Last month, the Federal Circuit decided a case over 70 years in the making. Following the bombing of Pearl Harbor in 1941 and full-scale U.S. entrance into World War II, the government entered into a series of contracts with oil companies to ramp up production of aviation gasoline (“avgas”) desperately needed for the war effort. But along with increased production came increased waste and toxic byproducts, notably spent alkylation acid and “acid sludge.” Safe waste disposal could not keep up with production, and much of the waste was eventually dumped at a site in Fullerton, California.
Until last week, the oil companies were on the hook for the cleanup costs. Thanks to the Federal Circuit’s recent ruling, though, the government must now reimburse the contractors for their remediation costs. The discussion below traces the course of the litigation, outlines the Federal Circuit’s legal analysis, and discusses how the decision represents but one potential avenue for U.S. government contractors to recover environmental remediation costs.