Shell Oil Co. v. United States, No. 20-2221 (Fed. Cir. 2021)
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In 1942-1943, the government contracted with the Oil Companies to rapidly expand aviation gas (avgas) production facilities and sell vast quantities of avgas to the government with an artificially low profit margin. The government assumed certain risks, agreeing to reimburse “any new or additional taxes, fees, or charges” which the Companies “may be required by any municipal, state, or federal law ... to collect or pay by reason of the production, manufacture, sale or delivery of the [avgas].” The increased production led to increased amounts of acid waste that overwhelmed existing reprocessing facilities. The Companies contracted to dispose of the acid waste at the McColl site in Fullerton, California.
In 1991, the United States and California sued under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601, seeking to require the Companies to pay cleanup costs. The Ninth Circuit held that the government was 100% liable for the cost of cleaning up the benzol waste (about 5.5% of the waste) at the McColl site. The Companies have borne nearly all of the clean-up costs incurred since 1994; they submitted a contract termination claim, seeking reimbursement. The Claims Court ultimately found the government liable for all cleanup costs at the McColl site and awarded the Companies $99,509,847.32 for costs incurred through November 2015. The government paid. Remediation at McColl remains ongoing. The Companies sought damages incurred after November 2015. The Federal Circuit affirmed that the government is liable for those costs plus interest, rejecting arguments that res judicata bars the claims and that the Claims Court did not have jurisdiction under the Contract Settlement Act of 1944.
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