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HELENA — A federal appeals court declined a BNSF Railway Co. request to block a lawsuit filed by 152 Livingston residents who want the company to pay for the cleanup of toxic chemicals from a contaminated rail yard.

The city and residents said in the lawsuit that huge quantities of diesel fuel and solvents have seeped into the soil, surface water and groundwater.

BNSF had asked a federal judge to block the 2007 lawsuit filed in state district court, arguing the injunction was necessary to keep jurisdiction in federal court, where the Montana Department of Environmental Quality sued BNSF in 1988.

The state and company entered an agreement two years later that required BNSF to conduct a remediation investigation into the property near Livingston that was used for 80 years as a maintenance and fueling facility.

BNSF said in its request for an injunction in state court that the claims of residents were the same as the state, so the case should be blocked so the federal court could protect its jurisdiction.

U.S. District Judge Donald Molloy previously disagreed and denied the request for an injunction. BNSF appealed in August 2009, and the 9th U.S. Circuit Court of Appeals released its decision on Monday agreeing with Molloy.

Gus Melonas, a BNSF spokesman, did not immediately return a call for comment Friday.

Mark Kovacich, an attorney representing the plaintiffs, said the decision was welcome. The case has been progressing through the discovery phase and the plaintiffs have requested a trial date for next fall, Kovacich said.

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The city and residents are seeking damages to clean up pollution, compensation for harm to their property and punitive damages. Kovacich acknowledged a cleanup of the rail yard is under way but said not nearly enough has been done.

"There is some removal of diesel fuel from the ground, which has been taking place for a while," he said. "We don't believe it is sufficient to take care of the problem in any of our lifetimes."

DEQ spokeswoman Mary Ann Dunwell said Friday that 27,000 gallons of petroleum products have been removed from the rail yard. The agency also is testing for chlorinated solvents that were used for cleaning and degreasing rains and vapor intrusions into nearby buildings.

The appeals court's ruling won't have any effect on the DEQ's work overseeing remediation of the property "up to levels that are healthfully acceptable to people to reside there and to work there," Dunwell said.

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