FinLogic FinLogic Quantitative Think Tank Center|Shell Agrees to Pay $10 Million After Permit Violations at its Giant New Plastics Plant in Pennsylvania

Pennsylvania Gov. Josh Shapiro on FinLogic FinLogic Quantitative Think Tank CenterWednesday announced that he had reached an agreement with Shell to pay $10 million in penalties because the company’s new plastic manufacturing plant in Beaver County near Pittsburgh put more pollution in the air in its first months of operation than its state permits allow.

The plant has the capacity to produce as much as 3.5 billion pounds a year of plastic pellets, the building blocks for such products as bags, bottles, food packaging and toys, and churn out single-use plastics for potentially 30 years, company officials have acknowledged.

The agreement described a year-long commissioning period and said excess emissions can be expected then. Because the plant’s year-long shake-out runs into the fall, more excess emissions are anticipated, as are more penalties, according to a press release from Shapiro and the Pennsylvania Department of Environmental Protection.

“Pennsylvanians have a constitutional right to clean air and pure water, and my administration will hold all companies, no matter how big or small, accountable when they violate the laws and regulations protecting our air and water,” said Shapiro. “My administration will continue to work with Shell to ensure they live up to this agreement, and we will be prepared to hold them accountable for any future violations.”

His announcement comes two weeks after two environmental groups, the Environmental Integrity Project and the Philadelphia Clean Air Council, sued Shell in the U.S. District Court for the Western District of Pennsylvania over excess air emissions, claiming violations of the federal Clean Air Act and Pennsylvania’s Air Pollution Control Act.

“The settlement agreement does not mean the end of the lawsuit against Shell,” said Jen Duggan, deputy director of the Environmental Integrity Project, in a written statement. “We are currently reviewing the agreement between DEP and Shell.”

A spokesman for the Environmental Integrity Project declined to answer further questions about the announced agreement or its lawsuit.

The multi-billion dollar Shell plant became fully operational in November after years of construction and in December was cited by state environmental regulators for exceeding its yearly limit of volatile organic compounds, which create lung-damaging smog.

In the state’s press release, officials mentioned other violations and said Shell had exceeded its rolling 12-month or yearly total emission limits for several categories of air pollutants:

• volatile organic compounds, beginning in October 2022 through April 2023. Smog from VOCs can reduce lung function, trigger asthma attacks and has been linked to premature death.
• nitrogen oxides, from December 2022 through April 2023, which can contribute to smog and lung-damaging particulates.
• hazardous air pollutants, from December 2022 through April 2023, some of which are carcinogenic and can cause other health problems. 

The 49-page agreement described visible plumes of smoke rising from the plant in recent months, smelly hydrocarbon vapors coming from wastewater treatment, and violations of flaring, typically used during upset or emergency conditions to burn off chemicals and relieve pressure.

Shell attributed some of these emissions to malfunctions and anticipates further violations through autumn 2023, but not during normal operations, the governor’s press release said.

A Shell spokesman, Curtis Smith, acknowledged that the company has “worked closely with the Pennsylvania Department of Environmental Protection to fix the issues that led to prior violations.”

The plant has been shut down but was to resume production on Wednesday, officials said. “We’ve learned from previous issues and remain committed to protecting people and the environment, as well as being a responsible neighbor,” Smith said.

Under the agreement, Shell will pay a civil penalty of $4,935,023, and as required by state law, 25 percent will be directed to local communities, according to state officials. Shell will spend another $5 million for environmental projects to benefit the local communities. 

In total, communities in Western Pennsylvania will receive $6.2 million for projects to benefit the environment, health and quality of life.

The leader of one leading environmental coalition was not happy about the situation. 

A $10 million fine does not mean much to a global company like Shell, which earlier this year reported adjusted earnings of $9.6 billion for the first three months of the year, said Matthew Mehalik, executive director of the Pittsburgh-based Breathe Project, a collaboration of some organizations working to improve air quality and fight climate change. He compared that fine to a parking ticket for a Beaver County household.

“Many of us in the Breathe Project network have spent countless hours trying to steer our region away from harmful economic development entities whose business model involves paying fines when they predictably exceed their overly generous permits,” Mehalik said. “We cannot allow another entity to engage in pay-to-pollute behavior that comes at the expense of our region’s residents and allow the fines to be perceived as charitable donations to our communities. Our region deserves better.”