Marathon Oil reaches a $241 million settlement with EPA for environmental violations

The federal government announced a $241.5 million settlement with Marathon Oil on Thursday for alleged air quality violations at the company's oil and gas operations on the Fort Berthold Indian Reservation in North Dakota.

The Environmental Protection Agency and Department of Justice said the settlement requires Marathon to reduce climate- and health-harming emissions from those facilities and will result in over 2.3 millions tons worth of pollution reduction.

“This historic settlement — the largest ever civil penalty for violations of the Clean Air Act at stationary sources — will ensure cleaner air for the Fort Berthold Indian Reservation and other communities in North Dakota, while holding Marathon accountable for its illegal pollution,” said Attorney General Merrick Garland.

Marathon officials did not immediately respond to a request for comment. Houston-based Marathon operates 169 well pads in North Dakota, where the company extracts oil and natural gas. A proposed consent decree for implementing the settlement says the company does not admit any liability over the allegations, but that the two sides agree it will avoid litigation and serve the public interest.

A spokesperson for the Mandan, Hidatsa and Arikara Nation based at the Fort Berthold Reservation did not immediately respond to a request for comment either.

While Marathon is the country's 22nd-largest oil producer based on 2022 data, the federal agencies said, it's also the seventh-largest emitter of greenhouse gas emissions in the oil and gas industry. Much of its emissions come from flaring, the industry practice of burning waste gases, including methane, which the EPA says is 25 times more potent of a contributor to climate change than carbon dioxide. While flaring burns off methane and other pollutants, it's not completely efficient, so significant quantities still get released into the atmosphere, which the agencies said can have health impacts on nearby communities.

The settlement is part of an EPA climate change enforcement initiative that focuses in part on reducing methane emissions from oil and gas production and from landfills.

It calls for Marathon to eliminate the equivalent of over 2.25 million tons of carbon-dioxide emissions over the next five years, which the agencies said was tantamount to taking 487,000 cars off the road for one year, and will also eliminate nearly 110,000 tons of volatile organic compound emissions, which contribute to asthma and other respiratory diseases.

“This settlement is a major win for the health and future of our Tribal communities, including people and families who are often overburdened by pollution,” said KC Becker, the EPA's regional administrator. “As a result of the agreement, Marathon has and will continue to take comprehensive measures to come into compliance and reduce harmful emissions across hundreds of production sources. These investments will improve air quality and reduce respiratory illnesses across the Fort Berthold Indian Reservation and western North Dakota.”

The agencies said the case is the first of its kind against an oil and gas producer for “violations of major source emissions permitting requirements under the Clean Air Act’s Prevention of Significant Deterioration program.” They also said the $64.5 million civil penalty Marathon must pay is the largest-ever penalty imposed for “stationary source violations,” which include facilities such as oil and gas tank systems.

The Justice Department said it’s the largest of 12 similar efforts by the Biden administration to target emissions from the oil and gas industry, with a penalty that’s more than double the 11 previous settlements combined.

Marathon also agreed to invest $177 million in extensive compliance measures, much of of it by the end of the year, that the agencies said will “significantly reduce” harmful emissions from 169 existing facilities on state land and on the reservation, as well as at new facilities built in North Dakota.

The settlement is part of a complaint and proposed consent decree officially filed Thursday in federal court in North Dakota. The complaint alleges that Clean Air Act violations at nearly 90 Marathon facilities resulted in thousands of tons of illegal pollution. And it alleges that Marathon submitted artificially low estimates of its emissions to avoid permitting requirements.

The consent decree is subject to a 30-day public comment period.

In May, ConocoPhillips said it was buying Marathon Oil in an all-stock deal valued at about $17.1 billion. The deal, worth $22.5 billion when including $5.4 billion in debt, comes as energy prices have surged and big oil companies have reaped huge profits. The acquisition was expected to close by the end of the year.

In its latest financial report, Marathon said it earned $297 million in the three-month period that ended March 31, posting revenue of $1.55 billion.

Thursday’s settlement did not appear to rattle investors. Marathon’s stock closed up 1.6% Thursday. It has risen about 18% so far this year.