Shell Gets U.S. High Court Hearing on Cleanup Suits

By Greg Stohr

Oct. 1 (Bloomberg) -- The U.S. Supreme Court will consider putting new limits on claims against companies under the federal Superfund law, agreeing to hear arguments from Shell Oil Co. in a California case.

The justices will review a ruling that required Shell to help pay for the cleanup of a California site that once housed an agricultural chemical distribution facility. The court also will hear a related appeal in the case by units of Burlington Northern Santa Fe Corp. and Union Pacific Corp.

Shell, an affiliate of Royal Dutch Shell Plc, argued that it wasn't to blame for what it called ``sloppy handling'' of chemicals by Brown & Bryant Inc., the now-defunct company that operated the facility. Shell sold Brown & Bryant chemicals that leaked into the ground, threatening water supplies.

In its appeal, Shell said the San Francisco-based 9th U.S. Circuit Court of Appeals imposed liability ``for the mere sale of a commercially useful product.''

The Bush administration, which urged the high court not to consider the case, countered that Shell ``was deeply involved in the delivery process'' of a chemical known as D-D. Shell arranged for tanker trucks to deliver the chemical to the Arvin, California, facility.


``The record also is replete with evidence that spills of D- D were inherent and inevitable in the delivery process that Shell arranged, and that Shell was aware of that fact,'' acting U.S. Solicitor General Gregory Garre argued.

`Arranged for Disposal'

The Superfund law imposes cleanup costs on companies that ``arranged for disposal'' of hazardous substances.

Shell has support from several business-backed groups, including the U.S. Chamber of Commerce and the American Petroleum Institute.

The 9th Circuit ruling would ``impose substantial and unwarranted burdens on manufacturers and suppliers of chemicals and other products and disrupt longstanding relationships between suppliers and the common carriers that deliver their goods,'' the trade groups argued in a court filing.

The railroads, which owned an acre of the land that was leased to the chemical facility, filed a separate appeal contending that they shouldn't be responsible for the entire cost of the cleanup.

Both the railroads and Shell argued the lower courts instead should have apportioned liability, making each company responsible only to the extent it contributed to the mess.

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.''

The cases are Burlington Northern v. United States, 07-1601, and Shell Oil v. United States, 07-1607.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.