The agreement still faces approval from a federal judge.
The settlement would cut greenhouse gas emissions at the Deer Park refinery and chemical plant by 750,000 pounds a year for the next three years. Monitoring of air quality would be improved.
Shell says the company strives to operate in compliance with all permits and regulations and is pleased to have reached an agreement with the citizen groups.
The Sierra Club and Environment Texas last year filed a lawsuit against Shell.
The company says the agreement is consistent with plans to cut emissions at the Deer Park site.
The monetary penalty would be used to fund health projects in Texas.
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