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United States v. Shell Oil Co.

ELR Citation: 29 ELR 20027
Nos. CV 91-0589-RJK, 13 F. Supp. 2d 1018/(C.D. Cal., 08/11/1998) "Allocation of response costs"

The court holds that the federal government is responsible under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for 100 percent of the response costs incurred in cleaning up hazardous waste that was the byproduct of the World War II aviation gasoline (avgas) program at the McColl Superfund site. During World War II, oil companies produced avgas at the demand of and in fulfillment of contracts with the U.S. government. The government exercised an extensive degree of oversight of the petroleum industry and its avgas program. The court first holds that the government is wholly responsible for the acid waste resulting from the production of benzol, which makes up 5.5 percent of the total waste at the McColl site. The court next holds that the spent alkylation acid dumped at the site, which constitutes 12 percent of the total waste at the site, is entirely attributable to the avgas program.

The court then holds that 100 percent of the nonbenzol waste at the site is attributable to the avgas program. The evidence does not indicate how much additional waste was created by the oil companies secondary use of the spent alkylation acid. However, the primary contaminant at the McColl site is sulfuric acid. This acid would be present in the same or slightly greater quantities irrespective of whether the oil companies had chosen to make secondary use of the acid for nonavgas products. Thus, the court cannot say that the secondary use of the spent alkylation acid by the oil companies materially aggravated the waste treatment problems at the McColl site. The court further holds that the government should bear 100 percent responsibility for waste attributable to the avgas program. The sludge and the cost of its cleanup were costs of World War II. An allocation to the government of liability for waste that is attributable to a war-time program is wholly consistent with the policy underlying CERCLA and simply places a cost of the war on the United States and thus on society as a whole. In addition, the oil companies had no reasonable recourse to on-land dumping of the sludge because the government would not allow the oil companies to use tank cars to ship acid to northern California for use as fertilizer. Furthermore, the government repeatedly rebuffed the oil companies' attempts to obtain priorities to build regeneration plants.

The court last holds that the benefits the oil companies received from the avgas program do not warrant any offset in favor of the government. The government considered the tax advantages and other benefits received by the oil companies at least twice and determined that it was getting a fair deal, which is to say the oil companies were not receiving undue benefits from the bargain at taxpayer expense. Thus, the court will not revisit these determinations because they were made by fact finders better situated both spatially and temporally than the court.

Counsel for Plaintiff
Lois J. Schiffer, Joshua M. Levin
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendants
Ronald L. Olson
Munger, Tolles & Olson
355 S. Grand Ave., 35th Fl., Los Angeles CA 90071
(213) 683-9100