WASHINGTON (Legal Newsline)-The U.S. Supreme Court could place new limits on claims against companies sued under the federal superfund law.
The nation's highest court agreed this week to hear arguments in a California case involving Shell Oil Co. and Burlington Northern Santa Fe Corp., over whether the U.S. government can recover cleanup costs from companies even if they are not directly responsible for contamination of a federal Superfund site.
Shell's main office in the United States is located in Houston.
By accepting the two cases, the justices will examine a ruling that required Shell and the railroad to help pay for the cleanup of a California site that once housed an agricultural chemical distribution facility.
In court papers, Shell argued that it was not responsible for "sloppy handling" of chemicals by Brown & Bryant Inc., which once operated the Avrin, Calif., facility, about 25 miles southeast of Bakersfield.
While a U.S. District Court ruled that Shell and the railroad could only be held responsible for their portion of liability, the U.S. 9th Circuit Court of Appeals ruled they could be held jointly and severally liable for the clean up costs.
In its appeal, Shell said the 9th U.S. Circuit unfairly imposed liability for the "mere sale of a commercially useful product."
A coalition of business groups argued in a brief that allowing the 9th U.S. Circuit ruling to stand would impose "substantial and unwarranted burdens" on chemical manufacturers and suppliers.
They also said the ruling would "disrupt longstanding relationships between suppliers and the common carriers that deliver their goods."
The railroad owned an acre of the land that was leased to the chemical facility. The company, along with Shell was sued by the U.S. Environmental Protection Agency to recover clean up costs at the site.
In its appeal, the company argued they shouldn't be on the hook for the entire cost of the cleanup. The railroad and Shell say the lower courts should have apportioned liability.
The 9th Circuit said that apportionment under the Superfund law "is the exception, available only in those circumstances in which adequate records were kept and the harm is meaningfully divisible."
In a brief, Acting U.S. Solicitor General Gregory Garre said both of the companies met acceptable tests for financial liability under Superfund law.
Shell Oil Company is a 50/50 partner with the Saudi Arabian government-owned oil company Saudi Aramco in Motiva Enterprises, a refining and marketing joint venture which owns and operates three oil refineries on the Gulf Coast of the United States, including the Port Arthur refinery.
The case is Shell Oil v. United States, 07-1607 and Santa Fe Railway Co. v. United States, 07-1601.
From Legal Newsline: Reach reporter Chris Rizo at chrisrizo@legalnewsline.com.