U.S. Owes Big Oil $84M |for Post-WWII Cleanup

(CN) - The government owes oil companies more than $84 million for cleanup of acid sludge waste resulting from aviation fuel production during World War II, the Federal Claims Court ruled.

During the war, the government hired oil companies to produce high-octane gasoline for airplanes. The high volume of gas produced created a sulfuric acid byproduct that overwhelmed existing processing facilities. The oil companies dumped acidic sludge waste at a California site.

Years later, the government sued Shell Oil, Union Oil, Atlantic Richfield and Texaco for cleanup costs at the McColl Superfund site in Fullerton, Calif.

The government argued that oil companies had other options besides dumping the acid sludge, such as selling or reprocessing it, and that it didn't owe the full amount of cleanup costs since some of the waste produced was from fuel other than the war plane gas.

The claims court considered only the amount of damages, having already found the government liable under contract for the cleanup costs.

The court cited the government's refusal to allocate resources for alternatives to dumping, coupled with a lack of available tank cars, as creating a situation where the only alternative was for the companies to dump the sludge. And since the contract allowed simultaneous production of other fuels, oil companies could not be faulted for that waste separately, the court concluded.

The Washington-based claims court quoted a California federal court decision that "the Government's war requirements created the waste and ... foreclosed the reasonable alternative methods of disposal."

The claims court ordered the government to pay oil companies $64 million for cleanup, $18 million in interest and about $1.6 million for monitoring and maintenance, for a total of around $84.5 million.

The court also cited a 9th Circuit decision attributing 100 percent of benzol waste cleanup to the government, refuting arguments against relitigation on the issue.

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