Shell v. U.S.: Court Holds Government to its World War II-Era “Grand Bargain” with Aviation Gas Refiners
by Christopher H. Marraro
Washington Legal Foundation
July 17, 2014
An April 2014 U.S. Court of Appeals for the Federal Circuit decision bound the federal government to a 70-year old contractual promise it made to United States businesses. Under the contract, refining companies invested massive capital resources to increase the production of 100-octane aviation fuel during World War II. In return, the government assumed all costs, including contingent future regulatory costs. After regulators brought a Superfund lawsuit against the fuel refiners in 2006 to clean up the old refinery sites, the companies sued to recover those costs under the original contract. The Federal Circuit’s ruling sends a critical message to both regulators and the private entities that contract with them: The courts will enforce the government’s contractual promises regardless of changes in circumstances or how long ago the bargain was struck.