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Shell May Back Out of a $90 Million Settlement With a Contaminated LA Suburb

A Los Angeles Superior Court Judge said he might not allow the deal to remain confidential, leading the oil company to withdraw its application for a settlement.
Image via Reuters

In November, Shell Oil offered to pay $90 million to 1,491 residents of Carson, California, who are suing the company over illnesses they claim were caused by contamination from oil buried beneath their homes. Last week, however, Shell's legal team withdrew its application for a settlement after Los Angeles Superior Court Judge William Highberger indicated he might not keep secret the terms of the deal.


The affected residents of Carson's Carousel neighborhood claim to suffer from cancer, blood disorders, asthma, and other ailments due to water and soil contamination from benzene and methane. A 2008 study overseen by the Los Angeles Regional Water Quality Control Board found contamination from benzene and other chemicals related to the petroleum storage tanks.

According to both the Environmental Protection Agency and the International Agency for Research on Cancer, benzene is a known carcinogen that can heighten rates of leukemia, including the types that have affected Carson residents.

"Bringing personal injury and class action lawsuits is often the only tool that people have to get remediation and have their injuries immediately addressed in these cases," Yana Garcia, a staff attorney at Communities for a Better Environment, told VICE News.

"Particularly with oil corporations, one of the main issues that concerns us is just the sheer concentration of refining and extraction activities that are conducted in this entire region," Garcia said. "The city of Carson doesn't just deal with Shell Oil storage but also has a lot of extraction activities that occur there."

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Shell has maintained its innocence in the case, claiming that the Dole Food Company should be named the responsible party for the soil contamination.

The location was undeveloped until Shell purchased the 44 acre area in 1923 and built three oil storage reservoirs. Over the next 40 years, Shell stored up to 3.5 million barrels of oil on the site. In 1965 Shell sold the land, with the reservoirs filled, to the Barclay Hollander Corporation (BHC) and Lomita Development Company. Lomita later merged with BHC, which is now a wholly owned subsidiary of Dole.


BHC and Lomita then reportedly graded the site and sought approval to rezone the land from industrial to residential. Los Angeles County approved the rezoning in 1966 and construction of the homes began in 1967.

Nonetheless, the Water Quality Control Board found Shell the responsible party and in 2009 the class action lawsuit was launched against the company. For its part, Shell has sued Dole claiming that when BHC and Lomita purchased the land they took responsibility for disposing of the oil.

Meanwhile, controversy over the settlement has taken hold among Carson residents. Home to some 90,000 people, the town lies 13 miles south of Los Angeles. Current and former residents of 285 single-family homes in Carson's Carousel Community are parties to the lawsuit. However, an anonymous flier was circulated throughout Carousel urging residents not to sign the settlement, arguing that the offer is not enough and that the plaintiffs' law firm, Giradi & Keese, are the true beneficiaries.

With questions of culpability in the air, the City of Carson has reached its own agreement with Shell.

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"The city has actively participated in influencing a favorable Remedial Action Plan before the Regional Water Quality Board, which now includes a real estate program and a relocation benefits program for the residents of the Carousel tract in the city of Carson," Carson Mayor Jim Dear told VICE News.


Mayor Dear believes that Shell should purchase the homes of the Carousel residents, compensating them for their depreciated property value, and pay to resettle them at an uncontaminated location.

Neither the company nor the plaintiffs' lawyers would comment on the standing of the $90 million settlement.

"Confidential settlement negotiations continue between plaintiffs and attorneys for Shell," Ray Fisher, a spokesman for Shell, told VICE News. "Due to the confidential nature of those negotiations, we cannot comment further at this time."

Mayor Dear was unaware of Shell withdrawing its settlement application but told VICE News that he will continue to pay close attention to developments.

"We want to ensure that our residents can come as close to being made whole as possible," he said.

Follow Jay Cassano on Twitter: @jcassano