Risk & Compliance

Exxon Mobil Settles Pollution Case

The proposed agreement will cost oil giant nearly $600 million; most will be spent on pollution-reduction equipment on seven U.S. refineries.
Craig SchneiderOctober 11, 2005

Exxon Mobil Corp. will settle a case with the Department of Justice by spending $571 million to install pollution-reduction equipment on seven U.S. refineries, according to press reports. A civil penalty will cost the oil giant $8.7 million, while Exxon Mobil will pay another $9.7 million toward community environmental projects, according to the DoJ.

The government had alleged that the company violated the “New Source Review” section of the Clean Air Act, which requires refineries and utilities to install pollution-reduction equipment when they upgrade and expand their facilities. In the proposed settlement — which is subject to a 30-day public-comment period before it can be granted court approval — Exxon Mobil denied that it committed any violations.

“We believe that the settlement is in the best interest of the company and support the continued trend of emission reductions that has occurred at our refineries,” an Exxon Mobil spokeswoman told Reuters.

The Bush administration had proposed weakening clean air rules by removing the installation requirement during expansion, but the rule change was frozen by a court order, the wire service reported.

The pollution-reduction equipment is slated for installation in five states — Louisiana, Texas, Montana, Illinois, and California — that reportedly represent about 11 percent of U.S. refining capacity. The equipment would cut emissions of sulfur dioxide and nitrogen oxides, which are associated with acid rain, smog, and asthma, by 75 percent in coming years, Reuters noted. Exxon Mobil must reduce yearly emissions of nitrogen oxide by nearly 11,000 tons and sulfur dioxide by more than 42,000 tons, according to MarketWatch.

The government has reached settlements with 16 other U.S. refiners in recent years, including Valero Energy Corp. which in June agreed to spend $700 million to cut emissions at its refineries.

Last week, The New York Times reported that General Electric agreed to dredge the Hudson River to clean up large quantities of polychlorinated biphenyls — pollutants better known as PCBs — at a cost of about $700 million.

Separately, the Supreme Court rejected an appeal from oil concern Saudi Basic Industries Corp., which has been trying to overturn the bulk of a $417 million judgment it was ordered to pay Exxon Mobil. The U.S. company was awarded $92.8 million in damages and $324 for lost profits after a joint venture between the two businesses fell apart, according to the Associated Press.