Shell Halts $90-Million Payout for Toxic Neighborhood after Judge Says Deal Can’t Be Secret

Wednesday, January 07, 2015
Carson protest in March 2013 (photo: Steve McCrank, Salt Lake City Tribune)

A lawyer suing on behalf of residents in the contaminated neighborhood of Carson said his clients would never settle with the much reviled Shell Oil over the toxic brew it buried a few feet beneath their soon-to-be-built houses.

Then they did, for $90 million in late November.

In reviewing the settlement before deciding whether to accept it, Los Angeles Superior Court Judge William Highberger indicated he might not keep terms of the agreement secret, as agreed to by the parties.

That didn’t sit well with Shell Oil and last month the company told the judge the settlement is unsettled while they consider their options. A third party to the legal battles swirling around the environmental disaster, the developers who built on the toxic mess, said they had not seen the settlement and feared important information about the site would be kept secret.

They care about that because Shell sued them for $40 million. “We know there’s something in the agreement they really don’t want the plaintiffs, or us, or the public to see,” developers’ attorney William Thomson told Law360. “This is not a small matter.”

Very little of what happened to the L.A-area Carousel neighborhood is a small matter. When Shell closed its 50-acre facility there, it left behind three crude oil reservoir tanks, with a total capacity of 3.5 million barrels. Shell says the reservoirs, which were concrete-lined earth slopes with asbestos-composition-covered frame roofs, were intact when they sold the land. 

A developer quickly bought the property and homes were built upon the reservoirs, which were smashed into pieces. The underground toxic stew wasn’t discovered until 2008, when testing of a nearby manufacturing plant led back to where 285 residents were soaking up benzene, methane and other toxic chemicals that were oozing through the still-oil-soaked dirt.

Two years later, with no cleanup in sight, residents sued and were joined by the city of Carson in 2013. Shell proposed a cleanup plan in late April 2014 that was rejected by the state as too skimpy, and a week later sued the developers. The company agreed to a $146-million cleanup plan in October, which would permit residents to temporarily relocate while 161,700 cubic feet of oily dirt was trucked out.      

Although lawsuit settlement details are unknown, the Torrance Daily Breeze reported that a confidential letter they saw indicated lawyers and residents would split the money, with determinations to be made later about each resident’s share. Shell offered to compensate residents who end up selling their homes below market value.

–Ken Broder


To Learn More:

Shell Rethinks $90M Waste Harm Deal after Secrecy Nixed (by Daniel Siegal, Law360)  

Shell May Back Out of a $90 Million Settlement with a Contaminated LA Suburb (by Jay Cassano, Vice News)

Shell Offers $90 Million to Residents of Contaminated Carson Neighborhood (by Sandy Mazza, Torrance Daily Breeze)

Carson Praises Shell Oil’s Carousel Neighborhood Cleanup Proposal (by Sandy Mazza, Torrance Daily Breeze)

City Sues Shell Oil for Letting Developers Build on Top of Carcinogenic Tanks (by Ken Broder, AllGov California)

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