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Exxon Mobil Corp. v. United States

ELR Citation: 41 ELR 20335
Nos. 09-265C, -882C, (Fed. Cl., 10/31/2011) (Smith, J.)

The Court of Federal Claims held that the U.S. government is liable for costs an oil company incurred cleaning up contamination stemming from the production of aviation gasoline at its Baytown, Texas, and Baton Rouge, Louisiana, refineries during World War II. In the early 1940s, the company's predecessors entered into contracts with the government to sell the "avgas" directly to the United States. The contracts require the government to pay for any new or additional "taxes, fees, or charges" that the companies may be required to pay in connection with its production, manufacture, sale, or delivery of avgas. In the 1980s and 1990s, Louisiana and Texas ordered the company to clean up the site. The company therefore filed suit against the federal government for reimbursement of its cleanup costs. The government claimed that its liability only covers costs incurred during the performance of the contract. But the court disagreed. The timing of the cleanup charges has no bearing on the government's liability to cover costs that are causally related to avgas production. The very purpose of the contract clause at issue was to remove the potential risks any reasonable producer would be reluctant to take on. To now argue that the guarantee was limited in time while the risks are now doing damage is inconsistent with the whole purpose of the clause.