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Jenner & Block Wins Motion to Dismiss In Alleged Pipeline Leak Federal Lawsuit

Essig_Genevieve_COLOR By Genevieve J. Essig

A Jenner & Block team including Partner Gabrielle Sigel and Associate Alexander Bandza of the Firm’s Environmental and Workplace Health & Safety group, supported by Partner Jessica Ring Amunson and Associate Amir Ali of the Firm’s Washington, D.C. office, won a significant victory in federal court environmental and pipeline litigation on behalf of clients Apex Oil Co., Inc. and Petroleum Fuel & Terminal Co. (PF&T).  Apex and PF&T are defendants in a cost recovery and injunction action brought against them by Chevron U.S.A. Inc. in the U.S. District Court for Maryland.  Chevron’s lawsuit concerns a pipeline that PF&T purchased from Chevron in 1994.  Chevron has claimed more than $30mm in damages for costs of remediating pollution allegedly caused by discharges from the pipeline over the course of approximately 20 years.

On October 20, 2015, U.S. District Court Judge J. Frederick Motz dismissed all 12 pending claims against Apex; and 9 counts against PF&T, including claims under the Oil Pollution Act, the Maryland Environmental Article, declaratory judgment, Download Climate_Change_Review_2009-2012quasi contract, and several tort theories.  Although the Court allowed breach of contract and indemnity claims and a Pipeline Safety Act claim to remain at issue for the time being, Judge Motz significantly limited the potential scope and financial impact of those claims, including through his decision on statute of limitations and timeliness defenses raised by PF&T.

With respect to Chevron’s cost recovery and contribution claims under the Oil Pollution Act, the Court found that Chevron’s complaint alleged an “attenuated underground path by which the contamination reached the Harbor from the groundwater surrounding the Pipeline . . . .”  (Opinion, p. 7.)  The Court held that Chevron’s claims alleging oil discharges into groundwater, “even if potentially connected to navigable waters,” cannot be the basis for OPA claims.  (Id.)  The Court also held that Chevron has no claim under the Maryland Environmental Article because Chevron’s claim under the Maryland statute does not create a private right of action and because the state statute only allows damages for a spill from a vessel, ship, or boat, which Chevron had not alleged.

The Firm is assisted in this matter by Timothy Maloney and Matthey Bradley of the Maryland firm of Joseph, Greenwald, & Laake. The Court’s decision has been profiled in Law360 and the Bloomberg News.