RPT-Shell agrees to settle TX refinery pollution suit

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By Erwin Seba

HOUSTON, April 23 (Reuters) - Shell Oil Co, the Sierra Club and a Texas environmental group have agreed on Thursday to settle a federal Clean Air Act lawsuit against Shell's Houston-area refinery and chemical plant.

Under the proposed settlement, Shell promises to cut pollution from malfunctions at the 329,800-barrel per day (bpd) Deer Park, Texas, refinery, upgrade the refinery's coking unit and the Deer Park chemical plant flare system, increase pollution monitoring and pay a $5.8-million civil penalty, according to a statement issued by the groups.

"We are pleased that we have reached an agreement with the citizen groups to resolve the matter, avoid continued litigation and provide benefits in the public interest," Shell said in a statement.

The bulk of the civil penalty will go to refit Houston-area diesel-powered school buses with better pollution control devices and for a solar energy pilot program for public buildings.

"We urge other oil and chemical companies in the region to take note of Shell's willingness to work constructively with us in developing solutions to the problems at the Deer Park facility - problems that are not unique to Shell," said Neil Carman of the Sierra Club's Texas chapter.

The refinery upgrades could cost tens of millions of dollars.

The proposed settlement must be approved by U.S. District Court Judge David Hittner before it takes effect.