Shell Oil May Nix $90M Settlement With Polluted Town Because It Wasn’t Kept Secret

CREDIT: ABC News Screenshot

Shell Oil Co. is reportedly reconsidering its offer to pay $90 million to residents of a California town with widespread soil contamination, saying they had wanted the settlement to be kept confidential.

According to a Law360 report, Shell attorney Deanne Miller told Los Angeles Superior Court Judge William Highberger on Friday that his refusal to keep the terms of the agreement secret left the case unsettled. On Thursday, Shell withdrew its application for a “good faith” settlement with the plaintiffs in Carson, California, who claim they’ve been plagued with cancer, blood disorders, and other illnesses from exposure to benzene, methane, and other hazardous chemicals in petroleum.

Shell had announced in November that it would pay $90 million to 1,500 current and former Carson residents, specifically those living in a neighborhood called the Carousel Tract. The houses in Carousel were built in the 1960s, directly on top of a former Shell oil tank farm that had been buried.

In 2008, the Los Angeles Regional Water Quality Control Board found that the soil in Carousel was widely contaminated with unhealthy levels on benzene, a known human carcinogen that can cause blood disorders and birth defects. The Board deemed Shell the responsible party, and residents who claimed they had been harmed — either with illnesses or declining property value — sued the company in 2009.

Shell has denied that they are fully responsible for the contamination, saying more blame should be placed on the companies that actually developed the homes (The developers are also being sued by the residents). Nevertheless, after five years of litigation, Shell agreed to pay $90 million to end the lawsuit. It has also been working on a cleanup plan, estimated to cost $146 million, for the last six years.

It seemed as though the plaintiffs were happy with the settlement offer. “The Shell defendant has shown great honesty and integrity,” plaintiff attorney Tom Girardi said last month. Residents reportedly came out in droves to sign the agreement — so many that the group-signing event had to be cancelled due to unsafe crowding.

But red flags started to rise. According to Law360, the developers said they haven’t seen the terms of the settlement, and their attorneys had been requesting to see it for weeks.

And in Carousel, an anonymous flier was distributed urging residents to reject the offer, implying the plaintiff law firm would receive a disproportionate amount in attorney fees, and that the community should fight for more. “The only ones benefiting are [the law firm] and Shell,” the anonymous flier read. “Think before you sign.”

Shell’s act of withdrawing a previously-submitted good faith settlement application was unusual, Law360 noted. A “good faith” agreement implies that the outcome is fair for everyone, and when it’s accepted by a judge, no more legal action can be taken by the parties involved.

Shell’s media office did not return ThinkProgress’ request for comment on why confidentiality was necessary for the settlement to go through, especially since the amount had already been disclosed. But one reason oil companies in particular like confidential settlements is because then there is no precedent for plaintiffs with similar claims — meaning, if it has been shown that the company agreed to pay $90 million for one community, it’s more likely that another community with similar claims might ask for a similarly large amount.