Allocating Environmental Remediation Costs for an Old Refinery Site

Litigation, North America

A comprehensive environmental site remediation was required for a refinery storage facility and pipeline corridor, but there was an ongoing dispute about which parties were responsible for the clean-up cost. Baker & O’Brien was engaged to review the approaches to allocating the total remediation costs among several potentially liable parties and conduct cost modeling and allocation analyses. Our consultant prepared an expert report and provided deposition testimony.

The petroleum refining value chain includes above-ground storage tanks, underground pipelines, and processing facilities – all potential leak sources. Small leaks in underground piping or storage tank floors can go undetected for long periods. For this reason, the degree of undetected releases and resulting contamination of the soil subsurface and associated remediation costs are always concerns for both long-time owners and prospective new owners. There are numerous methods for remediating oil-contaminated soil. However, they are all costly, labor-intensive, and time-consuming.

An old refinery site with adjacent crude oil and refined products storage facilities and pipeline corridors transiting the site were all suspected to be potential contributors to significant amounts of hydrocarbons detected in the soil and on the water table. A comprehensive site remediation plan was developed, and its execution began in earnest. However, there was an ongoing dispute about which parties – refinery owners, pipeline companies, and storage terminal operators – were responsible for the costs.

Baker & O’Brien reviewed approaches to allocating total remediation costs among several potentially liable parties, conducted cost modeling and allocation analyses, and proposed an alternate cost allocation framework. Our consultant prepared an expert report and provided deposition testimony.