Transwestern Pipeline Co. v. Monsanto Co.

Facts

Transwestern Pipeline Company transported natural gas from Texas and Oklahoma to California, connecting with Southern California Gas Company’s (SoCalGas) pipeline system. In 1968, after a gas explosion destroyed one of Transwestern’s compressing stations in New Mexico, the company installed a new turbine-driven gas compressor that used Monsanto’s Turbinol, a synthetic lubricant containing PCBs. Transwestern’s parent company, Texas Eastern, had been purchasing Turbinol from Monsanto since the early 1960s. In 1966, Monsanto learned PCBs were appearing in the environment, but did not inform Texas Eastern or Transwestern of the environmental risks until 1972. At that time, Monsanto also announced it would stop making Turbinol and offered to sell its remaining stock only if the companies signed an indemnification agreement, which they refused. In 1981, SoCalGas discovered PCB contamination in its pipelines and determined Transwestern was the source. The PCBs had entered SoCalGas’s system when Turbinol leaked from Transwestern’s compressor, contaminating the entire pipeline west to Needles. The contamination required SoCalGas to implement special handling procedures for pipeline condensate at a cost of over $1 million annually. After nine years of investigation and negotiation, Transwestern settled with SoCalGas in 1990 for approximately $10 million and later agreed to pay 86% of continuing remediation costs. Transwestern then sought equitable indemnity from Monsanto.