• Federal Government Held Liable for Environmental Contacts Cleanup Costs ExxonMobil Incurred Under Government Contract
  • November 11, 2011 | Authors: Peggy O. Otum; Paul E. Pompeo
  • Law Firm: Arnold & Porter LLP - Washington Office
  • On October 31, 2011, the United States Court of Federal Claims held the United States liable for environmental cleanup costs ExxonMobil incurred for the remediation of two refineries in Texas and Louisiana that manufactured aviation gasoline (“avgas”) for the military during World War II. Granting ExxonMobil’s motion for partial summary judgment, the court found that the contracts between the United States and the refineries cover ExxonMobil’s cleanup costs. This decision follows one year after the court’s similar holding in Shell Oil Co. v. United States, 93 Fed. Cl. 153 (Fed. Cl. 2010), after which the court ultimately ordered the United States to reimburse Shell and the other oil company plaintiffs US$69.8 million for cleanup costs incurred in connection with government contracts for the production of avgas. In the Shell decision, the court found that, under the terms of the government contracts for avgas production, the government was responsible for the cost of environmental cleanup required as a result of production under the contracts. Together, the ExxonMobil and Shell decisions significantly narrow the bases upon which the United States may resist liability for environmental cleanup costs occasioned by WWII-era production contracts. Companies facing cleanup liabilities relating to WWII-era production wastes should examine whether a government contract may provide a basis for a contract claim or support an independent cost recovery action under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). www.arnoldporter.com