Archive for Saturday, May 27, 2000

Court orders Koch to pay cleanup costs

May 27, 2000

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— A federal appeals court on Friday upheld a lower court's decision ordering a Kansas oil refining company to pay 15 percent of the costs of cleaning up contamination at a Duncan, Okla., refinery it formerly owned.

Koch Industries Inc. had appealed an Oklahoma federal judge's order that found the company partially responsible for cleanup costs incurred by current owner Tosco Corp.

A three-judge panel of the 10th U.S. Circuit Court of Appeals ruled that under federal environmental law, Tosco can recover cleanup costs from any entity that is liable or potentially liable.

"Prior owners or operators like Koch are responsible persons if they controlled the site 'at the time of disposal' of a hazardous substance," the judges ruled.

Koch said it could not be found liable under Oklahoma or federal law, and said the judge had unfairly divided the costs of cleanup and improperly admitted some evidence in the trial. The company also said the judge ignored an earlier settlement between Tosco and Sun Company Inc., which sold the refinery to Tosco in 1980.

The three-judge panel rejected each of the arguments.

Koch shut down part of the refinery in 1949 and sold it to a predecessor of Sun Company Inc. in 1953.

In 1994, Tosco entered into a cleanup agreement with the Oklahoma Department of Environmental Quality, and by 1997 had spent $755,868. The appeals court said total cleanup costs are likely to exceed $2 million.

Also in 1997, Tosco sued Sun, Koch and several other now-defunct companies connected to the refinery, seeking to recoup some of the costs.

Sun settled all claims with Tosco in January 1998, leaving Koch as the only defendant. The lower court had initially found Koch responsible for 19 percent of the cleanup costs, but later reduced the company's responsibility to 15 percent. Koch had argued it was responsible only for 1.5 percent of the costs.

In a separate case in January, the U.S. Environmental Protection Agency slapped Koch with $35 million in fines for dumping 3 million gallons of crude oil into lakes and streams in Texas, Oklahoma, Kansas, Alabama, Louisiana and Missouri after more than 300 oil spills.

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