Shell Oil Pays $19.75 Million in S.F. Bay Spill

SAN FRANCISCO —  In the largest settlement of its type, Shell Oil has paid $19.75 million in compensation for a 440,000-gallon oil spill into San Francisco Bay last year, several officials announced Wednesday.

Atty. Gen. John K. Van de Kamp said Shell agreed to spend nearly $11 million of the total to restore wetlands that were fouled in the April, 1988, spill and possibly buy land on which new marshes could be created.

“I think even for Shell, $20 million is worth something,” Van de Kamp said, calling the settlement the largest ever negotiated in a case involving pollution.

Federal authorities who were parties to the deal proclaimed that the nearly $20 million may serve as a precedent in the negotiations with Exxon over the far more massive oil spill earlier this year in Alaska’s Prince William Sound.

“We are certainly going to try within the law to get a result that is proportionate to the result that was gotten here,” said Assistant Atty. Gen. Richard Stewart, the U.S. Justice Department’s top environmental official.

Stewart estimated that 1,000 times more oil leaked into open water as a result of the Exxon spill. Asked whether Exxon could be expected to pay 1,000 times more for the environmental damages in Alaska, Stewart said, “We will see.”

“I hope it sends a message to anybody who is in the oil business,” he said of the settlement. “I think spills that are proportionately bigger ought to have a proportionately larger bottom line.”

Shell has already deposited a check for $19.75 million in an account with the state, even though the settlement will not become final for at least 45 days.

During that time, any individual or group can protest the settlement. A judge can decide to hear any such challenge or can sign the agreement. The settlement was filed along with a civil suit in federal court in San Francisco on Wednesday.

“In terms of whether it is a precedent or not, I don’t believe there is any way that we can speculate on that,” Shell spokesman Mark Singer said.

Singer called it “a fair and equitable settlement,” and said the company “regrets” the spill occurred. By settling the case, Shell did not admit wrongdoing.

Shell’s agreement to pay $19.75 million in penalties and compensation is in addition to the $10 million that the company estimated it has spent on clean-up and studies of the spill’s impact.

The spill occurred April 22, 1988, when tar-like crude leaked from a broken pipe into a ditch, or berm, built around a huge storage tank. An open valve in the berm allowed the crude to flow into the Carquinez Strait, which separates San Francisco Bay from the Sacramento-San Joaquin River Delta, 40 miles northeast of San Francisco.

In settling the case, local, state and federal authorities agreed not to sue or criminally charge Shell for the spill that killed upward of 300 birds and mammals near its tank farm in Martinez.

Van de Kamp noted that the civil fines, which amounted to $4.6 million of the $19.75 million, were “far more than you could ever get in a criminal prosecution.”

In what could be the most long-lasting aspect of the settlement, a task force of local, state and federal officials will decide how to spend the $11 million in restoration funds.

The goal of the committee will be to restore, create or enhance 1,000 acres of wetland. Officials who negotiated the deal said they intend to start spending the money soon after the settlement is approved by a judge.

The settlement also requires that some of the money be spent to study the long-term effects of the spill.

“Government, through its enforcement authority, intends to make pollution prohibitively expensive,” said Daniel W. McGovern, regional director of the Environmental Protection Agency. “This record-setting settlement helps do that.”

Mayor Mike Menesini of Martinez, a town that was especially hard hit by the leak, said he anticipates that some money will be spent on restoring sportfishing and perhaps commercial fishing in the area.

“It provides a clear warning that harm to our environment will not be tolerated,” Menesini said of the settlement.

NEXT STEP

In the next 45 days, anyone can challenge the settlement between Shell and the government. A judge can sign the agreement if no challenges are filed in that period. So far, no group has said it intends to bring a challenge.