In the United States Court of Federal Claims

Nos. 06-141C, 06-1411C

(Filed: January 14, 2013)

 

******************************************** *

Government Contracts for 

Production of Aviation Fuel

During World War II; CERCLA 

Liability for Waste Site Clean-up 

Costs; Interpretation of Contract 

“Taxes” Clause; Anti-Deficiency 

Act Limits on Indemnification in 

Government Contracts; First War 

Powers Act of 1941; National 

Defense Act of 1916; Issue 

Preclusion.

*

SHELL OIL COMPANY, *

ATLANTIC RICHFIELD COMPANY, *

TEXACO, INC., and *

UNION OIL COMPANY OF CALIFORNIA, *

*

 Plaintiffs, *

*

v. *

*

THE UNITED STATES, *

*

 Defendant. *

*

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Michael W. Kirk, with whom were Vincent J. Colatriano, Peter A. Patterson, and 

Michael Weitzner, Cooper & Kirk, PLLC, Washington, D.C., for Plaintiffs.

Stephen C. Tosini, with whom were Stuart F. Delery, Principal Deputy Assistant 

Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant 

Director, U.S. Department of Justice, Civil Division, Commercial Litigation Branch, 

Washington, D.C.; Michael J. Zevenbergen and Joshua M. Levin, U.S. Department of 

Justice, Environmental and Natural Resources Division; and Heather Cameron, General 

Services Administration, Of Counsel, for Defendant.

OPINION AND ORDER

WHEELER, Judge.

Plaintiffs in this contract case are well-known oil companies, Shell Oil Company, 

Atlantic Richfield Company, Texaco, Inc., and Union Oil Company of California. 

During the 1940s, at the urging of the U.S. Government, Plaintiffs entered into contracts 

to manufacture vast quantities of aviation fuel (called “avgas”) to help assure that the 

United States would prevail in World War II. The production of avgas was critical to the 

fueling of the nation’s fleet of military aircraft and unquestionably aided the war effort of 
2

the United States. However, the avgas manufacturing process yielded significant acid 

waste material that Plaintiffs by separate agreement deposited on real property in 

Fullerton, California known as the “McColl Site.” Plaintiffs’ avgas contracts were 

terminated at the end of World War II.

Many years later, under a statute known as the Comprehensive Environmental 

Response, Compensation, and Liability Act of 1978, 42 U.S.C. § 9601, et seq. 

(“CERCLA”), the U.S. Government and the State of California undertook a substantial 

effort to clean up the McColl Site. These clean-up efforts precipitated extensive litigation 

in California to determine which parties were responsible for the clean-up costs, and to 

what extent. See United States v. Shell Oil Co., 841 F. Supp. 962 (C.D. Cal. 1993); Shell 

Oil Co. v. United States, 13 F. Supp. 2d 1018 (C.D. Cal. 1998); United States v. Shell Oil 

Co., 294 F.3d 1045 (9th Cir. 2002). When the California CERCLA litigation failed to

produce a satisfactory outcome to Plaintiffs, they pursued a contract counterclaim arguing 

that, in the “Taxes” clause of each contract, the Government accepted full responsibility 

for all “charges” resulting from the production of avgas. The “Taxes” clause stated in 

part as follows:

Buyer shall pay in addition to the prices as established [in the 

price provisions of the contract], any new or additional taxes, 

fees, or charges, other than income, excess profits, or 

corporate franchise taxes, which Seller may be required by 

any municipal, state, or federal law in the United States, or 

any foreign country to pay by reason of the production, 

manufacture, sale or delivery of the commodities delivered 

hereunder.

Joint Appendix (“JA”) 16-17, 41-42, 61-62, 84-85, 112, 132-33, 159, 183-84, 208-09, 

231-32 (“Taxes” clause from the Government avgas contracts with each plaintiff 

company).

Following completion of the California CERCLA litigation, Plaintiffs commenced 

their action in this Court on February 24, 2006, and the case was assigned to Senior Judge 

Loren A. Smith. Based upon extensive discovery and stipulations of fact developed in 

the California litigation, the parties agreed, and the Court concurred, that the case could 

be decided without trial. After considering cross-motions for summary judgment on 

liability and damages, Judge Smith ruled in Plaintiffs’ favor. Shell Oil Co. v. United 

States, 80 Fed. Cl. 411 (2008) (liability decision); Shell Oil Co. v. United States, 86 Fed. 

Cl. 470 (2009) (damages decision). On appeal, however, the Federal Circuit ruled that 

Judge Smith should have recused himself from this case under 28 U.S.C. § 455(b)(4) due 

to a stock ownership issue, and it vacated and remanded the case for reassignment to a 

different judge. Shell Oil Co. v. United States, 672 F.3d 1283 (Fed. Cir. 2012). On 

remand, Judge Wheeler received the case through reassignment.
3

In the remand proceedings, the parties again elected to file cross-motions for 

summary judgment, relying upon the discovery and stipulations of fact developed during 

the California litigation. Plaintiffs filed their motion for summary judgment on June 29, 

2012, and Defendant filed its cross-motion for summary judgment on September 7, 2012. 

Additional response and reply briefs were filed on October 19, 2012 and November 16, 

2012, and the parties submitted a Joint Appendix of relevant documents on November 20, 

2012. The Court heard oral argument on December 18, 2012.

The amount at issue is $92,546,566.94, plus any additional interest and damages 

accruing since Plaintiffs filed their new motion for summary judgment in this Court. Of 

this amount, Plaintiffs’ claims are allocated as follows: (a) Shell Oil Company –

$54,213,778.91 (58.58 percent); (b) Union Oil Company of California – $17,528,319.78 

(18.94 percent); (c) Atlantic Richfield Company – $17,528,319.78 (18.94 percent); and 

(d) Texaco, Inc. – $3,276,148.47 (3.54 percent).

The resolution of this dispute turns on the meaning and effect of the “Taxes” 

clause that existed in each of Plaintiffs’ contracts. For reasons that will be explained, the 

Court finds that the “Taxes” clause deals only with taxes, and is not a broad 

indemnification clause promising that Plaintiffs will never have to pay for later-imposed 

liabilities such as CERCLA environmental clean-up costs. Even by inclusion of the word 

“charges,” the “Taxes” clause cannot reasonably be interpreted as Plaintiffs would like. 

Moreover, the parties have stipulated that the avgas contracts in question were terminated 

in 1945, and that all issues relating to these contracts were settled in the late 1940s. JA 

545, ¶ 609. There is nothing in the contracts to suggest that the United States would 

remain liable for any of the claimed costs after the contracts were terminated.

Major oil companies and the U.S. Government surely would know how to draft 

broad hold harmless indemnification clauses extending in perpetuity if that were their 

intent. The “Taxes” clause here does not accomplish that end. Words like “indemnify,” 

“hold harmless,” or any of their synonyms do not appear in the “Taxes” clause. 

Plaintiffs’ best opportunity to obtain reimbursement of its clean-up costs was in the 

California CERCLA litigation, where the courts dealt directly with the proper allocation 

of such costs under the CERCLA statute. The “Taxes” clause in Plaintiffs’ contracts 

does not trump the California courts’ CERCLA result. Accordingly, the Court finds for 

the Government. Plaintiffs’ motion for summary judgment is denied, and Defendant’s 

cross-motion for summary judgment is granted.
4

Factual Background1

During World War II, the U.S. Government procured large quantities of highoctane aviation gasoline (“avgas”) to fuel its fleet of military aircraft. Because avgas was 

an essential war supply, the Government possessed the authority to compel its production 

from private oil companies, and even to seize refineries, had it deemed such steps 

necessary. See United States v. Shell Oil Co., 294 F.3d 1045, 1049-50 (9th Cir. 2002). 

However, the Government did not need to resort to these measures to acquire avgas. As a 

matter of practice the Government, acting through the Defense Supplies Corporation 

(“DSC”), obtained avgas almost exclusively through consensual contract agreements with 

private sector oil companies. Among these companies were the Plaintiffs (or their 

predecessors-in-interest) (collectively, the “Oil Companies”). 

The avgas contracts were “base price” supply contracts, providing that the 

Government would pay the Oil Companies a fixed price per gallon of avgas, but with 

certain cost adjustment mechanisms built in to account for such things as fluctuations in 

crude oil prices. One such cost adjustment clause, entitled “Taxes,” lies at the center of 

the present controversy. The Oil Companies believe that the terms of the “Taxes” clause

require the Government to indemnify them for environmental clean-up costs incurred 

decades after the contracts were terminated. The Government disagrees, contending that 

the “Taxes” clause was meant only to create a price adjustment mechanism in the event 

the Oil Companies incurred unforeseen tax liabilities by reason of their production of 

avgas. 

Avgas consists of a blend of components, including alkylate. JA 383 (Stips. 8-9). 

During World War II, the standard method for producing alkylate consisted of mixing 

certain base components together in the presence of a catalyst, 98% sulfuric acid. Known 

as alkylation, this process yielded both alkylate and 89% spent alkylation acid. JA 383-

84, 510-11 (Stips. 9, 14, 493-94). The alkylate became a component of the avgas blend. 

The spent alkylation acid proceeded into one of three general “streams” for reuse or 

disposal: (1) reuse in the acid treatment of additional avgas components; (2) reuse in the 

acid treatment of non-avgas products also manufactured by the Oil Companies, such as 

motor gasoline and kerosene; or (3) disposal. JA 511(Stip. 496), 636-37 (Gov’t Liability 

Admis. ¶ 22). Whenever the spent alkylation acid was reused, the reuse process further 

diluted its acetic concentration, yielding a product of between 35% and 65% strength 

known as “acid sludge” that carried no further industrial utility. JA 511 (Stip. 496); JA 

643 (Gov’t Damages Admis. ¶ 7). At that point, the acid sludge was added to the 

disposal “stream.” 

 

1 As noted, the parties entered into extensive stipulations of fact during the California CERCLA litigation. 

The parties have included the stipulations in a Joint Appendix prepared for this action. All of the facts 

recited herein are undisputed. 
5

The Oil Companies disposed of both the excess spent alkylation acid and the acid 

sludge in large part by contracting with Mr. Eli McColl, who arranged to dump the waste 

into sumps on his property in Fullerton, California (the “McColl site”). At the end of the 

war, the Oil Companies settled “all ... issues concerning [the avgas] contracts” with the 

Government, thus terminating their contractual relationships. JA 545 (Stip. 609). At 

approximately the same time, the Oil Companies also ceased dumping avgas-related

waste at the McColl site, and, in the 1950s, McColl, with the assistance of the Oil 

Companies, filled in the sumps. United States v. Shell Oil Co., 841 F. Supp. 962, 967 

(C.D. Cal. 1993). 

A few decades later, however, the acid waste began oozing up through the surface 

of the ground at the McColl site. The U.S. Government and the State of California 

jointly began removing the waste, and later brought suit against the Oil Companies to 

recover the clean-up costs. Id. at 965-66. This prior litigation is relevant to the present 

proceedings, and will be addressed below.

CERCLA Environmental Litigation

Under the Comprehensive Environmental Response, Compensation, and Liability 

Act of 1978, 42 U.S.C. § 9601 et seq. (“CERCLA”), financial responsibility for 

environmental clean-up costs lies with the party or parties who caused the contamination, 

regardless of which entity conducts the clean-up work. However, CERCLA allows any 

responsible party to seek contribution from other responsible parties, and grants federal 

district courts broad discretion to equitably apportion clean-up costs among those who are 

liable. See, e.g., Cadillac Fairview/California, Inc. v. Dow Chem. Co., 299 F.3d 1019, 

1023-24 (9th Cir. 2002) (explaining the basic operation of CERCLA). In 1991, pursuant 

to this environmental framework, the United States and the State of California jointly 

initiated an action to recover from the Oil Companies the costs incurred for the clean-up 

work at the McColl site, as well as to obtain a declaratory judgment regarding the Oil 

Companies’ liability for costs to be incurred in the future. United States v. Shell Oil Co., 

841 F. Supp. 962 (C.D. Cal. 1993) (“Shell I”). The defendant Oil Companies filed 

counterclaims, seeking among other things indemnification under the avgas contracts. 

Two categories of waste at the McColl site were at issue in the CERCLA

litigation. The first of these, which accounted for approximately 5.5% of the total waste,

consisted of acid sludge resulting from the treatment of government-owned benzol. 

United States v. Shell Oil Co., 294 F.3d 1045, 1051 (9th Cir. 2002); Shell Oil v. United 

States, 13 F. Supp. 2d 1018, 1023 (C.D. Cal. 1998). The Government conceded that it 

was liable under CERCLA for the clean-up costs of this waste. United States v. Shell Oil 

Co., 294 F.3d 1045, 1059-60 (9th Cir. 2002) (discussing the Government’s concession 

with respect to the benzol waste). The second category of waste in the CERCLA 

litigation and now at issue here is the combination of the spent alkylation acid and acid 

sludge discussed above, referred to as the “non-benzol” waste. 
6

A. District Court Proceedings

The U.S. District Court for the Central District of California separated the liability 

and damages portions of the proceedings, and bifurcated the Oil Companies’ counter- and 

cross-claims from the remainder of the cost recovery phase of the litigation. Shell I, 841 

F. Supp. at 975-76. With respect to liability for the non-benzol waste, the court issued 

two decisions that had the effect of finding both the Oil Companies and the governmental 

entities responsible. First, the court granted the motions for summary judgment of the 

United States and California, holding that the record before it “establishe[d] beyond 

dispute that the oil companies generated the [non-benzol] hazardous waste dumped at the 

McColl site,” and thus were liable for the attendant clean-up costs under CERCLA. Id. at 

969-70. However, in a separate unpublished decision, the court nonetheless held that the 

U.S. Government was also liable for the non-benzol clean-up costs, under an “arranger” 

theory of liability under CERCLA. See Shell Oil v. United States, 13 F. Supp. 2d 1018, 

1019 (C.D. Cal. 1998) (“Shell II”) (citing the unpublished decision, dated September 18, 

1995); Dkt. No. 109-1 (the September 18, 1995 decision). 

Having found both the Oil Companies and the Government liable under CERCLA

for the non-benzol waste clean-up costs, the district court then held a trial to determine 

the proper allocation of the total clean-up costs among the parties. Shell II, 13 F. Supp. 

2d 1018. During these proceedings, as the Ninth Circuit later observed, the Government 

“introduced very little evidence with respect to the benzol waste,” United States v. Shell 

Oil Co., 294 F.3d 1045, 1060 (9th Cir. 2002), and the district court mistakenly believed 

that the Government had conceded not just that it was liable to some degree for the 

benzol waste, but that it was completely responsible for this waste. Id. at 1059; Shell II, 

13 F. Supp. 2d at 1024. Working under this assumption, the district court engaged in a 

lengthy analysis of the proper allocation of the non-benzol clean-up costs at the McColl 

site, for which the Oil Companies and Government were both liable.

The court began this analysis by emphasizing the unique nature of its task. Under 

CERCLA, courts resolve contribution claims according to “such equitable factors as 

[they] determine[] are appropriate,” 42 U.S.C. § 9613(f)(1), such that the court must first 

choose, and only then apply, the relevant equitable factors. Shell II, 13 F. Supp. 2d at 

1020. The court then held that there were two categories of relevant equitable factors in 

the case before it: first, “the percentage of the McColl site waste attributable to the avgas 

program,” and second, “the percent of that waste for which each party is responsible.” 

Id. at 1024. The court explained that the first factor required it to approximate, as closely 

as it could with the information before it, “what percentage of the sludge ... is avgas 

sludge,” and also that the second inquiry was “more conventional. Once a percentage is 

affixed to the amount of sludge attributable to avgas production, [this inquiry] seeks to 

determine how much responsibility for that sludge the Government and the Oil 

Companies each must bear.” Id.
7

Considering the first of these questions, the district court rejected both the Oil 

Companies’ and the Government’s attribution theories, and held instead that the relevant 

question was “[g]iven that all of the treatment of avgas stocks was going to occur as it in 

fact did occur irrespective of the Oil Companies’ plans to make other products using 

spent alkylation acid, how much additional waste was created by the Oil Companies’ 

secondary use of the acid?” Id. at 1026. In answering this question, the court found that:

the primary contaminant at the McColl Site is the sulfuric 

acid. This acid would be present in the same (or slightly 

greater) quantities irrespective of whether the Oil Companies

had chosen to make secondary use of the acid for non-avgas 

products. Had the waste dumped at the McColl Site been 

purely spent alkylation acid the Court ... would readily 

attribute 100 percent of that waste to the avgas program. 

Without persuasive evidence that the secondary use of the 

spent alkylation acid substantially aggravated the waste 

cleanup programs at the McColl site beyond what they would 

have been in the absence of that secondary use, the Court 

cannot say that th[is] secondary use ... materially aggravated 

the waste treatment problems at the McColl site.

Id. The court therefore concluded that “100 percent of the non-benzol waste at the 

McColl site is attributable to the avgas program.” Id.

The district court then found, and weighed as additional discretionary, equitable 

factors favoring the Oil Companies (1) that the waste and the clean-up costs were costs of 

World War II, such that “the American public” should “bear the[ir] burden”; (2) that “the 

Oil Companies had no reasonable recourse” to their dumping practices, in part because of 

a governmental failure to facilitate the creation of disposal alternatives; and (3) that the 

Oil Companies’ profits from the avgas program were not excessive, and thus did not 

warrant an offset in favor of the Government. Id. at 1027-29. The district court therefore 

allocated 100 percent of the non-benzol clean-up costs to the Government. Id. at 1030. 

If the district court’s ruling had prevailed, the full allocation to the Government would 

have ended the dispute, and the Oil Companies’ action in this Court would have been 

unnecessary. However, the appellate court held a different view.

B. Ninth Circuit Proceedings

On appeal, the Ninth Circuit affirmed in part and reversed in part the district court 

decisions. United States v. Shell Oil Co., 294 F.3d 1045 (9th Cir. 2002) (“Shell III”). 

First, the appellate court reversed the district court’s holding that the Government had 

sufficient control over the avgas production and disposal to be held liable as an 
8

“arranger” under CERCLA. Id. at 1059. In reaching this conclusion, the Ninth Circuit 

emphasized that the United States was only the end purchaser, not the manufacturer, of 

the avgas; that it never owned any of the raw materials or intervening products; that it 

“did not even know that the Oil Companies had contracts to dispose of their waste at the 

[McColl] site”; that the Oil Companies “voluntarily entered into the contracts and 

profited from the sale[s]”; and that the Government “was aware that waste was being 

produced, but did not direct the manner in which the companies disposed of it.” Id. at 

1056-59. Thus, “[b]ecause the United States [was] not an arranger, it [had] no liability 

under CERCLA for the clean-up costs” of the non-benzol waste. Id. at 1059.

However, the Ninth Circuit upheld the district court’s determination that the 

United States was 100 percent liable for the clean-up costs of the benzol waste also 

present at the McColl site. Id. at 1060-61. As noted above, the trial court had at one point 

mistakenly understood the Government to have conceded its full liability for this category 

of waste. However, after the Government discovered and notified the district court of 

this error, that court had reinstated the issue for further review. In an unpublished order,

the court allocated 100 percent of the benzol costs to the Government, “for the same 

reasons that avgas sludge is fully allocable to the Government.” Id. at 1060 (quoting the 

unpublished decision). Reviewing this determination, the Ninth Circuit expressly 

recognized that, because of the district court’s error, its “analysis ... was focused on the 

non-benzol rather than the benzol waste.” Id. However, the appellate court found that 

the lower court was “entirely justified” in extending that analysis from one category of 

waste to the other, for two reasons: first, the United States had “introduced very little 

evidence with respect to the benzol waste,” and second:

to the degree that the [district court’s chosen] equitable 

factors support allocation of the cleanup costs to the United 

States with respect to the non-benzol waste, where the 

arranger status of the United States was disputed, such factors 

are even stronger with respect to the benzol waste, where the 

United States concedes that it was an arranger.

Id. The Ninth Circuit therefore held that “the district court did not abuse its discretion in 

choosing the factors on which to rely in determining allocation, nor did it clearly err in 

applying those factors to the benzol waste.” Id.

C. Prior Proceedings in This Court

On remand from the Ninth Circuit, the district court transferred the Oil 

Companies’ indemnity counterclaims to this Court pursuant to 28 U.S.C. § 1631. The Oil 

Companies then voluntarily dismissed their complaint in the transferred action and filed a 

new complaint, thus initiating the present action. Proceeding before Senior Judge Smith, 

the parties cross-moved for summary judgment and received final decisions as to both 
9

liability and damages. See Shell Oil Co. v. United States, 80 Fed. Cl. 411 (Fed. Cl. 

2008); Shell Oil Co. v. United States, 86 Fed. Cl. 470 (Fed. Cl. 2009).2 Shortly after 

entering final judgment, however, Judge Smith disclosed to the parties that his wife 

owned a small amount of stock in a parent company of two of the plaintiffs. On review, 

the Federal Circuit was careful to “emphasize that there [was] neither an allegation nor 

[a] suggestion that [Judge Smith] was unduly influenced by his wife’s financial interest,” 

but nonetheless ultimately held that under these circumstances, 28 U.S.C. § 455(b)(4) 

required that Judge Smith recuse himself entirely from the case. Shell Oil Co. v. United 

States, 672 F.3d 1283, 1291 (Fed. Cir. 2012). The Federal Circuit therefore vacated the 

judgment, and the Oil Companies’ consolidated claims were duly transferred to the 

undersigned for fresh consideration. Following transfer, the parties again cross-moved 

for summary judgment and re-briefed their motions.

Discussion

A. Standard of Review

Summary judgment is appropriate where the evidence demonstrates that there is 

“no genuine issue as to any material fact and that the moving party is entitled to judgment 

as a matter of law.” Rule of the Court of Federal Claims (“RCFC”) 56(a); see also

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–49 (1986); Casitas Mun. Water Dist. 

v. United States, 543 F.3d 1276, 1283 (Fed. Cir. 2008). A “genuine” dispute is one that 

“may reasonably be resolved in favor of either party,” Anderson, 477 U.S. at 250, and a

“material” fact is one that “might affect the outcome of the suit under the governing 

law[.]” Id. at 248. The moving party carries the burden of establishing its entitlement to 

summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Once that 

burden is met, the onus shifts to the non-movant to identify evidence demonstrating a 

dispute over a material fact that would allow a reasonable finder of fact to rule in its 

favor. Anderson, 477 U.S. at 256. It is not necessary that such evidence be admissible, 

but mere denials, conclusory statements, or evidence that is merely colorable will not 

defeat summary judgment. Celotex, 477 U.S. at 324; Anderson, 477 U.S. at 249–50.

In considering a motion for summary judgment, a court does not weigh each side's 

evidence but, rather, must draw all inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88

(1986). Where, as here, the parties have filed cross-motions for summary judgment, the 

 

2 The Court notes that, in addition to these decisions, Judge Smith has issued an opinion in another avgas 

contract case, Exxon Mobile Corp. v. United States, 101 Fed. Cl. 576 (2011), in which the Court ruled in 

favor of the Plaintiff on all liability issues. As in the earlier decisions in this case, Judge Smith based his 

ruling on a broad interpretation of the “Taxes” clause, and a rejection of the Government’s AntiDeficiency Act arguments. Oddly, neither party cited this highly relevant decision in the briefs or at oral 

argument in this case. As will become evident from the analysis that follows, the Court respectfully 

disagrees with the ruling in Exxon Mobile.
10

court evaluates each motion on its own merits and makes all reasonable inferences 

against the party whose motion is under consideration. Marriot Int’l Resorts, L.P. v. 

United States, 586 F.3d 962, 968–69 (Fed. Cir. 2009) (internal citation omitted). To the 

extent there exists a genuine issue of material fact, both motions must be denied. Id. at 

969.

B. Analysis

Only the clean-up costs for the non-benzol waste remain at issue in the present 

case. Having failed in their attempt to hold the Government liable for these costs in the 

California CERCLA litigation, the Oil Companies now advance a different, strictly 

contractual theory of liability that under the terms of the avgas contracts, they are 

indemnified for these costs. In response, the Government raises several defenses.

First, the Government contends that the contract clause relied on by the Oil 

Companies was not intended to create a broad, open-ended indemnification, but rather 

merely a price-adjustment mechanism in the event that the Oil Companies were assessed 

unforeseen taxes by reason of their avgas production. Second, the Government argues 

that any claim to the contrary is barred by the fact that, as the Oil Companies stipulated in 

the CERCLA litigation, “all ... issues concerning [the avgas contracts] were settled 

between the parties in the late 1940s,” at the time of their termination. JA 545 (Stip. 

609). Third, the Government argues that even if the Court could construe the contract 

clause in question as an indemnification agreement, such an agreement would be ultra 

vires under the Anti-Deficiency Act, and therefore unenforceable. Finally, the 

Government argues that, as a factual matter, the majority of the waste at the McColl site 

resulted from the manufacture of products other than avgas.

The Court will examine each of these issues in turn below. 

1. The CERCLA Clean-Up Costs Are Not “Charges” Within the Meaning of 

the “Taxes” Clause

The “Taxes” clause at the heart of the present dispute is substantially the same in 

each of the Oil Companies’ contracts, and states as follows:

Taxes.

[(a)] Buyer shall pay in addition to the prices as established 

[in the price provisions of the contract], any new or additional 

taxes, fees, or charges, other than income, excess profits, or 

corporate franchise taxes, which Seller may be required by 

any municipal, state, or federal law in the United States, or 

any foreign country to pay by reason of the production, 
11

manufacture, sale or delivery of the commodities delivered 

hereunder. Buyer shall also pay any such taxes on crude 

petroleum or the transportation thereof, to the extent such 

taxes result in increased cost of the commodities delivered 

hereunder not compensated for by Section V hereof.

[(b)] Buyer shall also pay in addition to the prices established 

[in the price provisions of the contract], any now existing 

taxes, fees, or charges measured by the volume or sales price 

of the aviation gasoline delivered hereunder, imposed upon 

Seller by reason of the production, manufacture, storage, sale 

or delivery of such gasoline, unless Buyer or Seller is entitled 

to exemption from a given tax, fee or charge by virtue of 

Buyer’s governmental status; it being understood that Buyer 

now believes that both Buyer and Seller are entitled to such 

exemption. Seller represents that the taxes, fees, and charges 

referred to in this paragraph have not been included in its 

computation of costs on which the prices set forth in Section 

IV hereof are based.

[(c)] If in any case the parties cannot agree on the question as 

to whether or not Buyer or Seller is entitled to an exemption 

from a given tax by virtue of Buyer’s governmental status, the 

burden shall be upon Buyer to obtain a ruling in writing from 

a duly constituted and authorized governmental tax authority 

as to such exemption. Until such ruling is obtained Buyer 

shall pay the amount of the tax to Seller or to the appropriate 

tax collecting agency or make satisfactory arrangements with 

such tax collecting agency.

JA 16-17, 41-42, 61-62, 84-85, 112, 132-33, 159, 183-84, 208-09, 231-32.

The Oil Companies’ legal theory is tethered to the very first sentence of this

clause, which provides that “Buyer shall pay ... any new or additional taxes, fees, or 

charges, other than income, excess profits, or corporate franchise taxes, which Seller may 

be required by any municipal, state, or federal law in the United States, ... to pay by 

reason of the production, manufacture, sale or delivery of [avgas].” (emphasis added). 

Although the Oil Companies concede that CERCLA liability is neither a “tax” nor a 

“fee,” they argue that such liability is a “charge” within the meaning of the clause, for 

two textual reasons. First, as the Oil Companies point out, the plain meaning of a 

“charge” includes, among many other definitions, a “cost,” which CERCLA liability 

most certainly constitutes for the party on whom it is imposed. See Pls. Mem. at 25-26 

(quoting, e.g., BLACK’S LAW DICTIONARY 311 (3d ed. 1933) (partially defining 
12

“charges” as “[t]he expenses which have been incurred, or disbursements made in 

connection with a contract, suit, or business transaction”) and THE AMERICAN HERITAGE 

DICTIONARY OF THE ENGLISH LANGUAGE 312 (4th ed. 2000) (a “charge” is, inter alia, an 

“expense [or] cost”)). Second, the Oil Companies posit that “courts often speak of 

‘charges’ as encompassing CERCLA costs.” Id. at 26 (collecting cases and quoting, e.g., 

Del-Ray Battery Co. v. Douglas Battery Co., 635 F.3d 725, 732 (5th Cir. 2011) 

(“CERCLA is the federal statute that ... charges the costs of [environmental] cleanup to 

those responsible for the contamination.”) (emphasis added)). 

In a related vein, the Oil Companies also attempt to analogize the “Taxes” 

provision at issue here to contract clauses that appeared in two other World War II-era 

government contracts which were also the subject of federal litigation. Id. at 28-29 

(citing Ford Motor Co. v. United States, 378 F.3d 1314 (Fed. Cir. 2004) and E.I. DuPont

de Nemours & Co. v. United States, 365 F.3d 1367 (Fed. Cir. 2004)). In Ford Motor and 

DuPont, the plaintiffs were, like the Oil Companies, manufacturers of war materials 

purchased by the Government. And, in both cases, the Federal Circuit found that the 

contract clauses in question indemnified the manufacturers for CERCLA-mandated 

clean-up costs imposed decades later. The Oil Companies argue that the Court should 

find a similar indemnification here.

In response, the Government offers some compelling counter-arguments. First, it 

asserts that the wording of the contract clauses at issue in Ford Motor and DuPont are 

simply not analogous to the “Taxes” clause in the avgas contracts, and that the “Taxes” 

clause here has a much more limited scope. Gov’t Mem. at 12-16. Second, the 

Government argues that even if the “Taxes” clause could be construed generally as an 

indemnification clause, the term “charges” cannot encompass CERCLA liability, which 

is a “legal responsibility to clean up one’s own pollution.” Id. at 17. The Government

also points out that the word “charge” does not appear anywhere in CERCLA, with the 

exception of its use in the context of a “person in charge.” Id. (citing 42 U.S.C. §§ 9603, 

9604). Further, the Government notes that none of the CERCLA cases cited by Plaintiffs 

for their use of the word “charge” actually examined the meaning of that word in the 

context of either CERCLA liability or purported indemnification under a contract clause. 

Id. at 18. 

Reading the relevant clause as a whole, including the title, “Taxes,” the Court 

finds that it was plainly intended as a price-adjustment mechanism in the event the Oil 

Companies were assessed additional or unanticipated taxes as a result of their avgas 

production. Cf. INS v. Nat’l Ctr. for Immigrants’ Rights, Inc., 502 U.S. 183, 190 (1991) 

(while not dispositive, titles of statutory sections “can aid in resolving an ambiguity in the 

legislation’s text”). In addition to the title of the clause, other textual signals within the 

clause support this reading. For example, although the clause speaks in terms of “taxes, 

fees, or charges” three times, it also twice refers back to this trio of terms by the umbrella 

identifier “such taxes.” See the “taxes” clause at paragraph [(a)] (“Buyer shall also pay 
13

any such taxes on crude petroleum or the transportation thereof, to the extent such taxes

result in increased cost of the commodities delivered hereunder not compensated for by 

Section V hereof.”) (emphasis added). Similarly, the first sentence of the clause 

expressly excludes from the “taxes, fees, or charges” that were eligible for recoupment 

“income [taxes], excess profits [taxes], or corporate franchise taxes.” Thus, the limitation 

lists only specific types of taxes, and not any other form of liability or category of costs.

Although not dispositive, this fact supports the conclusion that the parties intended the

clause to create a tax-related price-adjustment mechanism, not a broad indemnification. 

Moreover, the Court also rejects the Oil Companies’ argument that the word 

“charge” is never synonymous with a “tax,” and therefore that the Court must, on pain of 

otherwise reading this term out of the “Taxes” clause altogether, read it as meaning a 

“cost or expense.” Pls. Mem. at 25-26; see also Tr. Oral Arg., Dec. 18, 2012, at 69 

(“[T]he place where you go to find out what the ordinary, everyday meaning [of a given 

term] ... is the dictionary, and I would submit and I’m not aware of one that suggests that 

‘charges’ is a synonym for taxes. And that’s really the most important point I wanted to 

leave you with.”). Indeed, this argument is belied by the very dictionaries cited by the 

Oil Companies, among others. See, e.g., BLACK’S LAW DICTIONARY 311 (3d ed. 1933) 

(a “charge” is, inter alia, “[a]n encumbrance, lien, or burden”); BLACK’S LAW 

DICTIONARY 265 (9th ed. 2009) (“[a]n encumbrance, lien, or claim”); WEBSTER’S NEW 

INTERNATIONAL DICTIONARY 452 (2d ed. 1937) (“whatever constitutes a burden on 

property, as rents, taxes, liens, etc.”); THE WINSTON DICTIONARY, COLLEGE EDITION 162 

(1942) (“an expense or liability”); THE OXFORD ENGLISH DICTIONARY 36 (2d ed. 1989, 

Vol. III) (“[a] liability to pay money laid upon a person or estate”3); AMERICAN 

HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE 312-13 (4th ed. 2000) (“a financial 

burden, such as a tax or lien”) (emphasis added in all instances). 

Of course, the mere existence of this relatively narrow definition of “charge” –

i.e., an encumbrance, lien, or other like financial burden or liability, especially one that 

relates to real property – does not compel the conclusion that it was the one intended and 

understood by the parties to the avgas contracts. However, in addition to the textual 

signals discussed above, the canon of construction known by its Latin name noscitur a 

sociis also supports a narrow interpretation of the term, as it was used here. That canon

“counsels that a word [be] given more precise content by the neighboring words with 

which it is associated.” Reema Consulting Servs., Inc. v. United States, --- Fed. Cl. ---, 

2012 WL 5901035, at *8 n.11 (Fed. Cl. Nov. 6, 2012) (quoting United States v. 

Williams, 553 U.S. 285, 294 (2008)).4 Because the “Taxes” clause associates the words 

 

3 The O.E.D. includes as examples of this usage “[w]hether the same proportional charge should be made 

on incomes of 100l. or 500l., as on those of 1000l. or 5000l.?” (1852) and “[l]imitation has ...been put 

upon proceedings to recover charges on the estate” (1858) (alteration in original).

4 Although this canon is more frequently used by courts in interpreting statutes, it applies with equal force 

to contracts. See, e.g., La Salle Bank Nat’l Ass’n v. CIBC Inc., 2011 WL 4943341, at *4 (S.D.N.Y. Oct. 
14

“taxes, fees, [and] charges,” this canon thus counsels that “charges” be “given more 

precise content” by “taxes” and “fees.” Applying this principle, the Court finds that, as it 

was used in the “Taxes” clause, the term “charges” connotes the fairly narrow tax-related

meaning suggested by the definitions listed above.5 As such, it cannot bear the openended, indemnifying meaning advanced by the Oil Companies. 

In addition, the Court agrees with the Government that Ford Motor and DuPont

hinder, rather than aid, the Oil Companies’ case on this question. As noted, both of these 

cases involved claims, at least superficially similar to the one at issue here, that 

manufacturers of certain war materials were indemnified for later-imposed CERCLA 

liability under the terms of their contracts. See Ford Motor, 378 F.3d 1314; DuPont, 365 

F.3d 1367. However, while the Federal Circuit held in both cases that the contract 

clauses in question did, in fact, provide for such indemnity, it based its holding in each 

instance on specific language found in each of the relevant contracts. In DuPont, that 

language stated, in relevant part, that subject to certain exceptions not relevant here:

[i]t is the understanding of the parties hereto, and the 

intention of this contract, that all work ... is to be performed 

at the expense of the Government and that the Government 

shall hold [DuPont] harmless against any loss, expense 

(including expense of litigation), or damage (including 

damage to third persons because of death, bodily injury or 

property injury or destruction or otherwise) of any kind 

whatsoever arising out of or in connection with the 

performance of the work[.]

365 F.3d at 1370. 

As part of its analysis of this language, the Federal Circuit quoted with approval a 

test set forth by a Pennsylvania district court: “[i]n order for a pre-CERCLA 

indemnification clause to cover CERCLA liability, courts have held that the clause must 

be either ‘[1] specific enough to include CERCLA liability or [2] general enough to 

include any and all environmental liability which would, naturally, include subsequent 

CERCLA claims.’” DuPont, 365 F.3d at 1373 (quoting Elf Atochem N. Am. v. United 

 

17, 2011) (noting that “the canon noscitur a sociis urges a court to construe contract terms in accordance 

with the meaning of the words that are associated with them”) (internal quotation omitted); Integra 

Telecom, Inc. v. Twin City Fire Ins. Co., 2010 WL 1753210, at *4-6 (D. Or. April 29, 2010) (similar).

5 At oral argument, Plaintiffs’ counsel advanced the plain-language argument that “if [one] just thinks 

about ordinary, everyday usage of the word [“charges”], one does not say that ‘I’m paying my income 

charges to the IRS.’ One does not say ‘I’m paying my property charges to the state government.’ Taxes 

and charges simply don’t mean the same thing.” Tr. Oral Arg. at 69. However, the Court notes that it is 

perfectly natural to speak of one’s “tax liabilities,” and that “liability” frequently appears as a synonym 

for “charge” in the above-listed dictionary definitions. 
15

States, 866 F. Supp. 868, 870 (E.D. Pa. 1994)). Regarding the contract language in 

question, the Court held that because the relevant clause “contain[ed] no limiting 

language, and show[ed] an intent to allocate all possible liabilities among the parties,” id.

(internal quotation omitted), “[t]he indemnity language of this provision (‘any ... expense 

... of any kind whatsoever’) [was] clearly sufficiently broad on its face to include 

DuPont’s CERCLA-related liability,” id. at 1372 (ellipses in original).

Similarly, in finding that the contract clause in Ford Motor indemnified the 

company for its CERCLA liability, the Federal Circuit again tied its holding to the 

relevant contract language. In Ford Motor, that language expressly stated that “allowable 

costs” under the contract included “loss or destruction of or damage to property as may 

arise out of or in connection with the performance of the work under this contract.” 378 

F.3d 1319.

6

The Court agrees with the Government that the language in the “Taxes” clause

here is not analogous to the language in either DuPont or Ford Motor. In contrast to the 

clause at issue in DuPont, the “Taxes” clause does not state that the Government will 

hold the Oil Companies harmless for anything, much less “any loss, expense ..., or 

damage ... of any kind whatsoever.” In contrast to both clauses, the “Taxes” clause does 

not make any mention of the allocation of liability for any property damage arising out of 

Plaintiffs’ performance. Cf. Shell II, 13 F. Supp. 2d at 1020 (noting that the avgas 

contracts “were silent on the question of who should bear the burden of waste 

treatment”). To the contrary, the “Taxes” clause is specific only with respect to the types 

of taxes excluded from the clause’s coverage, as well as the duty of the Oil Companies to 

obtain a ruling from “a duly constituted governmental tax authority” in the event a tax 

dispute arose. Under the test endorsed by the Federal Circuit, therefore, the Court finds 

that the “Taxes” clause is neither “specific enough to include CERCLA liability,” nor 

“general enough to include any and all environmental liability which would, naturally, 

include subsequent CERCLA claims.” DuPont, 365 F.3d at 1373. Indeed, the Court finds 

that the “Taxes” clause was not concerned with environmental liability or property 

damage at all. Instead, it merely created a price-adjustment process in the event the Oil 

Companies incurred unexpected tax liability from any level of government.

Finally, the Court finds that, contrary to the Oil Companies’ assertions, it is

irrelevant that the word “charge” sometimes appears in the text of CERCLA decisions. 

See Pls. Mem. at 27 (collecting and quoting cases). As noted above, “charge” has many 

definitions, one of which is “cost or expense,” and another of which is, in a related verbal 

iteration, “to hold financially liable; demand payment from.” THE AMERICAN HERITAGE 

 

6

 The rulings in DuPont and Ford Motor were also contingent upon the Federal Circuit’s finding that (1) 

the plaintiffs had expressly preserved their indemnification rights through the terms of their termination 

agreements, and (2) the Contract Settlement Act of 1944, 41 U.S.C. § 101 et seq, provided the necessasry

waiver of the Anti-Deficiency Act that allowed them to do so. DuPont, 365 F.3d at 1373-78; Ford Motor, 

378 F.3d at 1318-20. The Court will address these questions as to the Oil Companies below.
16

DICTIONARY OF THE ENGLISH LANGUAGE 312 (4th ed. 2000). It is therefore entirely 

natural and unremarkable that courts would sometimes employ the word “charge” in 

cases involving CERCLA liability, where they are asked to impose significant costs in

allocating clean-up cost responsibility. See, e.g., City of Wichita v. APCO Oil Corp. 

Liquidating Trust, 306 F. Supp. 2d 1040, 1093-94 (D. Kan. 2003) (“a state agency’s 

“charges [for oversight] are necessary costs of response at the Site, and are fully 

recoverable” under CERCLA); Foster v. United States, 130 F. Supp. 2d 68, 77 (D.D.C. 

2001) ( “A party liable for the presence of hazardous substances under CERCLA may be 

charged for the cost of ascertaining the danger posed by an actual or threatened release of 

hazardous substances”) (internal citation omitted) (emphasis added in both). 

The fact that judges have sometimes employed this exceedingly common usage of 

the word “charge” in their CERCLA opinions does not indicate anything about the intent 

of the Oil Companies and the Government in the avgas contracts. Indeed, in none of the 

opinions cited by the Oil Companies does “charge” carry or connote any particular legal 

meaning. To the contrary, the opinions simply use the term in a common colloquial 

manner, as demonstrated by the examples cited. The existence of this general usage

simply has no bearing on what the parties intended by the term “charge” in the “Taxes” 

clause of the avgas contracts.

Thus, for the reasons stated, the Court finds that the Oil Companies’ claims of 

indemnification must fail as a matter of law because their CERCLA liability is not a 

“charge” within the meaning of the “Taxes” clause in the avgas contracts.

2. The Oil Companies Discharged Any Right to Indemnification When They 

Terminated Their Avgas Contracts in the Late 1940s

The Court finds that the Oil Companies’ claims fail for a second, independent 

reason. The Oil Companies stipulated in the course of the California CERCLA litigation

that the avgas contracts “were terminated in 1945 or ... shortly thereafter. Matters 

relating to profits from the[] [avagas] contracts, termination costs, and all other issues 

concerning these contracts were settled between the parties in the late 1940s.” JA 545 

(Stip. 609) (emphasis added). Even assuming that the Oil Companies once had colorable 

claims for indemnification, they have not offered any explanation for how such claims

survived the contract terminations, and the Court finds that none exists.

Again, a comparison to the indemnification claims in DuPont and Ford Motor

cases is instructive. As discussed above, the contract clauses in those cases provided, 

respectively, that the Government would “hold [DuPont] harmless against any loss, 

expense ..., or damage ... of any kind whatsoever,” 365 F.3d at 1370, and, in Ford

Motor, that “allowable costs” under the contract included “loss or destruction of or 

damage to property as may arise out of or in connection with the performance of the work 

under this contract,” 378 F.3d at 1319. The “Taxes” clause here differs markedly from 
17

both of these provisions in that it lacks any comparable intent to indemnify the Oil 

Companies. Setting this issue aside, however, the Court notes that in DuPont and Ford 

Motor, the indemnification language alone was insufficient for the plaintiffs to prevail on 

their claims. Rather, each case also hinged on a finding that, in agreeing to a termination 

of the contract, each party expressly preserved its rights to indemnification into the 

future.

In DuPont, the termination agreement provided that, upon the payment of a certain 

sum by the Government to the company, “all rights and liabilities of the parties under the 

Contract ... shall cease and be forever released except[,] [inter alia] ... “[a]ll rights and 

liabilities of the parties under the contract articles ... applicable to ... covenants of 

indemnity.” 365 F.3d at 1370 (emphasis added).

7

 Having first found that the “hold 

harmless” clause was a qualifying covenant of indemnity, the Court expressly relied on 

this language, as well as the fact that the termination agreement carried no apparent

expiration date, to hold that DuPont’s indemnity “remain[ed] in effect” notwithstanding 

the general contract termination. Id. at 1374-75.

Similarly, the termination agreement between Ford and the Government expressly 

provided that Ford maintained the right to recover costs “which are based upon 

responsibility of the Contractor to Third Parties ... and which involve costs reimbursable 

under the Contract ... but which are not now known.” Ford Motor, 378 F.3d at 1318. 

Relying on this language, the Federal Circuit held that “the Termination Agreement ... 

reserved unknown claims from a general release of claims, [thus] preserv[ing] Ford’s 

claim for payment under the War Contract.... Because Ford’s [indemnity] claim was 

exempted from settlement by the[se] terms ..., the government’s liability ... was not 

released.” Id.

At oral argument in this case, counsel explained that neither party was able to 

locate the Oil Companies’ termination agreements with the Government. Tr. Oral Arg. at 

54. However, while the Court lacks direct evidence of the terms of these agreements, 

during the course of the California CERCLA litigation the Oil Companies stipulated that:

[t]he contracts for avgas entered into between the United 

States and the oil companies during World War II were 

terminated in 1945 or ... shortly thereafter. Matters relating 

to profits from these contracts, termination costs, and all other 

issues concerning these contracts were settled between the 

parties in the late 1940s.

 

7 Neither the Government nor DuPont was able to locate an actual copy of the relevant termination 

agreement. However, the court credited evidence presented by DuPont that the termination agreement 

included this and other provisions. DuPont, 365 F.3d at 1370 n.3.
18

JA 545 (Stip. 609). The Oil Companies do not disavow this stipulation, but instead 

attempt to evade its consequences by changing the subject. Pointing to the language in 

the “Taxes” clause that the Government was to “pay ... any new or additional taxes, fees, 

or charges ...[,]” the Oil Companies argue that “[f]ar from limiting the duration of 

potential government liability,” this language “in no way distinguishes between new 

charges imposed during the Oil Companies’ performance and new charges imposed 

later.” Pls. Mem. at 27 (emphasis added). Thus, according to the Oil Companies, 

“CERCLA costs are no less ‘new or additional’ charges because Congress passed 

CERCLA long after the Oil Companies delivered the much-needed avgas,” and the 

Government’s liability for the CERCLA “charges” is, by its plain terms, without 

temporal limitation. Id. at 27-28.

For reasons already explained, the Court disagrees that the term “charges,” as it 

appears in the avgas contracts, can fairly be read to encompass CERCLA liability. Even 

if it did, however, the Oil Companies still have failed to explain how their claims of 

indemnification survive the contract terminations. There is no suggestion that the Oil 

Companies preserved their rights as the plaintiffs in DuPont and Ford Motor did. The 

Court can only conclude that the Oil Companies have no answer as to how their claims 

are still intact.

“One who has a contractual right against another has the power to discharge such 

rights and the other’s duty by executing a release[,]” which is “an instrument terminating 

one’s rights under a contract and bar[ring] the later assertion of claims with respect to 

that contract.” Imprimis Investors LLC v. United States, 83 Fed. Cl. 46, 61 (Fed. Cl. 

2008) (citing, inter alia, Cairo, Truman & S. R.R. Co. v. United States, 267 U.S. 350, 351 

(1925) and Augustine Med., Inc. v. Progressive Dynamics, Inc., 194 F.3d 1367, 1370-71 

(Fed. Cir. 1999)). Thus, it is well-settled that “‘a contractor who executes a general 

release is thereafter barred from maintaining a suit for damages or for additional 

compensation under the contract based upon the events that occurred prior to the 

execution of the release.’” Id. (quoting, inter alia, B.D. Click Co. v. United States, 222 

Ct. Cl. 290, 305 (Ct. Cl. 1980)). 

The Oil Companies stipulated that the parties terminated the avgas contracts in the 

mid- to late1940s, at which time “matters relating to profits,” as well as “all other issues 

concerning these contracts,” were “settled.” While the Court does not have the actual 

termination agreements before it, the Oil Companies have offered no evidence or 

argument that this “termination” and “settle[ment]” differed in any material way from a 

general release. Indeed, the wording of the stipulation indicates essentially a general 

release. In the absence of any evidence that the Oil Companies preserved their purported

indemnification rights from the settlement of “all issues” related to the contract, the Court 

is without any basis to find that anything was left unsettled.
19

Accordingly, the Court finds that the Oil Companies’ claims must fail by reason of 

their admission that “all issues” related to the avgas contracts were settled following the 

close of the war.

3. The Government Was Not Authorized to Waive the Anti-Deficiency Act in 

Order to Indemnify the Oil Companies

Finally, the Court finds that the Oil Companies’ claims must fail for a third 

independent reason. Even if the parties had intended the “Taxes” clause to operate as a 

broad indemnification clause, and even if the companies’ indemnification rights had been 

preserved after the contract terminations, any such “rights” would have been ultra vires

under the Anti-Deficiency Act (“ADA”). The version of the ADA in effect in the 1940s 

at the time the parties executed the avgas contracts provided, in relevant part:

[n]o Executive Department or other Government 

establishment of the United States shall expend, in any one 

fiscal year, any sum in excess of appropriations made by 

Congress for that fiscal year, or involve the Government in 

any contract or other obligation for the future payment of 

money in excess of such appropriations unless such contract 

or obligation is authorized by law.

Pub. L. No. 59-28, 34 Stat. 27, 49 (1906), 31 U.S.C. § 665 (1940) (current version at 31 

U.S.C. § 1341). Thus, as the Federal Circuit explained in DuPont, under the ADA the 

Government was at all relevant times, and remains today, prohibited from entering into 

“open-ended indemnification clauses [with its contractors] ... without specific 

appropriation or statutory authority.” 365 F.3d at 1371; see also, e.g., Calfornia-Pacific 

Utilities Co. v. United States, 194 Ct. Cl. 703, 710 (1971) (“The United States Supreme 

Court, the Court of Claims, and the Comptroller General have consistently held that 

absent an express provision in an appropriation for reimbursement adequate to make such 

payment [or other statutory authority], [the ADA] proscribes indemnification on the 

grounds that it would constitute the obligation of funds not yet appropriated.”) (collecting 

cases).

The Oil Companies do not dispute that, as a general matter, the ADA bars openended indemnification clauses in government contracts. However, they argue that in the 

case of the avgas contracts, the purported indemnifications were authorized by (1) the 

First War Powers Act of 1941, as implemented by various Executive Orders; (2) the 

National Defense Act of 1916; and (3) a June 1941 amendment to the charter of the DSC, 

the public corporation designated as the purchaser of avgas during World War II. The 

Court will discuss each of these theories separately below. For the reasons set forth 

below, the Court finds that none of these sources provided the requisite ADA waiver that 

would have allowed the Government to indemnify the Oil Companies.
20

a. The First War Powers Act

Title II of the First War Powers Act (“FWPA” or “Title II”), enacted in 1941, 

granted the President the power to:

authorize any department or agency [engaged in the war 

effort], in accordance with regulations prescribed by the 

President for the protection of the interests of the 

Government, to enter into contracts and into amendments or 

modifications of contracts hereafter made ... without regard 

to the provisions of law relating to the making, amendment, 

or modification of contracts whenever he deems such action 

would facilitate the prosecution of the war: Provided, That 

nothing herein shall be construed to authorize the use of the 

cost-plus-a-percentage-of-cost system of contracting: 

Provided further, That nothing herein shall be construed to 

authorize any contracts in violation of existing law relating to 

limitation of profits: Provided further, That all acts under the 

authority of this section shall be made a matter of public 

record under regulations prescribed by the President and 

when deemed by him not to be incompatible with the public 

interest.

Pub. L. No. 77-354, § 201, 55 Stat. 838, 839 (1941) (repealed 1966), JA 286 (emphasis 

added).

The Oil Companies argue, and the Court agrees, that the plain language of Title II 

authorized the President to delegate to designated agencies the ability to waive, among 

other “provisions of law relating to the making, amendment, or modification of

contracts,” the anti-deficiency limitations of the ADA. Just as plainly, however, this 

provision was not self-executing, but required an affirmative act by the President, 

“deem[ing],” “as a matter of public record under regulations,” that “such action would 

facilitate the prosecution of the war[.]” Thus, the question is whether President 

Roosevelt ever exercised his authority under Title II to waive the ADA in a manner 

relevant to the avgas contracts. Recognizing as much, the Oil Companies point to several 

Executive Orders, each of which the Court will discuss below. As the Court will explain, 

it disagrees that any of the cited Executive Orders waived the anti-deficiency limitations 

with respect to the avgas contracts.
21

b. Executive Order 9001

The first “regulation” advanced by the Oil Companies as a relevant exercise of 

President Roosevelt’s authority under Title II is Executive Order 9001 (“E.O. 9001”), 

issued on December 27, 1941. 6 Fed. Reg. 6787, JA 244. In E.O. 9001, President 

Roosevelt expressly invoked the FWPA to “hereby order,” among other things:

that the War Department, the Navy Department, and the 

United States Maritime Commission be and they hereby

respectively are authorized within the limits of the amounts 

appropriated therefor to enter into contracts and into 

amendments or modifications of contracts heretofore or 

hereafter made, and to make advance, progress, and other 

payments thereon, without regard to the provisions of law 

relating to the making, performance, amendment, or 

modification of contracts.

Id. (emphasis added). 

As noted, the public corporation tasked with purchasing avgas for the Government 

during World War II was the Defense Supplies Corporation, or DSC. Incorporated in 

1940, DSC originally was housed within the Federal Loan Agency and then transferred, 

in February 1942, to the Department of Commerce. See JA 329-30 (DSC Charter); 

Executive Order 9071 (“E.O. 9071”), 7 Fed. Reg. 1531 (Feb. 24, 1942), JA 249

(transferring the powers and duties of DSC and its parent agency, the Reconstruction 

Finance Corporation (or RFC), from the Federal Loan Agency to the Department of 

Commerce). Neither the Federal Loan Agency nor the Department of Commerce is 

among the agencies enumerated in E.O. 9001. However, by separate order dated 

November 5, 1942, President Roosevelt extended E.O. 9001 to the Department of 

Commerce and, by extension, to DSC. Executive Order 9264 (“E.O. 9264”), 7 Fed. Reg. 

105 (Nov. 5, 1942), JA 251 (extending “the provisions of Executive Order No. 9001 ... 

to the Department of Commerce ... subject to the limitations and regulations contained in 

such Executive Order”). Thus, the Oil Companies contend, and the Government does not 

contest, that the terms of E.O. 9001 applied to DSC by operation of E.O. 9071 and E.O.

9264. For ease of reference, the Court will refer to this group of Executive Orders, as 

they apply to the DSC, simply as “E.O. 9001” throughout the remainder of this opinion.

However, while the parties agree that E.O. 9001 applied to DSC, they vigorously 

dispute the consequences of this fact. The Oil Companies focus on the last line of the

above-quoted passage, authorizing designated agencies to enter into contracts “without 

regard to the provisions of law relating to the making, performance, amendment, or 

modification of contracts.” In the Oil Companies’ view, as a law “relating to the making, 

performance, amendment, or modification of contracts,” the ADA is plainly a qualifying 
22

“provision of law,” and hence waived by operation of E.O. 9001 (and its statutory 

enabler, the FWPA). Pls. Mem. at 45-47. The Government, on the other hand, points out 

that even as E.O. 9001 delegated expanded contracting authority to the designated 

agencies, it also expressly restricted such authority to “the limits of the amounts 

appropriated therefor.” The Government therefore argues that, far from waiving ADA 

prohibitions against open-ended indemnification clauses, E.O. 9001 expressly affirmed

them. Gov’t Mem. at 27-28.8

The Oil Companies do not address this limiting language directly, but instead 

argue that the Government’s position is precluded by operation of a contemporaneous 

formal opinion issued by then-Attorney General Francis Biddle. Pls. Mem. at 45-47. 

This opinion, issued on August 29, 1942, was prepared in response to an inquiry from the 

Secretary of War as to whether, pursuant to the FWPA and E.O. 9001, his agency could 

conduct its contracting activity without regard to a discrete set of statutes. 40 Op. Att’y 

Gen. 225, JA 307-16 (“Biddle Opinion”). This list included, inter alia, “[t]he act of 

March 3, 1933 ... concerning foreign-made, foreignmined, or foreign-produced goods,” 

“[t]he act of June 25, 1938 ... concerning purchases of blind-made goods,” and “[t]he act 

of January 12, 1895 ... requiring that Government printing, etc., be done at the 

Government Printng Office.” JA 313-14. Notably, this list did not include the ADA. Id.

In addition to his general question regarding the waivability of the enumerated statutes, 

the Secretary of War also posited three specific examples of proposed contracting 

actions, and asked that Attorney General Biddle inform him whether each could be 

properly undertaken. JA 315-16.

Although the Oil Companies recognize that the Biddle Opinion does not mention 

the ADA, they latch on to the Opinion’s response to the third of these examples – which 

involved certain specific kinds of indemnity for a dredging contractor – and argue that 

this portion of the opinion “definitively establishes” that by signing E.O. 9001, President 

Roosevelt “authorize[ed] indemnification agreements with war contractors.” Pls. Mem. 

at 46. The Oil Companies make the separate argument that, at a minimum, the Biddle 

Opinion demonstrates that the Roosevelt administration understood this to be the case, 

and that the Court therefore owes “substantial deference” to Attorney General Biddle’s 

position. The Court disagrees with both of these propositions, for the following reasons.

First, the Court does not believe that the dredging example can reasonably bear 

such a broad interpretation. This example posited “a firm contract on a lump-sum basis 

to do certain dredging,” entered into by the War Department prior to the attack on Pearl 

Harbor. JA at 316. As the Secretary explained:

 

8 The Government also points out that when Executive Order 9264 extended “the provisions of Executive 

Order No. 9001 ... to the Department of Commerce,” it did so “subject to the limitations and regulations 

contained in such Executive Order,” thus reaffirming, again, E.O. 9001’s articulation of the antideficiency principle and extending this principle to the Department of Commerce – and, by extension, the 

DSC. (emphasis added). Gov’t Mem. at 27.
23

[t]he equipment employed in this dredging is worth a very 

large sum, believed to be about [one-sixth of the total contract 

value]. The dredging to be done is absolutely essential to the 

war effort. Although the Government is under no obligation 

to do so, it is desired to enter into an agreement by which the 

Government will agree to undertake to indemnify the dredge 

owner against loss of his dredge and plant by enemy action, 

and against liability as a self-insurer, under various 

Workmen’s Compensation laws. There is some possibility 

that unless this is done, the owner of the dredge will prefer to

run the risks of damages by breach of contract rather than to

proceed [with performance]....

Id. Responding to this and the two other hypotheticals simultaneously, Attorney General 

Biddle stated, with little analysis, that he “agreed” that the “proposed action[s] may be 

taken if it is determined administratively that such action[s] would facilitate the 

prosecution of the war.” JA 313. On the Oil Companies’ reading, this statement

“confirms that the First War Power Act and [E.O.] 9001 authorized indemnification 

agreements like those before the Court in this case.” Pls. Reply at 32. 

The Court, however, declines to read the Biddle Opinion so broadly. First, as the 

Government points out, the indemnification in the dredging example was limited to the 

cost of equipment and potential Workmen’s Compensation liability, and hence was much 

different in kind from the type of open-ended, all-purpose liability the Oil Companies 

contend was promised here. Whether or not that distinction is material,9however, the 

fact remains that the question of the waivability of the ADA under the FWPA and E.O.

9001 was neither squarely presented in, nor addressed by, the Biddle Opinion. The Court 

therefore agrees with the Government that “the most that can be said” about the opinion 

is that it failed to “flag a marginal anti-deficiency issue in one of its hypothetical 

examples.” Gov’t Mem. at 34. In these circumstances, the Court finds that adopting the 

sweeping interpretation of the Biddle Opinion advanced by the Oil Companies would be 

unwarranted.

Moreover, to the extent that the Biddle Opinion arguably could be read as 

interpreting E.O. 9001 to authorize open-ended indemnification agreements, the Court 

further holds that such an interpretation is contrary to the plain language of E.O. 9001. 

At least two other courts have reached similar conclusions. First, in Johns-Manville 

 

9 As recently noted by this Court, “[v]arious decisions have held that the ADA does not pose a problem if 

the maximum amount of liability under an indemnification clause is fixed or readily ascertainable.” 

Lublin Corp. v. United States, 98 Fed. Cl. 53, 58 n.1 (2011). The parties dispute whether Workmen’s 

Compensation liability is ascertainable, but the Court need not reach that issue, for the reasons that 

follow.
24

Corp. v. United States, 12 Cl. Ct. 1, 23-24 (1987), this Court construed Title II of the 

FWPA as “granting the President the authority to delegate to departments and agencies 

contracting power virtually unfettered by contract law, including the ADA.” However, 

Johns-Manville further held that the delegation that was in fact implemented by E.O.

9001:

authorized [the designated agencies] to exercise this 

contracting power only ‘within the limits of the amounts 

appropriated therefor.’ The effect of this limitation was 

nearly identical to that of the ADA. Just as the ADA 

prohibited government officials from spending or obligating 

an amount in excess of appropriations for the particular 

purpose, the language of the Executive Order delegated this 

broad power to make or amend contracts only insofar as the 

exercise of that power did not exceed the amounts 

appropriated for those contracts. Just as an indemnity 

agreement exposing the Government to potentially unlimited 

liability would create an obligation in excess of 

appropriations (a violation of the ADA), the same agreement 

would be an exercise of the power to make or amend 

contracts that [went] beyond ‘the limits of the amounts 

appropriated therefor’ (and therefore is an action not 

authorized by the Executive Order). 

Id. at 24. 

Like the Oil Companies here, the plaintiff in Johns-Manville tried to avoid the 

consequences of this limitation in the express terms of E.O. 9001 by pointing to the 

Biddle Opinion. Although the court apparently agreed with the plaintiff that the opinion 

was best read as broadly authorizing indemnification agreements, it nonetheless held that

the fact that:

the Attorney General and other government officials, in their 

honest efforts to facilitate the war effort, may have 

misunderstood or ignored the limitations on powers to 

contract and genuinely believed unlimited indemnification 

agreements to have been valid and essential does not render 

them valid or enforceable in the face of contrary language in

[E.O.] 9001.

Id.
25

Fifteen years later, when these issues resurfaced in identical form in DuPont, the 

trial court in that case adopted the reasoning and holding of Johns-Manville in full, 

quoting extensively from the earlier opinion. E.I. DuPont de Nemours & Co. v. United 

States, 54 Fed. Cl. 361, 370-71 (2002), reversed in part on other grounds by 365 F.3d 

1367 (Fed. Cir. 2004). The Federal Circuit expressly noted that DuPont did not challenge 

the lower court’s holding with respect to the FWPA and E.O. 9001, and the appellate 

court let stand the lower court’s holding “that to the extent the First War Powers Act ... 

made ADA prohibitions as to open-ended indemnification clauses irrelevant to wartime 

contracts ... the President re-imposed those ADA limits in [E.O. 9001].” 365 F.3d at 

1374 n.12. 

The Court agrees with and adopts the sound analysis of both Johns-Manville and 

DuPont. By its express terms, E.O. 9001 delegated expanded contracting authority to the 

designated agencies, including the DSC, only within “the limits of the amounts 

appropriated therefor.” Thus, E.O. 9001 cannot supply the requisite ADA waiver to the 

avgas contracts. To the extent the Biddle Opinion is to the contrary, it does not control.10

c. Executive Order 9024

The Oil Companies also argue that President Roosevelt separately waived the 

ADA, again pursuant to his authority to do so under the FWPA, by means of Executive 

Order 9024 (“E.O. 9024”). Issued on January 16, 1942, E.O. 9024 established the War 

Production Board (“WPB”). Simultaneously, E.O. 9024 granted the WPB Chairman the 

 

10 Citing primarily Udall v. Tallman, 380 U.S. 1 (1965), the Oil Companies assert that “[i]t is wellestablished that courts must accord substantial deference to interpretations of Executive Orders by the 

Executive Branch.” Pls. Mem. at 46. The Udall case did hold that the Department of the Interior’s 

interpretation of an Executive Order was, in a specific instance, entitled to judicial deference. 380 U.S. at 

4. However, Udall has since been limited to instances in which the agency has been expressly charged 

with the implementation of the Executive Order in question, and it is unclear from the record in this case 

whether the Attorney General (as opposed to the agencies bestowed with the additional contracting 

authority) was authorized to implement and administer E.O. 9001. See, e.g., Washington v. Chu, 558 

F.3d 1036, 1043 n.15 (9th Cir. 2009) (“We give deference to an agency's interpretation of statutes and 

executive orders it is charged with administering. When an agency interprets a statute outside its 

administration, however, we review that interpretation de novo.”) (internal citation omitted); El-Ganayni 

v. U.S. Dep’t of Energy, 591 F.3d 176, 187 (3d Cir. 2010) (similar); Sherley v. Sebelius, 776 F. Supp. 2d 

1, 22 (D.D.C. 2011), affirmed on other grounds by 689 F.3d 776 (D.C. Cir. 2012) (similar). 

 At any rate, doctrines of judicial deference are inapplicable where the original text in question is 

unambiguous, see Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837, 842-43 (1984), and also where the 

agency has not acted pursuant to a delegated authority to issue an interpretation carrying the force of law, 

United States v. Mead Corp., 533 U.S. 218, 226-27 (2001); see also Gonzales v. Oregon, 546 U.S. 243, 

258 (2006) (“Chevron deference ... is not accorded merely because the statute is ambiguous and an 

administrative official is involved.”). As E.O. 9001 unambiguously limited the contracting authority it 

delegated to “the amounts appropriated therefor,” and the Oil Companies offer no argument as to how the 

Biddle Opinion meets the standards established in Mead and its progeny, the Court finds that it owes no 

deference to this Opinion.
26

power to, inter alia, “[d]etermine the policies, plans, procedures, and methods of the 

several Federal departments, establishments, and agencies in respect to war procurement 

and production, including purchasing, contracting, specifications, and construction[.]” 7 

Fed. Reg. 329, 330 ¶ 2(b) (Jan. 16, 1942), JA 246-47. By letter dated February 13, 1942, 

WPB Chairman Harold I. Ickes then delegated to the Office of the Petroleum Coordinator 

the responsibility to “determine the price at which aviation gasoline is to be purchased, 

the capacity of the particular refiner to perform[,] and the technical details of the 

particular contract.” JA 305. By the same letter, Chairman Ickes also delegated to DSC

(and another agency not relevant here) the residual responsibility to determine “the other 

terms and the form of such [avgas] contracts.” Id.

Thus, the relevant authorization and delegation here proceeded in steps. First, as 

discussed above, the FWPA authorized the President to delegate to agencies of his 

choosing the ability to enter into procurement contracts without regard to normal legal 

constraints. Second, in an arguable (but not explicit) exercise of at least some of that

statutory power, President Roosevelt delegated to the WPB Chairman the authority to set 

governmental “policy” with respect to “contracting” for “war procurement and 

production.” Finally, Chairman Ickes re-delegated to DSC the authority to set all terms 

of the avgas contracts that were unrelated to price, the Oil Companies’ production 

capacity, or “technical details.” 

The question is at what point in this process, if ever, a waiver of the ADA 

occurred. According to the Oil Companies, the magic moment occurred at step two, by 

means of E.O. 9024’s delegation to the WPB Chairman of the authority to set 

governmental “policy” with respect to “contracting” for “war procurement and 

production.” In addition, the Oil Companies repeatedly characterize the residual

contracting authority that this officer re-delegated to DSC at step three (that is, to set 

“other” terms in the avgas contracts, not related to price, the Oil Companies’ production 

capacity, or “technical details”), as a power “without limitation.” Pls. Mem. at 42-44. 

Putting these two contentions together, the Oil Companies argue that DSC possessed “all 

power, without limitation, to ‘determine’ on behalf of the United States contract terms 

with respect to war procurement and production of [a]vgas.” Id. at 44. In the Oil 

Companies’ estimation, this “limitless” authority necessarily included the authority to 

waive the ADA in the course of such procurement-related action. 

The Court disagrees. As noted, the FWPA did grant authority to the President to 

designate, at his option, agencies that could bypass normal contracting restrictions. 

However, in contrast to E.O. 9001, E.O. 9024 did not invoke the FWPA or employ any 

language demonstrating an intent to allow covered agencies to bypass any subset of 

contracting restrictions, much less anti-deficiency restrictions. Instead, E.O. 9024 simply 

granted the WPB Chairman the authority to set “policy” with respect to “contracting.” It

is a long jump, and one this Court declines to take, from this unadorned language to the 

proposition that general “policy-making” authority necessarily includes the power to 
27

waive the ADA – or, for that matter, any other federal statute. Thus, even assuming that 

Chairman Ickes re-delegated the full extent of the “policy-making” authority conferred to 

him by E.O. 9024 to DSC, there is no evidence that this authority included the ability to 

waive the ADA.11

The Court’s conclusion is, moreover, bolstered by the fact that both E.O. 9001 as 

well as yet another Executive Order – E.O. 8512, issued on August 13, 1940 – expressly 

reaffirmed the anti-deficiency principles of the ADA as they applied to wartime 

contracting. The Court has already discussed E.O. 9001 above and need not repeat that 

analysis here. However, E.O. 8512 mandated that “[n]o agency shall make expenditures 

or involve the Government in any contract or obligation for the future payment of money 

in excess of the amount currently available therefor under the apportionments so 

approved or revised.” 6 Fed. Reg. 2849 (Aug. 13, 1940). 

The Oil Companies attempt to evade the plain meaning of this directive (as well as 

the similar anti-deficiency language found in E.O. 9001) by arguing that the later-issued

E.O. 9024 overrode the relevant portions of these two prior Executive Orders. Pls. Reply 

at 31. However, while E.O. 9024 stated that “any provisions” of any prior Executive 

Order “conflicting with this Order are hereby superseded,” 7 Fed. Reg. at 330, JA 247, 

the Court does not read the anti-deficiency language of either E.O.’s 8512 or 9001 as 

“conflicting” with E.O. 9024’s simple grant to the WPB Chairman of the authority to set 

“policy” with respect to “contracting.” Especially in light of E.O. 9024’s silence with 

respect to the ADA (as well as other contracting limitations), the Court sees no basis to 

construe that Order’s grant of general “policy-making” authority to the WPB Chairman 

as in any way creating a material conflict with the anti-deficiency language in E.O.’s 

8512 and 9001. 

Finally, the Court notes that, contrary to the Oil Companies’ assertions, Cadillac 

Fairview/California, Inc. v. Dow Chemical Company, 299 F.3d 1019 (9th Cir. 2002), 

 

11 As noted, Chairman Ickes delegated the responsibility to “determine the price at which aviation 

gasoline is to be purchased, the capacity of the particular refiner to perform[,] and the technical details of 

the particular contract,” to the Office of the Petroleum Coordinator, and only the residual responsibility to 

determine “the other terms and the form of such [avgas] contracts” to DSC. JA 305. The Court is

therefore puzzled by the Oil Companies’ insistence on characterizing DSC’s contracting authority as 

“limitless.” Nonetheless, the Court understands the Oil Companies’ fundamental contention here to be 

that DSC’s power to “‘determine,’ on behalf of the United States, all ‘other’ terms ... includ[ed] [the 

power to determine] terms governing what costs would be reimbursed by the Government.” Pls. Mem. at 

43. Because the Court finds that E.O. 9024 did not grant any agency the authority to waive the ADA, it 

need not reach the question of whether the Office of the Petroleum Coordinator or DSC in fact retained 

the power to determine avgas contract terms involving, in the Oil Companies’ words, “what costs would 

be reimbursed by the Government.” However, the Court notes that, although neither party addressed the 

question, it would seem on the basis of the record before the Court that a case might plausibly be made 

that these kinds of terms are closely related to price, and therefore fell within the contracting authority redelegated by Chairman Ickes to the Office of the Petroleum Coordinator, not to DSC.
28

does not compel a different result. That case involved another instance of CERCLA 

litigation stemming from clean-up costs related to the production of military supplies 

during World War II. In that case, the product was synthetic rubber. On appeal, the 

Ninth Circuit upheld the district court’s equitable allocation of the clean-up costs to the 

Government, in part based on the existence of a “hold harmless” clause in the contract. 

The Government argued that notwithstanding this clause, any purported indemnification 

would have been ultra vires under the ADA, because the relevant Rubber Reserve agency

there lacked the authority to commit the Government to holding the rubber manufacturer 

harmless. 

The Ninth Circuit rejected this argument, emphasizing that “[e]ven if there were a 

serious question about whether the Rubber Reserve acted ultra vires in making the 

contract ... it would make no difference, because in this case the contract [itself] was not 

enforced. It was merely considered as a factor in the equitable allocation of response 

costs.” Id. at 1029. However, in dicta and without the benefit of any substantive

analysis, the Ninth Circuit also stated that the Government’s ADA argument was 

“without force” on its merits, because:

the agreement with [the manufacturer], including the hold 

harmless language, was authorized by law, namely the 

emergency powers Congress gave the President, and the 

regulations issued by the executive branch, for the 

prosecution of the war. The [First] War Powers Act 

authorized the President to authorize agencies to make 

contracts ‘without regard to the provisions of law’ such as the 

Anti-Deficiency Act, ‘whenever he deem[ed] such action 

would facilitate the prosecution of the war.’ The president 

exercised this authority in an [E]xecutive [O]rder particularly 

directed to the Rubber Reserve.

Id. at 1028-29. The Court cited, in support of the last sentence of this passage, Executive 

Order 9246 (“E.O. 9246” or the “Rubber Reserve Order”), 7 Fed. Reg. 7379 (Sept. 17, 

1942) and, following a “see also” signal, E.O. 9001 as well. Id. at 1029 n.27.

The Oil Companies argue that the language in E.O. 9024 granting the WPB 

Chairman the authority to make “policy” with respect to “contracting” is “considerably 

broader” than the corresponding language in E.O. 9246 (i.e., the Rubber Reserve Order). 

Pls. Mem. at 45. Therefore, they contend, if the Rubber Reserve Order sufficed to allow 

the Rubber Reserve to indemnify its contractors, it must follow a fortiori that E.O. 9024 

similarly authorized the DSC to do the same. Pls. Reply at 30-31.

Even assuming the Oil Companies are correct that E.O. 9024 is “considerably 

broader” than E.O. 9246, the Court is not bound or persuaded by Cadillac Fairview’s 
29

cursory treatment, in dicta, of the ADA question. Although Cadillac Fairview states that 

President Roosevelt exercised the full extent of his FWPA authority in the Rubber 

Reserve Order, the decision offers no textual analysis in support of this conclusion, and

does not consider or address the anti-deficiency constraints reiterated in E.O. 8512 and

E.O. 9001. In these circumstances, the Court finds the relevant passage in Cadillac 

Fairview unpersuasive.

d. The National Defense Act of 1916

The Oil Companies also argue that the purported indemnification agreements were 

independently authorized by the National Defense Act of 1916 (“NDA”), Pub. L. No. 64-

85, 39 Stat. 166, in conjunction with Executive Order 9040 (“E.O. 9040”), 7 Fed. Reg. 

527 (Jan. 24, 1942), JA 248. 

Enacted during World War I, Section 120 of the NDA authorized the President to 

“place an order” with any supplier for any “product or material as may be required” for 

the furtherance of war efforts. Pub. L. No. 64-85, 39 Stat. at 213. The Act further made 

compliance with such an order “obligatory” on both the supplier and “the responsible 

head or heads thereof,” on penalty of “imprisonment for not more than three years and by 

fine not exceeding $50,000.” Id. In the event the supplier refused to comply with such 

an order, the NDA additionally authorized the President to “take immediate possession” 

of its plant or plants. However, the Act also mandated that the Government pay suppliers 

a “fair and just” price for all provisions. Id. As the Oil Companies note, the NDA 

authorized the President to employ these powers “in addition to the present authorized 

methods of purchase or procurement.” Id.

On January 24, 1942, President Roosevelt issued E.O. 9040, delegating to the 

WPB Chairman the authority to “[p]erform the functions and exercise the powers” vested 

in the President by the NDA. 7 Fed. Reg. 527 ¶1(c), JA 248. E.O. 9040 further provided 

that the WPB Chairman “may exercise the powers, authority, and discretion conferred 

upon him by this or any other Order through such officials or agencies and in such 

manner as he may determine; and his decisions shall be final.” Id. ¶3. Although neither 

the NDA nor E.O. 9040 made any mention of the ADA or other contracting limitations,

the Oil Companies argue that “[t]he additional grant of the President’s powers under 

Section 120 ... confirms beyond any doubt that the Anti-Deficiency Act did not limit the 

authority of [the] WPB and DSC12 to make the reimbursement promises.” Pls. Mem. at 

 

12 The Government protests that E.O. 9040 applied only to the WPB Chairman, and not DSC. However, 

as the Oil Companies point out, by its plain terms E.O. 9040 authorized the WPB Chairman to “exercise 

the powers, authority, and discretion conferred upon him by this or any other Order through such officials 

or agencies and in such manner as he may determine.” 7 Fed. Reg. 527, JA 248 (emphasis added). And, 

as discussed above, by letter dated February 13, 1942, Chairman Ickes delegated to DSC the 

responsibility to determine “other” avgas contract terms (not related to price or technical specifications). 

JA 305. Because the Court finds that the NDA did not grant any governmental authority the ability to 
30

48-49. This argument has two main components, neither of which the Court finds 

convincing.

First, the Oil Companies emphasize the provision in the NDA stating that the 

President’s powers under that Act were “in addition to the present authorized methods of 

purchase or procurement.” According to the Oil Companies, this language shows:

an explicit grant of additional authority allowing the 

Executive Branch to deviate from the existing ‘methods of ... 

procurement. The limitations imposed by the ADA (enacted 

in 1906) constrained ‘present authorized methods of purchase 

or procurement’: by its plain terms, Section 120 expanded the 

President’s purchase and procurement authority beyond such 

constraints.

Pls. Reply at 39-40 (quoting the NDA). The bald contortions to the actual language of 

the NDA present in this interpretation, however, need hardly be identified. The only 

reasonable meaning of the Act’s statement that the powers created therein were “in 

addition to the present authorized methods of purchase or procurement” is that the Act 

did not in any way abridge the Government’s existing procurement powers. This 

proposition, however, bears no logical relation to the quite different proposition advanced 

by the Oil Companies that the Act somehow abolished existing procurement constraints

(such as the ADA). In other words, the Oil Companies’ argument here is made possible 

only by an overt substitution of meanings. To borrow their phrasing, the “plain terms” of 

the Act in fact “expanded the President’s purchase and procurement authority” not

beyond existing “constraints,” but rather beyond existing “methods,” a different matter 

altogether. 

Second, the Oil Companies quote extensively from a 1931 Supreme Court takings 

case, International Paper Company v. United States, 282 U.S. 399, 405 (1931), which 

involved the Government’s requisition of electrical power during World War I. Although 

the Government paid the power supplier for the electricity, it failed to reimburse the 

plaintiff in the case, a company that owned a portion of the water that was necessary for 

the power supplier to fill the Government’s order. The Court awarded the plaintiff the 

costs it had incurred as a result of the diversion of its water, and stated, in a passage the 

Oil Companies urge is quite pertinent to the case at hand:

[t]he Government has urged ... that it does not appear that the 

action of the Secretary was authorized by Congress. We shall 

give scant consideration to such a repudiation of 

 

waive the ADA, however, it need not determine whether this re-delegation sufficed to bring DSC within 

the purview of E.O. 9040.
31

responsibility. The Secretary of War in the name of the 

President, with the power of the country behind him, in 

critical time of war, requisitioned what was needed and got it. 

Nobody doubts, we presume, that if any technical defect of 

authority had been pointed out it would have been remedied 

at once. The Government exercised its power in the interest 

of the country in an important matter, without difficulty, so 

far as appears, until the time comes to pay for what it has had. 

The doubt is rather late. We shall accept as sufficient answer 

the reference of the petitioner to the National Defen[s]e Act 

of June 3, 1916...giving the President in time of war power to 

place an obligatory order ...

Id. at 406.

Seizing on this passage, the Oil Companies argue that “[t]he only difference 

between this case and International Paper is that here the Government did not just seize 

property but actually promised to pay for it. The Government’s authority to do so under 

Section 120 follows a fortiori from its authority under the same provision to seize the 

property at issue.” Pls. Mem. at 50. 

The problem with this argument, as the Government points out, is that 

International Paper was a Fifth Amendment takings case that had nothing to do with the 

ADA. Elsewhere in their briefing and at oral argument, the Oil Companies concede that,

absent a specific applicable waiver, the ADA has always prohibited the use of openended indemnification clauses in government contracts. Pls. Mem. at 41; Tr. Oral Arg. at

33-34. Their International Paper argument, however, is not tied to any purported ADA 

waiver, but instead is an attempt to bolster the waiver requirement by way of analogy 

between the Government’s contracting and eminent domain powers. 

The Court rejects this analogy. The relevant question here is not, as the Oil 

Companies imply, whether the Government’s purported power to indemnify its private 

suppliers of war materials can or should somehow be conceived of as a “lesser” power 

than that which it admittedly possessed to seize private property in order to ensure the 

production of the same materials. Nor is the Government’s seizure authority relevant in 

any way to the actual facts of the avgas program, where, as the Ninth Circuit stated in 

Shell III: 

[t]hroughout the war, the Oil Companies designed and built 

their factories, maintained private ownership of their 

facilities, and managed their own refinery operations. The 

Oil Companies affirmatively sought contracts to sell avgas to 

the government, and the contracts were profitable throughout 
32

the war. After the war, the Oil Companies retained 

ownership of the facilities they had built with the help of 

government loans.

294 F.3d at 1050; see also Shell I, 841 F. Supp. At 966-67 (“[I]t is beyond dispute that 

the oil companies entered into their contracts to supply the federal government with 

aviation fuel volitionally.”). Rather, the apposite question here is simply whether the 

NDA effected an ADA waiver of benefit to the avgas contracts. For the reasons 

explained, the Court finds that it did not. 

e. The DSC Charter

The Oil Companies’ final ADA argument is that the statute was independently 

waived by DSC’s enabling charter, as amended in July 1941. The DSC charter 

amendment in question enumerated a list of the “objects, purposes, and powers” of DSC. 

Amendment to the Charter of the Defense Supplies Corporation, July 9, 1941, JA 331. 

These included “[t]o produce, acquire, carry, sell, or otherwise deal in strategic and 

critical materials ...,” id. ¶1(a), and “[t]o purchase and lease land; purchase, lease, build, 

and expand plants; purchase and produce equipment, facilities, machinery, materials and 

supplies for the manufacture of strategic and critical materials...” id. ¶1(b). In addition, 

the charter amendment states that:

[t]he [DSC] shall have power and authority to do and 

perform all acts and things whatsoever which are necessary, 

suitable[,] convenient, or proper in connection with or 

incidental to the foregoing objects, purposes, and powers, 

including, but without limitation, the power to lease, 

purchase, or otherwise acquire, and to lease, sell, or otherwise 

dispose of, and to deal in, manage, and control transportation 

facilities in and between the other American countries of the 

Western Hemisphere and the United States and to otherwise 

develop such facilities and equipment incidental thereto in 

order to facilitate trade between those countries and the 

United States and for other purposes affecting the national 

defense, the power to borrow and hypothecate, to lend 

money, to adopt and use a corporate seal, to make contracts, 

to acquire, hold, and dispose of real and personal property, 

and to sue and be sued in any court of competent jurisdiction.

Id. ¶1 (emphasis added).

Once again, the Oil companies attempt to build an argument through selective 

quotation. Specifically, seizing on only the highlighted language in the above passage, 
33

they posit that “[t]he DSC, therefore, was expressly authorized by law to perform ‘all acts 

and things whatsoever,’ including specifically, ‘without limitation, the power ... to make 

contracts.” Pls. Mem. at 52 (emphasis added). 

Plainly, the phrase “all things whatsoever” and the “without limitation” qualifier 

are used in the above passage to indicate that the subsequent list of powers possessed by 

DSC was not exhaustive. The argument advanced by the Oil Companies, that “without 

limitation” somehow specifically described the scope of the DSC’s contracting authority

and bypasses the ADA, is without merit, and the Court need not consider it further. 

4. The Government Would Be Free to Argue that the Oil Companies’ 

CERCLA Liability Was Not Incurrred “by Reason of” Their Avgas 

Production

Notwithstanding the Court’s holding that the Oil Companies’ indemnification 

claims fail as a matter of law for the multiple reasons discussed above, the Court will also 

address one remaining area of contention raised by these proceedings: whether the nonbenzol waste was dumped at the McColl site “by reason of” the Oil Companies’ 

“production, manufacture, sale or delivery” of avgas. 

As noted, the language in the “Taxes” clause on which the Oil Companies rely for 

their indemnification claims provides that “Buyer shall pay ... any new or additional 

taxes, fees, or charges ... which Seller may be required by any [government] ... to pay by 

reason of the production, manufacture, sale or delivery of [avgas].” (emphasis added). 

Thus, had the Oil Companies been able to demonstrate that CERCLA liability was a 

“charge” within the meaning of the “Taxes” clause, they still would have been required 

to demonstrate that all or some of these “charges” were incurred “by reason of” the 

companies’ avgas production. The Oil Companies contend that the Government is 

collaterally estopped from arguing against the presence of the necessary causal 

relationship by the outcome of the CERCLA litigation. In the alternative, they argue that 

the factual record before the Court establishes this relationship beyond any “genuine 

issue” that would preclude entry of summary judgment in their behalf. Pls. Mem. at 30-

40. The Government disagrees on both counts, contending that a majority of the acid 

waste at the McColl site resulted from the production of non-avgas products, and that 

Shell III is not to the contrary. Gov’t Mem. at 36-43. Although this issue is secondary to 

the legal questions already discussed, in the interests of completeness the Court will

address this subject.

Under the doctrine of issue preclusion (sometimes known as collateral estoppel), a

litigant is barred from relitigating a factual or legal issue that has already been raised and 

decided in a prior proceeding. This doctrine applies where “(i) the issue previously 

adjudicated is identical with that now presented, (ii) that issue was actually litigated in 

the prior case, (iii) the previous determination of that issue was necessary to the end-
34

decision then made, and (iv) the party precluded was fully represented in the prior 

action.” Whiteman v. Dep’t of Transp., 688 F.3d 1336, 1340 (Fed. Cir. 2012) (internal 

citation omitted). The Oil Companies argue that the Ninth Circuit’s decision in Shell III, 

294 F.3d 1045, meets these prerequisites on the issue of whether the non-benzol waste 

was generated and disposed of at the McColl site “by reason of” the Oil Companies’ 

avgas production. Due to the peculiarities of the CERCLA litigation, as well as the trial 

court’s confusion regarding the extent of the Government’s benzol waste admissions in 

Shell II, analyzing this claim requires careful scrutiny of both decisions.

As explained in the factual background section of this opinion, after conducting an 

extensive analysis of the avgas program, the trial court in Shell II determined that, as a 

factual and equitable matter, “100 percent of the non-benzol waste at the McColl site 

[was] attributable to the avgas program” (as opposed to, and distinct from, the Oil 

Companies’ secondary use of the spent alkylation acid to treat non-avgas products). 13 

F. Supp. 2d at 1026. The district court then determined, and weighed in favor of the Oil 

Companies, a group of additional equitable factors, among them that, in the district 

court’s estimation, the waste and its clean-up costs were war costs, such that “the 

American public” should “bear the[ir] burden,” and that “the Oil Companies had no 

reasonable recourse” to their dumping practices as a result of the Government’s failure to 

create or facilitate disposal alternatives. Id. at 1027-28.

As also explained in the factual background section, on review the Ninth Circuit 

reversed the district court’s holding as to the Government’s liability for any of the nonbenzol clean-up costs. In reaching this conclusion, the Ninth Circuit emphasized that the 

United States was only the end purchaser, not the manufacturer, of the avgas; that it never 

owned any of the raw materials or intervening products; that it “did not even know that 

the Oil Companies had contracts to dispose of their waste at the [McColl] site”; that the 

Oil Companies “voluntarily entered into the contracts and profited from the sale[s]”; and 

that the Government “was aware that waste was being produced, but did not direct the 

manner in which the companies disposed of it.” 294 F.3d at 1056-59. Accordingly, the 

Ninth Circuit held that “[b]ecause the United States is not liable as an arranger, the 

question of allocation of liability for the non-benzol waste between the United States and 

the Oil Companies ...is moot.” 294 F.3d at 1049. 

However, the Ninth Circuit also upheld the district court’s determination that the 

United States was 100 percent liable for the clean-up costs of the benzol waste at the 

McColl site “for the same reasons that avgas sludge is fully allocable to the 

Government.” Id. at 1060 (quoting the district court’s unpublished decision regarding the 

benzol liability). In so holding, the Ninth Circuit expressly recognized that, due to the 

district court’s initial confusion regarding the extent of the Government’s benzol 

concession, its actual “analysis ... was focused on the non-benzol rather than the benzol 

waste.” Id. However, the Ninth Circuit found that the lower court was “entirely 
35

justified” in extending that analysis from the non-benzol category of waste to the benzol 

category of waste, in part because:

to the degree that the [district court’s chosen] equitable 

factors support allocation of the cleanup costs to the United 

States with respect to the non-benzol waste, where the 

arranger status of the United States was disputed, such factors 

are even stronger with respect to the benzol waste, where the 

United States concedes that it was an arranger.

Id. The Ninth Circuit therefore held that “the district court did not abuse its discretion in 

choosing the factors on which to rely in determining allocation, nor did it clearly err in 

applying those factors to the benzol waste.” Id.

In the present case, the Oil Companies argue that, although the district court’s 

findings with respect to the non-benzol waste were mooted by the appellate court, those 

same findings were “necessary to the judgment allocating 100 percent of the benzolrelated cleanup costs to the government.” Pls. Mem. at 33. Thus, the Oil Companies 

contend that these findings – and in particular, that “100 percent of the non-benzol waste 

at the McColl site [was] attributable to the avgas program” – should be given preclusive 

effect on the question of whether the Oil Companies incurred the non-benzol-related 

clean-up costs “by reason of” their avgas production. Pls. Mem. at 31 (quoting Shell II, 

13 F. Supp. 2d at 1026). The Court acknowledges a superficial appeal to this argument, 

but, on careful inspection, finds its logic illusory, for the following reasons. 

It is true, as the Oil Companies point out, that the Ninth Circuit found the district 

court to be “entirely justified” in extending its reasoning regarding the non-benzol waste 

to the separate category of the benzol waste. However, it is also true that the majority of 

the relevant findings there were generalized, such that they could logically apply to both

the non-benzol and benzol waste alike. Examples of such generalized findings include, 

for example, the district court’s holding that the clean-up costs were properly conceived 

of as war costs and should therefore be broadly shared by the public, and that “the Oil 

Companies had no reasonable recourse” to their dumping practices as a result of certain 

governmental actions or inaction. Id. at 1027-28. The one exception to this rule, 

however, also happens to be the sole finding to which the Oil Companies stake their 

estoppel argument – the district court’s finding that “100 percent of the non-benzol waste 

at the McColl site [was] attributable to the avgas program.” This finding, in particular,

plainly had no bearing on the question of the proper allocation of liability on the benzol 

waste. To the contrary, this finding simply was beside the point.

Thus, the district court’s finding that “100 percent of the non-benzol waste at the 

McColl site [was] attributable to the avgas program,” fails, at a minimum, the third 

requirement of collateral estoppel, that the previous determination of the issue in question 
36

was “necessary to the end-decision then made.” Whiteman v. Dep’t of Transp., 688 F.3d 

at 1340. Accordingly, the Oil Companies would not have been entitled to summary 

judgment on this issue, even had they prevailed on the other legal issues discussed in the 

prior sections of this opinion.

Having made this determination, the question then presented is whether this Court, 

acting on a blank slate, would have found all or some of the Oil Companies’ CERCLA 

liability to have been incurred “by reason of” their avgas production. While the Court 

will not engage in a lengthy analysis of this issue, it finds that, had it been necessary for 

the Court to reach this question, further proceedings would have been necessary for the 

Court to reach a final determination. Setting aside the question of what level of causation 

this phrase connotes, the issue of what portion of the non-benzol waste was created “by 

reason of” the avgas program raises factual questions that are simply not adequately 

answered by the evidence or stipulations currently before the Court. 

For example, the Government has introduced evidence that various oil companies, 

including but not limited to the Plaintiffs (or their predecessors-in-interest) in this action, 

successfully disposed of acid waste by means other than dumping – such as reprocessing 

or burning – throughout the course of the war. JA 512-14 (Stips. 500-12). However, the 

facts in the record do not necessarily allow the Court to extrapolate the extent to which 

the Oil Companies had, as an overall matter, access to reprocessing facilities, nor about 

their ability to safely (if not cleanly) burn any remaining acid waste that could not be 

reprocessed. Conversely, the Oil Companies point to a few instances in which certain 

Plaintiffs sought federal permission to build additional acid reprocessing facilities, but 

were denied or frustrated in these plans. JA 452-53, 456-57, 461-67, 635. Similarly, 

were it to resolve the question of what portion of the Oil Companies’ CERCLA costs 

were incurred “by reason of” their avgas production, the Court would desire additional 

information about these events, the proposed capacities of the never-built facilities, and 

their likelihood of completion within a time frame relevant to the use of the McColl site.

In any event, the Court reiterates that resolution of these questions (among other 

similar ones) is not, in the end, necessary to its disposition of this matter. To the 

contrary, the Court has found three other, independent bases for dismissing the Oil 

Companies’ claims as a matter of law and entering judgment in favor of the Government. 

Consequently, the Court need not further address or require the evidentiary proceedings 

that would be necessary to resolve the “by reason of” factual issue.
37

Conclusion

Based upon the foregoing, the Court DENIES the Oil Companies’ motion for 

summary judgment, and GRANTS the Government’s cross-motion for summary judgment. 

The Clerk of Court is directed to enter judgment in favor of the Government. No costs.

IT IS SO ORDERED.

s/Thomas C. Wheeler 

THOMAS C. WHEELER

Judge