Shell Oil Avoids Liability |for $8M Cleanup Costs

(CN) - Shell Oil does not have to reimburse the state or federal governments any portion of the $8 million they spent cleaning up polluted land in California, the U.S. Supreme Court ruled Monday. However, the justices held two railroads liable for 9 percent of the cleanup costs.

In 1960, an agricultural chemical distributor called Brown & Bryant began buying and storing hazardous chemicals on a piece of land in Arvin, Calif. It later expanded to a parcel of land owned by Burlington Northern and Santa Fe Railway and Union Pacific Railway.

Investigations by state and federal environmental agencies revealed significant soil and ground-water contamination. In 1989, the California Department of Toxic Substances Control and the federal Environmental Protection Agency forked out $8 million to cover the costs of cleaning up the site.

They sued the railroads and Shell, seeking reimbursement.

The district court found the railroads 9 percent liable for the mess, and Shell 6 percent liable because it had "arranged for disposal ... of hazardous substances," including the pesticide D-D.

The 9th Circuit agreed that Shell could be held liable, but rejected the plan to divide liability. It found Shell and the railroads jointly and severally liable.

The Supreme Court ruled 8-1 that Shell can't be held liable for arranging the disposal of hazardous chemicals, but that the district court "reasonably" apportioned the railroads' liability based on the size of the leased land.

"The District Court's detailed findings make it abundantly clear that the primary pollution at the Arvin facility was contained in an unlined sump and an unlined pond in the southeastern portion of the facility most distant from the railroads' parcel and that the spills of hazardous chemicals that occurred on the railroad parcel contributed to no more than 10 percent of the total site contamination, some of which did not require remediation," Justice Stevens wrote.

"With those background facts in mind," Stevens added, "we are persuaded that it was reasonable for the court to use the size of the leased land and the duration of the lease as the starting point for its analysis."

Justice Ginsburg dissented, saying she would've upheld the ruling against Shell.

"Given the control rein held by Shell over the mode of delivery and transfer," she wrote, "Shell was properly ranked an arranger."

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