Feds Ordered to Pay $20.3M for Wartime Pollution Cleanup

This May 1945 photo shows a view of bomb damage in Hamburg, Germany. (AP Photo, File)

HOUSTON (CN) — A federal judge on Wednesday ordered the United States to pay ExxonMobil $20.3 million and a share of future remediation costs, resolving a dispute over who should foot the bills for cleaning up pollution from jet fuel production for World War II and the Korean War.

Exxon’s predecessors Humble Oil and Refining Company and Standard Oil of Louisiana built refineries in Baytown, Texas, and Baton Rouge, Louisiana, in the early 1900s to meet the nation’s demand for gasoline as Ford’s Model-T made leisure driving a national pastime.

But after Japan’s attack on Pearl Harbor in 1941 drew the United States into World War II, the government contracted the refineries to produce jet fuel for military aircraft.

The environmental movement had yet to emerge and both the Baytown and Baton Rouge refineries were designed to pump waste directly into the surrounding waterways—the Mississippi River in Louisiana and the Houston Ship Channel in Texas.

Environmental concerns also took a backseat to the war efforts in the 1940s and 1950s, and with the government mandating the refineries run 24/7 year round, the operators had no time for routine maintenance and did not have the resources to install pollution-control equipment.

After ExxonMobil bought the refineries and surrounding chemicals plants at both sites, it says it spent $77 million cleaning up wartime pollution at the sites.

It sued the federal government in 2010 and 2011, seeking to hold it liable for some of those costs. The refineries also produced hydrocarbons used to make synthetic rubber and TNT for the war effort.

In a two-week bench trial in March and April, which started in a courtroom and ended with both sides making their arguments on Zoom due to the novel coronavirus, the government said it should only be responsible for 25% to 40% of the pollution generated during World War II because not all the products produced were for the war.

To bolster those claims, the government said Humble Oil made money off selling gasoline at its service stations during the war, and argued the companies voluntarily cooperated with its effective takeover of their refineries, knowing they would profit from the war effort.

But U.S. District Judge Lee Rosenthal credited Exxon’s claims the government forced its predecessors to sign contracts to supply jet fuel, or avgas. She also found the record evidence shows all the refining done at the two sites was for war products.

“While patriotism played a role, and while the refineries profited, the court finds that Exxon has shown from the historical record that the government effectively left the companies no choice in contracting to make and supply avgas, and little room to maneuver on contract terms,” Rosenthal wrote Wednesday in two identical 113-page orders.

Further undermining the government’s efforts to limit liability, Exxon produced evidence Standard Oil sought approval during World War II for a master separator at its Baton Rouge site to remove oil and oily silt from wastewater the plant discharged into a Mississippi River tributary.

“Because federal wartime policy was fixed on prioritizing maximum avgas production in the two refineries, and in devoting available materials and labor to serve that overriding goal, federal approval for the master separator was refused,” wrote Rosenthal, a George H.W. Bush appointee and chief judge of the Southern District of Texas.

Because the litigation centered on long-past events, the bulk of expert testimony at the trial came from two forensic historians, and Rosenthal found Exxon’s historian provided more credible testimony than the government’s and had a “superior mastery of the original source” documents used to parse out liability.

Still, Rosenthal said she realized it was impossible to pinpoint the source of the pollution Exxon is cleaning up decades later.

“The court recognizes the difficulty of determining what happened 50 to 100 years ago and its impact on the degree of contamination up to the present. The court does not expect either side to determine with precision the composition or source of the contamination across the years,” she wrote.

On top of the $20.3 million, Rosenthal said the government must pay 24.67% and 36.54% of Exxon’s future cleanup costs for its refinery and chemical plants in Baytown, and 14.4% of those costs for its Baton Rouge refinery.

Despite prevailing after years of litigation, Exxon had a muted reaction to the rulings.

“We agree with the court’s ruling that supports ExxonMobil’s claim that the government is liable for a proportionate share of the clean-up costs,” a spokesman said in an emailed statement.

The Justice Department declined to comment.

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