pay a $3 million civil penalty as well as $3.9 million on other environmental projects.

Tesoro Corp. as part of the agreement, will pay for projects to reduce emissions at its Golden Eagle refinery in Martinez, California, which it purchased from Valero in 2002.

Refineries owned by Valero covered by the agreement are located in California, Colorado, Louisiana, Oklahoma, and Texas. Refineries owned by Sunoco covered by the agreement are located in Ohio, Oklahoma and Pennsylvania.

Those states were also parties to the settlement.