Chevron OKs $7-Million Pollution Settlement

Chevron U.S.A. Inc. has agreed to pay a record $7 million to settle a lawsuit with federal regulators who charged that the company violated clean-air laws at its offshore oil terminal near El Segundo.

The settlement--the largest ever under the Clean Air Act for a single facility--involves alleged abuses of a program under which companies were allowed to scrap old cars instead of installing costly equipment to reduce emissions at their facilities.

It is the second settlement Chevron has paid in the case in the last two months. The company earlier paid $1 million to resolve the portion of the lawsuit brought by a private environmental group.

The U.S. Environmental Protection Agency has been investigating a pollution credit trading program that allows industries flexibility to comply with Southern California’s clean-air rules.

The South Coast Air Quality Management District approved the emissions trading program in 1993. It allows oil companies to destroy dirty cars in lieu of installing costly equipment to capture smog-forming fumes during tanker-filling operations.

While companies like the program, the EPA, which never approved it, says it is easily exploited, doesn’t always result in tangible emissions cuts and is poorly enforced.

Between 1995 and 1998, for example, Chevron sometimes underestimated 100-fold the emissions released during tanker refilling, said Allan Zabel, senior counsel for the EPA’s California office.

In addition, the cars that were scrapped sometimes were inoperable or otherwise unqualified for pollution credits, Zabel said. Engines were reportedly removed from other cars and put into other vehicles, perpetuating the pollution that the engines emitted.

“The settlement sends a strong message that any company violating the Clean Air Act rules to reduce smog will pay a heavy price. This is especially so in the Los Angeles area, which has one of the most serious smog problems in the nation,” said Lois J. Schiffer, assistant attorney general for environment and natural resources.

Chevron officials admit no wrongdoing as part of the settlement and say the company ceased petroleum-loading operations at its terminal before the lawsuit was filed. “Chevron operated in good faith and thought it was in full compliance with appropriate air emission rules,” said Gary Yesavage, general manager of the El Segundo refinery.

Most of the settlement money goes to the federal treasury, although $500,000 will be used to help fund a community health clinic in Wilmington and $500,000 will be used to install no-leak valves and double-seal pumps at Chevron’s El Segundo refinery, which is 1 1/2 miles from the offshore terminal.

Communities for a Better Environment, an Oakland-based environmental group, originally filed the lawsuit against several oil companies and the EPA later joined the case. The environmental group settled with Chevron on July 13.