Occidental Petroleum Corp., the Los Angeles energy conglomerate, was ordered by the Securities and Exchange Commission yesterday to disclose hundred of millions of dollars in potential liabilities facing the company because of chemical dumping at Love Canal in Niagara Falls and elsewhere by its subsidiary, Hooker Chemical Co.
It was the broadest-drawn environmental case ever brought by the SEC, according to a commission spokesman.
The case, moreover, can be viewed as a warning by the SEC to publicly owned companies that they must disclose to their stockholders -- and to the public -- the full extent and possible costs of environmental problems.
While neither admitting nor denying the allegations, the company settled the agency charges by agreeing to designate a director, subject to commission approval, to prepare an environmental report.
In addition to the environmental allegations, the SEC also accused Occidental of failing to properly disclose to stockholders a number of other, non-environmental corporate developments:
In July 1978, Occidental reduced on its books the value of its Canvey Island refinery near London from $110 million to $20 million. But the SEC said the company failed to "adequately disclose" these troubles at Canvey Island when they began to develop in 1975.
After the Libyan government unilaterally nationalized 51 percent of Occidental's oil and gas operations in that country, the company and the government reached agreement on payment in 1975. But Occidental "omitted to disclose" to its stockholders "the various facts and significant risks . . . over the interpretation and implementation" of that agreement.
Beginning in 1962, Occidental's chairman, Dr. Armand Hanner, required that certain nominees to the company's board of directors submit signed and undated letters of resignation. The stockholders, however, were not informed that Hammer held the threat of dismissal over the board members, who are meant to be independent. The SEC said that none of the current board members signed such a letter.
In alleging that Occidental has hidden environmental problems from its stockholders, the SEC said: "Occidental did not disclose, in numerous instances, the required information concerning pending or comtemplated administrative or judicial proceeding by governmental authorities arising under federal, state or local law relating to the protection of the environment."
The SEC said Occidental was involved in 90 legal proceedings with governmental units relating to protection of the environment between 1974 and 1976. One was a criminal misdemeanor action against Occidental's wholly owned subsidiary, Island Creek Coal Co., for discharging pollutants into the streams of West Virginia. But the SEC said that Occidental failed to disclose, as required, any of these pending legal actions until 1977. f
The SEC said that Occidental Chemical Co. did not tell stockholders in 1978 that it faced criminal prosecution in central Florida for allegedly polluting the Suwannee River. The company settled the case by pleading no contest to a single-count misdemeanor.
The SEC also accuses Occidental of failing to properly inform its shareholders of massive environmental problems in California and Michigan.
Occidental, which acquired Hooker Chemical after the company dumped deadly chemicals in Love Canal, failed to disclose in 1977 its potential liability, the SEC said. Then, in 1980, Hooker and Occidental were sued by New York State for a total of $625 million over the canal.
The SEC also alleges that Occidental failed to properly disclose potential legal problems that may result from chemical waste dumped at two other landfill sites in Niagara Falls.