U.S. Must Pay Big Toxic Tab

A federal judge has ruled that the U.S. government is responsible for the full cost of cleaning up the McColl Superfund site in what appears to be a major victory for oil companies that dumped toxic substances there during World War II.

The decision comes now that the mammoth cleanup of the Fullerton site is complete and after years of legal battling between the government and oil companies over who should pay for it.

Judge Robert J. Kelleher ruled this week that Shell Oil Co., ARCO and other firms are not responsible for the cleanup because the dumping occurred as part of the war effort.

Attorneys who pored over the complex 32-page decision Thursday from San Francisco to Houston to Washington were cautious in appraising the ruling’s impact. Some suspect it could have a ripple effect on similar Superfund legal disputes nationwide involving war-related pollution cleanup.

The McColl cleanup is expected to cost $80 million or more. But attorneys said it was unclear exactly how much the ruling could cost the federal government due to the complexity of both the case and the judge’s ruling.

Federal officials had hoped that the court would allocate a large portion of the cleanup responsibility to the oil companies. But Kelleher disagreed.

“The war caused the problem, and like myriad others, the burden must rest on the United States, which is all of us,” Kelleher wrote in the decision dated this week. “The United States won the war and all of us paid the costs at the time. This is another such cost merely long delayed.”

Government attorneys expressed surprise at the ruling.

“We’re disappointed with the decision. We’ve made no decision about an appeal, and we are reviewing the decision now,” said Michael Gordon, spokesman for the U.S. Department of Justice.

The oil companies, however, said the ruling supports their contention that the federal government should pay for the cleanup because of its intensive role in gasoline production during World War II.

“We feel vindicated by the decision,” said Walt Simmons, an ARCO official involved in the long-running cleanup effort at the McColl site.

Shell Oil Co. issued a statement from its Houston headquarters, stating, “Shell is very pleased to hear of the report of the court’s decision because we have always believed it’s appropriate the government should be responsible for World War II cleanup costs, rather than the companies named as defendants.”

The McColl site sparked controversy long before cleanup began.

Oily sludge was dumped into 12 sumps at the McColl site during the 1940s. Homeowners began complaining about odors and health problems after a neighborhood was built nearby in the 1970s. Testing found such hazardous waste as sulfuric acid and benzene. It was declared a federal Superfund site in 1983.

After years of debate, federal officials settled on a solution: a cap of high-density polyethylene built atop the pits that keeps water out and seals in potentially cancer-causing chemicals. The cleanup was designed and conducted by the four oil companies--known as the McColl Site Group--under the oversight of EPA.

That cooperation continued even as lawyers for the government and oil companies were sparring in court over who should pay.

“We really worked closely and well with the EPA to get the remedy done as soon as possible,” said Kent Rogers, a Shell official and spokesman for the McColl Site Group.

Ironically, the ruling comes just as the U.S. Environmental Protection Agency takes steps to remove the McColl site from the Superfund roster of the nation’s most hazardous waste dumps. The area is now capped and partially covered by a golf course that opened to players last month.

The court ruling does not affect the cleanup, officials said.

“They’re not fighting over who should clean it up. They’re fighting over who should pay the bill,” said Tim Patterson, a deputy attorney general who has been involved with the site since 1991.

This week’s federal court ruling stems from a 1991 lawsuit brought by the United States and the state of California against Shell, ARCO, Union Oil, Texaco and the landowner at the site. The government suit attempted to recover cleanup costs.

The federal government’s War Production Board oversaw the production of aviation gasoline for war purposes at Los Angeles-area refineries owned by the four oil companies, and those refineries produced the waste dumped at McColl.

The oil companies have argued that because the federal government heavily regulated the production of that gasoline, the U.S. should have to pay the costs of cleaning up the waste.

But federal attorneys argued in court in February that the oil companies made the key decisions regarding both the production and disposal of the waste at the McColl site.

Jeanne Elias, assistant regional counsel at the EPA office in San Francisco, pointed out that Kelleher had found in earlier decisions that both the federal government and the oil companies were liable at the site.

Attorneys had different opinions about whether the ruling had implications beyond McColl.

“Each case has to be evaluated on its own facts,” said Kathleen Johnson, acting chief of the hazardous waste branch for the EPA’s office of regional counsel. “This decision is very specific, based on facts present at the McColl Site. So I’m not at all sure it would be precedential at other sites.”

But other attorneys said it could have a wider effect.

“It’s significant for other sites involving disposal of hazardous substances during the war era,” said Patterson, of the attorney general’s office. He said that while the federal district court case is not a binding precedent, “it will go into that group of cases out there regarding private-party liability and government liability where the wastes were created in relation to the war effort.”

Environmental attorney Gail Ruderman Feuer said she found the decision surprising.

“Basically, this judge is saying the oil companies may have dumped this waste, but they get off scot-free because ‘the war should pay for it,’ ” she said.

“It’s certainly an unusual order in allowing the private companies that did the dumping of the waste to get off without picking up the tab for the problems they caused,” said Feuer, a senior attorney with the Natural Resources Defense Council, an environmental group. “So I could see this having an impact on other cases where a private company can argue that the government made them do it.”

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Times staff writer Renee Tawa contributed to this report.