Justice Department Obtains Industry Settlements

Published October 1, 2003

The U.S. Department of Justice has announced it will recover nearly $65 million in August settlements of four environmental suits.

Shell Oil Hid Natural Gas Emissions

Shell Oil Company has agreed to pay $49 million in penalties to settle charges it made unauthorized and unreported natural gas emissions.

According to an August 5 announcement by the Justice Department and the Interior Department’s Mineral and Management Services (MMS), Shell produced but then secretly burned off enough natural gas to power “hundreds of thousands of homes” once it determined it would be more profitable to switch its operations over to oil production.

In addition to failing to report the emissions to the federal government, Shell failed to pay the appropriate royalties for the natural gas it had recovered and burned off.

“A settlement of this size sends a clear message to the industry that MMS is serious about compliance with its regulations,” said MMS Director Johnnie Burton. “MMS continues to ensure the American people receive the royalties that are due from production of their natural gas, and works to conserve our nation’s resources and to ensure safe and pollution-free operations.”

Officials of the Dutch-owned and -operated company, who frequently assert they are more environmentally conscience than their American counterparts, attributed the unreported natural gas production and emissions to a misinterpretation of federal regulations. “It appears to me (they decided) to go ahead and produce more oil at the expense of being able to properly handle the gas production,” said company spokeswoman Mary Dokiano. “At the time, the oil was more valuable as a commodity than the gas was.”

Added Dokiano, “Since we couldn’t stabilize the gas to separate it to get it into the gas pipeline, we made the decision to continue producing oil rather than to shut down the facility.”

The $49 million settlement comes two years after Shell paid $110 million to settle a charge it under-reported the value of oil it accessed on public lands.

Additional $16 Million in Settlements

In addition to the Shell Oil settlement, the Justice Department announced $10 million in three separate settlement agreements.

  • Earthgrains, a bakery company now owned by Sara Lee, has agreed to pay $5.25 million to settle charges its refrigerants emitted chemicals thought to harm the ozone layer. In addition to the monetary settlement, Earthgrains has agreed to phase out the use of the refrigerants in question.
  • DuPont has agreed to pay $550,000 in fines and fund $550,000 in environmental projects to settle charges that a May 1997 chemical release from its Louisville, Kentucky plant emitted 11,500 pounds of hydrogen flouride into the air.
  • Twelve companies have agreed to reimburse the federal government $10 million for the cleanup of the San Gabriel Valley Los Angeles Superfund site. The site had been contaminated with chlorinated organic solvents.