Shell Oil Company v. United States
751 F.3d 1282
| Fed. Cir. | 2014Background
- World War II avgas contracts obligated oil companies to supply aviation gasoline to US military; government controlled production and funded expansion via DSC/PAW; waste from alkylation (spent acid and acid sludge) dumped at McColl site due to limited reprocessing/transport options; CERCLA action decades later sought reimbursement for cleanup costs; Court of Federal Claims granted summary judgment to Government on liability and damages, later reversed in part by appeals court; remand for damages trial and attribution of nonbenzol waste to avgas program.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do avgas contracts require indemnification for CERCLA costs? | Oil Companies: costs are ‘charges’ under new/additional charges provision; CERCLA costs are government-imposed charges. | Government: ‘charges’ limited to tax-like obligations; CERCLA costs not within scope. | Yes, indemnification required for CERCLA costs. |
| Were the Oil Companies' contract claims released by termination/settlement? | Release did not clearly extinguish future indemnification claims. | Termination and settlement released all issues concerning the contracts. | No, not proven as broad release; claims survive. |
| Is the indemnification barred by the Anti-Deficiency Act (ADA)? | War Powers Act delegation authorized indemnification despite ADA. | ADA requires funds to be authorized; no waiver sufficient. | No, indemnification not barred; authorized by law. |
| Was there a genuine dispute on damages due to attribution of waste to avgas program? | Collateral estoppel/attribution supports 100% nonbenzol waste to avgas. | Attribution disputed; remand needed. | Damages remanded for factual determination. |
Key Cases Cited
- E.I. Du Pont de Nemours & Co. v. United States, 365 F.3d 1367 (Fed. Cir. 2004) (CERCLA indemnification under broader contract language allowed)
- Ford Motor Co. v. United States, 378 F.3d 1314 (Fed. Cir. 2004) (‘Allowable costs’/indemnification extended to CERCLA liability)
- Houdaille Indus., Inc. v. United States, 151 F.Supp. 298 (Ct. Cl. 1957) (Termination claims and indemnification under CSA contemplated future claims)
- Elf Atochem N. Am. v. United States, 866 F. Supp. 868 (E.D. Pa. 1994) (CERCLA liability within pre-CERCLA indemnity scope)
- Metric Constructors, Inc. v. Nat’l Aeronautics & Space Admin., 169 F.3d 747 (Fed. Cir. 1999) (Contract language must be given meaning consistent with contemporaneous context)
- Coast Fed. Bank, FSB v. United States, 323 F.3d 1035 (Fed. Cir. 2003) (Extrinsic evidence limited when contract unambiguous; used to confirm intent)