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The New York Times: Wide Impact Expected In Shell Pollution Case

Published: December 21, 1988

LEAD: A finding by a California jury on Monday against the Shell Oil Company may influence similar suits involving pollution damage, parties in the case and in similar cases said yesterday.

Shell’s 250 insurers had argued that the oil company was not covered by any of its 800 policies because it knew it was polluting the ground water at the Rocky Mountain Arsenal, near Denver.

Shell plans to appeal the ruling, which came in San Mateo County Superior Court. The cleanup cost, to be split by Shell and the Army and to be spread over 10 years, has been estimated at as much as $2 billion.

Closely Watched Case

A Shell spokesman, Norman Altstedter, said that even if the ruling was not overturned, ”we do not expect any material adverse effect on the company.” Analysts said the effect would be small.

The stock of Royal Dutch/Shell, which owns Shell Oil, lost $2 yesterday on the New York Stock Exchange, closing at $115.375.

The case has been watched closely by other companies facing demands by Federal and state governments to pay for environmental cleanups.

More than 100 companies have sued their insurers to seek coverage.

”This has been one of the flagship cases,” said Barry R. Ostrager, who represented the Travelers Insurance Company in the Shell case and was the lead defense counsel.

Future decisions and out-of-court settlements in cases where the company knew it was polluting would be affected, Mr. Ostrager said. He could not estimate how many other cases fell into that category. ‘It Does Set a Precedent’

Thomas J. Quinn, a lawyer who represented Lloyd’s of London, said, ”To the extent that the industrial company knew what it was doing, it does set a precedent.” But he added, ”Each one of these cases has to be decided on its own factual basis.”

Lloyd’s is a defendant in similar cases brought by the Westinghouse Electric Corporation, which is seeking coverage from 140 insurers for 74 separate hazardous-waste sites, and the Texas Eastern Corporation, a gas pipeline company that dumped PCB’s in many locations.

Peter J. Kalis, who represents Westinghouse and the United Technologies Corporation in suits against their insurers, said, ”If the press reports are accurate, that the jury was persuaded that Shell was an intentional polluter and therefore undeserving of coverage, it will not affect my clients.” Basis for Liability

Under a 1980 law, the Comprehensive Environmental Response, Compensation and Liability Act, known as Superfund, the Government could seek cleanup money if it establishes liability even if there was no fault involved, Mr. Kalis said.

”You could have done everything under law that you were required to do back then, but if it’s contaminated now, you have to clean it up and tough luck,” he said.

For example, Mr. Kalis said, a company might have shipped its waste with a licensed hauler to a licensed disposal facility, where the material leaked into ground water. ‘A Punitive Message’

At the National Toxics Campaign, an environmental group involved in the Rocky Mountain case, Adrienne Anderson, the Western director, said most pollution cases involved illegal acts by the companies.

”To the extent that a polluter can get nailed for a $2 billion cleanup decision, we hope that will begin to change the practices in America,” she said. ”It sends a punitive message. Maybe they will invest those same dollars in preventive technologies.”

But she asserted that the insurance companies knew about the pollution. ”If you go around bashing people with your car, your insurance gets yanked,” she said. ”If they choose to continue to insure polluters acting with this kind of reckless abandon, they should throw money into the till as well.”


SACRAMENTO, Calif., Dec. 20 (AP) -Texaco Refining and Marketing Inc., a subsidiary of Texaco Inc., will pay $8.95 million to settle a complaint that it improperly stored hazardous wastes in Bakersfield, Calif., state officials said today.

Attorney General John Van de Kamp and Health Director Kenneth Kizer called the settlement the largest reached under the state’s hazardous-waste law.

Mr. Van de Kamp said investigators had found about 5,000 steel drums containing hazardous waste at the company’s site in Bakersfield.

About 2,000 of the drums were leaking, corroded or open and more than 3,000 were not labeled, he said. A Texaco spokesman said the waste posed ”no significant risk to our employees, the environment or the community.”


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