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Nearly eighty years after ‘Pearl Harbor’, Shell wins battle with the U.S. over outstanding war bill

English translation of an article published today by the FD. 




Bert van Dijk

The 1941 attack on Pearl Harbor withdrew the US World War II. It also marked the start of a decades-long lawsuit between Shell and the U.S. government, with Shell now emerging as the winner. Photo: Hugh Gentry / Reuters

In brief

  • The US government also has to repay the last cent of interest on previously granted compensation to Shell.
  • The payment is a compensation for clean-up costs incurred by Shell and other oil companies at a location where toxic waste was dumped in World War II.
  • The judge finds that the US government is responsible for the remediation of the land.

Nearly eighty years after the attack on Pearl Harbor – the culmination of decades of litigation with the United States government – Shell is finally able to put an end to an ongoing legal battle over the disposal of a large amount of toxic waste. Or rather, about the costs of that clean-up. The US now also has to pay the last cent of interest to Shell.

Nearly $ 945,000 (over € 830,000). That is the amount that the US government still has to transfer to Shell, according to a US judge a few weeks ago. The money is compensation for the costs that Shell had to make between 2015 and 2019 for cleaning a piece of land in California. The oil and gas multinational also recovers the claimed interest on that amount. A few years ago, Shell had already received more than $ 58 million in compensation for cleaning costs incurred by the company up to 2015.

Shell does not want to respond substantively to the case, but indicates that with this ruling most of the points that are at issue in this case are ‘final’, ‘including the fact that the government is indeed liable,’ said a spokesman.

Jet fuel

The lawsuit is all about a piece of land in Fullerton, California, where Shell, Texaco, Union Oil and Atlantic Richfield dump large amounts of toxic substances between 1942 and just after World War II. That waste is the by-product of a refining process in which jet fuel avgas, a type of kerosene, was produced.

Demand for this fuel skyrockets after the attack on the US naval base Pearl Harbor on December 7, 1941. One day after this Japanese surprise attack, the US declared war on Japan and was withdrawn from World War II.

‘Most necessary refining product in the war’

The deployment of the United States Air Force requires large amounts of fuel. Production capacity at that time is nowhere near enough for the American war machine, and so the government is closing a deal with major oil companies, including Shell, to ramp up avgas production. At the time, that fuel was seen as the most necessary refining product in the war.

Shell and its competitors have little choice and swallow low profit margins of 6% to 7% in exchange for many of the government’s risks, including compensation for costs to be incurred by oil companies in the future due to production from avgas. If production increases twelvefold in a few years from 40,000 barrels per day to 514,000 barrels per day, the waste flow will also grow proportionally.

Because sulfuric acid is also used to make avgas. This led to a growing mountain of acid sludge in the oil companies during the war, which could be further processed into nothing useful.

Dump waste

Shell requests to build installations that can process this waste stream even further, but it gets twice zero on the complaint from the Americans. It takes too much time and money. A shortage of tankers also closes that storage route. And so Shell and the other oil companies cannot do much more than dump the waste. They are signing a landfill contract on an almost 9-acre piece of land in California.

When the war ends and the Americans terminate contracts with the oil multinationals, the dumping site is also closed.

Los Coyotes Country Club

Decades later, the land with the toxic waste under it is sold to an entrepreneur who builds the Los Coyotes Country Golf Club on it. Homes are being built nearby. When toxins surface to the surface in the late 1970s, residents begin to complain of enormous stench and headaches. Black slime also seeps through the surface. The U.S. Department of the Environment intervenes and in 1983 declares the area a priority for remediation.

Twelve years later, the remediation of the land is finally started and at the same time a year-long legal battle about the remediation costs is started. Initially, Shell and fellow oil companies are ordered to pay that cleaning, but eventually a senior US judge decides that the oil companies should be compensated.

Also pay the interest

This will take place in 2015. After a further appeal by the American government, the verdict remains in 2018 with a higher court that the US should compensate the oil companies for the costs spent. They committed themselves to this in accordance with the agreements in 1942.

But because the Americans only pay the money into the oil companies’ account in 2019, they took it to court again to also be reimbursed for the costs and interest incurred between 2015 and 2019. That claim has now also been accepted.


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