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NLC joins Indiana cities in case against polluters; oil companies' liability is at stake.

Noting that the Environmental Protection Agency (EPA) has confirmed there are at least 314,700 leaking underground storage tanks in cities and towns across the nation, NLC joined the City of Indianapolis and the Indiana Association of Cities and Towns in filing an amicus brief before the Indiana Supreme Court. The court's final decision could reaffirm the responsibility and liability of major oil companies to clean up groundwater pollution caused by such leaking tanks from service stations, not just in Indiana, but also in some 29 other states. The final ruling by the court will determine who will bear the hundreds of millions of dollars of costs and liabilities.

The case, Shell Oil Co. v. Meyer, involves a suit filed by five families living near a former gas station in Tippecanoe, Indiana, whose groundwater was contaminated by leaks from an underground storage tank. The families had sued the property owner, a former occupant, and two major oil companies, Shell and Union 76 Oil. The Indiana Court of Appeals determined that the cost of the cleanup should be financed by the two oil companies. The court determined that even though the gas station was owned and operated by an independent dealer, the two oil companies had made sure it met company standards of presentation and cleanliness: "We agree that Shell and Union had the authority and ability to control underground storage tanks," the appeals court affirmed the trial court's holding that the oil companies are liable.

For cities and towns, the case has major implications -- in and beyond the borders of Indiana. Because the case is one the judges called a case of first impression, the determination that the oil companies had "the authority to control" the tanks could set a precedent for later determinations in some 30 other states that have state statutes modeled after Indiana's. The court's decision was based upon its interpretation of the Indiana Underground Storage Tank Act, which is itself modeled after the federal Resource Conservation and Recovery Act. After determining that there were a "dearth" of cases determining responsibility under either the Indiana or federal law, the appeals court had to break new legal ground.

For cities, the determination of liability is critical to cleanup. With nearly 50 percent of the nation dependent upon ground water for drinking water, ground water contamination form tanks forces cities and towns to take health and safety action. But the costs of cleanup can be steep.

In addition to immediate health and safety concerns, NLC, in its friend of the court brief warned that such contamination can have harsh economic impacts: "such contamination can cause significant economic problems for cities and towns across the nation by diminishing the property value of any property that has been directly contaminated ... and may interfere with economic development."

The lead attorney for the five families said "the case is really about brownfields and redevelopment." Service stations, abandoned or still in operation, but with suspected contamination from their underground tanks, are typically located on high profile corners in neighborhoods. They can lead to blight and depressed assessed property values, because few developers will want to risk investment -- especially absent clarification of responsibility and liability.
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Title Annotation:National League of Cities
Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Article Type:Brief Article
Date:Oct 6, 1997
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