US Supreme Court to review Shell clean-up case

01 October 2008 22:25  [Source: ICIS news]

Court may set new limits for cleanup costsHOUSTON (ICIS news)--The US Supreme Court agreed on Wednesday to review a Shell chemical clean-up case that could set limits regarding how much money companies could pay to clean up a site - even if they are not directly responsible for the contamination.

The case has led to several friend-of-the-court briefs by such business groups as the Chamber of Commerce of the United States, the American Chemistry Council (ACC), the American Petroleum Institute (API) and the National Petrochemical & Refiners Association (NPRA).

The trade groups contend that the case could broaden clean-up liabilities for companies that sell chemicals in the everyday course of business.

Since the potential clean-up costs would be enormous, the decision could place significant burdens on chemical producers and suppliers. The brief contends that lawmakers never intended that chemical companies should shoulder such costs.

The ruling by the appeals court also conflicts with past decisions, the brief said.

The case stemmed from a lawsuit that the US government and California regulators filed against Shell, Burlington Northern Santa Fe and Union Pacific.
In the suit, the government alleged that Shell and the railroads had to pay the costs to clean up a former agriculture-chemical distribution centre in Arvin, California, operated by Brown & Bryant.

Before going out of business, Brown was found to have violated several hazardous-waste laws, according to court documents. In addition, US regulators found substantial amounts of soil and groundwater contamination at the Brown site.

The government spent substantial sums cleaning up the site, according to court documents.

Shell was named in the suit because it delivered the soil fumigants D-D and Nemagon to Brown & Bryant, according to court documents. The railroads leased land to Brown, which the company used to store and transfer chemicals.

A lower US court ruled that Shell and the railroads were liable for only a small portion of the government's clean-up expenses at the Environmental Protection Agency's Superfund site. The railroad's share came to 9%, and Shell's share came to 6% plus a small portion of the railroad's liability.

The government appealed the decision to 9th Circuit US Court of Appeals.

The appeals court reversed the decision, finding that Shell and the railroads were liable for up to the entire amount of the clean-up costs.

The burden of avoiding full liability fell on Shell and the railroads, the appeals court said. They had to provide sufficient evidence upon which to assign percentages for the clean-up costs.

They failed to do so, the appeals court said.

The lower court based Shell's percentages -  in part - on extrapolated numbers and assumed leakage figures, the appeals court said.

The railroads failed to adequately quantify the amount of leakage that could be attributed to the chemicals stored on its parcel, the court said.

The railroad also needed to describe how the leaked chemicals travelled to and contaminated the soil and groundwater, the court said.

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By: Al Greenwood
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