8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 16, 2005

VALERO ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-13175		74-1828067
(State or other jurisdiction of incorporation)	(Commission File Number)		(IRS Employer Identification No.)
One Valero Way San Antonio, Texas		78249
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code: (210) 345-2000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01Other Events.

On June 16, 2005, Valero Energy Corporation (the “Company”) issued a press release announcing its settlement with the U.S. Environmental Protection Agency and several states under the Clean Air Act. In connection with the settlement, Valero will invest approximately $785 million in environmental projects through 2012 to reduce emissions across Valero’s U.S. refining system. In addition, Valero will pay a $5.5 million civil penalty and spend approximately $5.5 million on supplemental environmental projects in states where Valero’s refineries are located. A copy of the Company’s press release is filed with this report as Exhibit 99.1, and is incorporated herein by reference.

Item 9.01Financial Statements and Exhibits.

(c)Exhibits.

99.1Press Release dated June 16, 2005.

Safe Harbor Statement

Statements in this report that state the Company’s or its management’s expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.  The Company’s actual results could differ materially from those projected in such forward-looking statements.  Factors that could affect those results include those mentioned in the documents that the Company has filed with the Securities and Exchange Commission.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	VALERO ENERGY CORPORATION
Date: June 17, 2005	By:	/s/ Jay D. Browning
		Jay D. Browning
		Vice President and Secretary

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EXHIBIT INDEX

Number	Exhibit
99.1	Press Release dated June 16, 2005.

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE	CONTACT:
	Mary Rose Brown (Media)
	(210) 345-2314
	Eric Fisher (Investor Relations)
	210-345-2896

VALERO, EPA AGREEMENT TO RESULT IN

ADDITIONAL CLEAN AIR BENEFITS

SAN ANTONIO, June 16, 2005 – Valero Energy Corporation (NYSE: VLO), which uses some of the most advanced environmental controls and has one of the cleanest baseline emission records in the petroleum refining industry, today announced an agreement with the U.S. Environmental Protection Agency (EPA) and the states of Texas, Louisiana, Oklahoma, New Jersey and Colorado, to invest more than $700 million in environmental improvement projects to further reduce emissions across the company’s U.S. refining system.  The agreement is part of the EPA’s industry-wide Refinery Enforcement Initiative, an ongoing program in which the EPA and refiners enter into agreements for the installation of significant new emission control equipment based on alleged past environmental permitting issues at U.S. refineries.  The Valero agreement includes more refineries than any other settlement to date.  Included in the agreement are Valero’s 12 current U.S. refineries along with its recently divested Denver refinery and Tesoro’s Golden Eagle refinery in Martinez, CA, which Valero was required to divest as a condition of merger approval with Ultramar Diamond Shamrock at the close of 2001.

Valero has had unprecedented growth over the last seven years, acquiring 14 refineries in that period, and has proactively invested hundreds-of-millions of dollars to increase production of environmentally clean fuels and to improve the environmental performance of all of its refineries.

“Our first priority at every refinery we have acquired has been to improve safety, reliability and environmental performance, and as a result, our baseline emission data shows that we are one of the cleanest operators in the industry,” said Bill Greehey, chairman and CEO of Valero.  “We struggled with this enforcement initiative because we are confident that we have met the requirements of the Clean Air Act and because the vast majority of the EPA’s concerns involved alleged permitting issues that occurred at the refineries long before Valero even acquired them, as well as issues at a refinery that we never operated.  But we’re happy to have the agreement completed and we’re looking forward to working with the EPA and the states to implement it.  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.”

The complex agreement includes the addition of new environmental control equipment and state-of-the-art technology and programs at each of Valero’s U.S. refineries.  The initiatives range from enhanced programs to detect and repair leaks on process equipment to major capital projects such as additional low-emission, energy-efficient heater and boiler systems and new scrubber systems to further reduce emissions from operating units.  The projects that Valero plans to implement are expected to reduce total emissions at its plants by 21,000 tons per year from its already clean baseline.

The agreement calls for the initiatives to be phased in over the next seven years and includes aggressive deadlines.  “Many of the projects were agreed to in principle during the course of negotiations over the last few years,” said Greehey.  “So the capital costs are already included in the capital budget forecasts we have previously announced, and we have started the engineering and planning work for the projects,” said Greehey.  “As a result, the projects will be on the fast

track once the agreement is finalized.  In fact, Valero will have more guaranteed emission reductions in place sooner than many refining companies that completed settlements with the EPA before we did.”

Greehey added that Valero is the only refiner to have ever received participation in such an agreement from the state of Texas.  “We believe that our commitment and solid environmental performance at our Texas refineries was the reason we were able to reach an agreement with the state of Texas,” he said.  “We look forward to our continued partnership with the Texas Commission on Environmental Quality and the Texas Attorney General in improving air quality in Texas, just as we expect to do with the other states where we have refining operations.”

As a result of its environmental leadership, Valero has received considerable recognition.  The company received two of the three awards given to the refining sector during the EPA’s celebration of the Clean Air Act’s 10^th anniversary, and the company was honored by World Refining Magazine in 2001 as the U.S. Refiner of the Year for investing in the refining industry and serving as a national leader in the production of clean-burning fuels.  Valero was the first petroleum refiner to receive the “Governor’s Award for Environmental Excellence,” Texas’ highest environmental honor.

The company was also recognized for being the first Texas refiner to voluntarily permit its “grandfathered” refineries in Texas, and participated in the Clean Industries Texas 2000 program in which industrial plants were asked to reduce their emissions by 50 percent between 1995 and 2000, a goal that the company met ahead of schedule.

Valero Energy Corporation is a Fortune 500 company based in San Antonio, with approximately 20,000 employees and annual revenue of approximately $55 billion.  The company owns and operates 14 refineries throughout the United States, Canada and the Caribbean. Valero’s refineries have a combined throughput capacity of approximately 2.5 million barrels per day, which represents approximately 12 percent of the total U.S. refining capacity. Valero is also one of the nation’s largest retail operators with more than 4,700 retail and wholesale branded outlets in the United States, Canada and the Caribbean under various brand names including Diamond Shamrock, Shamrock, Ultramar, Valero, and Beacon. Please visit www.valero.com for more information.