Shell Oil Co. has agreed to reduce harmful emissions at its Deer Park refinery as part of an agreement with environmentalists who said in an unusual citizens’ suit that the company failed to comply with federal laws on controlling pollution.

Under the settlement filed Thursday, the Houston-based arm of oil giant Royal Dutch Shell would upgrade the plant to reduce emissions known as “upsets,” which occur during equipment malfunctions and other unforeseen events. The company would pay fines if it fails to meet annual caps for emissions.

Shell also agreed to pay nearly $6 million for past violations of the Clean Air Act — an amount believed to be the largest penalty in Texas history to come from a citizens’ suit seeking enforcement of the federal law. The money will go toward local environmental projects, including the replacement of diesel-powered school buses.

Environment Texas and the Sierra Club sued Shell in January 2008, taking the uncommon approach of filing suit to enforce clean air standards in the absence of government action.

The two groups alleged that the Deer Park refinery recorded more than 1,000 upsets in a five-year period, releasing roughly 5 million pounds of pollutants into the air, including toxic chemicals benzene and 1,3-butadiene.

The Texas Commission on Environmental Quality fined Shell, but failed to solve the problem, said Luke Metzger, director of the Austin-based advocacy group Environment Texas. “This should serve notice to other polluters who are playing fast and loose with environmental laws.”

Commission spokesman Terry Clawson defended the agency’s enforcement efforts.

“We have been very aggressive in pursing all violations documented at the facility,” he said. “A citizen’s suit may be brought notwithstanding the agency having taken administrative enforcement against an entity.”

California standards

Josh Kratka, the attorney who represented the environmental groups in the lawsuit, said they would use the tactic again to force emissions reductions.

“Shell is the tip of the iceberg,” Kratka said. “You can look all up and down the Houston Ship Channel, and there are several facilities with significant problems with upsets. If Shell can fix them at its old plant, anyone can.”

The settlement, pending the approval of U.S. District Judge David Hittner, would require Shell to reduce emissions from upsets at the refinery by 80 percent within three years. If the company fails to meet annual targets for reductions, it would be required to pay penalties.

The approach represents “a hard cap” on emissions regardless of cause, said Neil Carman, air quality director for the Sierra Club’s Lone Star chapter.

Shell wouldn’t provide cost estimates for the upgrades, which include developing a facilitywide plan to reduce flaring that meets California’s standards, considered the most stringent in the nation.

Shell spokeswoman Robin Lebovitz said the upgrades would be part of a continuing effort to reduce emissions and flaring at the refinery.

“We are committed to fulfilling the requirements of the consent decree related to this ongoing work,” Lebovitz said in a statement.

matthew.tresaugue@chron.com