Shell Must Dish Out $29.5M To Aid in WW2 Fuel Cleanup, EPA Turns Up Heat On Oil Companies

The Environmental Protection Agency has just closed on a settlement with Shell Oil Co. (NYSE: RDS-A). Shell must now pay almost $30 million upfront and more than half of all future cleanup costs of a World War II fuel contamination site. 

What Happened: During World War II, an almost 22-acre site in California was contaminated from aviation fuel, also known as avgas. The debate over who exactly is responsible for cleanup costs has been going on for years. 

To help the war effort during WW2, oil companies like Shell signed a contract with the government to supply fuel for planes. However, as the oil companies upped their production, more and more pollution was leaked into McColl's California site. In total, almost 73,000 cubic yards of petroleum waste were left at the site. 

In 1991, Shell was sued by California. California claimed that the Comprehensive Environmental Response, Compensation, and Liability Act made all the oil companies responsible for cleanup costs. 

But the oil companies filed a counter lawsuit for breach of contract, claiming that the terms of the WW2 contacts made the government responsible for cleanup. In 2018, the oil companies won that claim and received $99.6 million.

However, the EPA revived this issue, and the judge affirmed that Shell was actually responsible for cleanup costs. The $29.5 million Shell must pay is a cost recovery by the government. 

Why It's Important: More and more oil companies can now expect the government to use legal force to get them to foot the bill of oil and fuel cleanups. 

A regional director for the EPA, Enrique Manzanilla, said that the Shell case "reflects EPA's commitment to ensure that responsible parties, and not taxpayers, pay for cleanup of hazardous waste."

As of now, Shell has waived any right to appeal this decision because they have settled. Additionally, Shell is already battling with a major cleanup. Shell's oil spill in the Nigerian Delta was estimated to cost them billions of dollars starting in 2015.