Exxon Sues Federal Government for Texas Refinery Cleanup Costs

Exxon Mobil Corp. is suing the United States to recover more than $45 million in clean-up costs at its refining and petrochemical plants in Baytown, Texas, saying the government controlled the facilities during World War Two.

Exxon argues it should be reimbursed for what it spent to clean up toxic substances around the complex because the government assumed ownership and or “substantial operational control” of the plants throughout the war in the 1940s and up to the Korean War in the early 1950s, according to a lawsuit filed in federal court in March.

“The wartime-related operations at these plants resulted in the generation and disposal of a significant amount of waste at the Baytown site,” the lawsuit said.

In a separate filing, the government denied it had assumed operational control over the facility during wartime.

The Baytown plant, owned by Exxon predecessor Humble Oil, began as a small refinery around 1920. During the 1940s, Exxon says, the government reconfigured and expanded the plant to make war-related materials including aviation fuel, rubber and toluene, the lawsuit said.

The refineries and five other production plants at Baytown generated “substantial hazardous waste” that was disposed of at the site, while treated wastewater was discharged into nearby bodies of water, including the Houston Ship Channel, the oil company’s complaint said.

Under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the owner or operator of a facility is responsible for response costs for the release of hazardous materials, Exxon’s lawsuit said.

“Since 2004, ExxonMobil has been working in good faith with the government to resolve these claims,” Exxon spokeswoman Kristen Hellmer said in a statement. “In light of the looming statutory deadline to file our contract action, ExxonMobil has determined it necessary to proceed with filing our contract claim.”

Exxon said that it still hopes for an amicable resolution.

“Exxon is liable as the current owner and operator of the Baytown complex, and as the owner and operator of the Baytown refinery when the disposal of hazardous substances occurred,” the U.S. government said in its response to Exxon’s complaint.

A spokesman for the U.S. Department of Justice declined additional comment.

“For Exxon, this is chicken feed, it’s barely a rounding error on their annual budget,” said Tom “Smitty” Smith, state director of consumer environmental group Public Citizen.

Exxon reported a net profit of $7.56 billion in the second quarter.

Exxon and the government had engaged in confidential settlement discussions, which have so far been unsuccessful, the two sides said.

Exxon’s Baytown complex, located about 25 miles east of Houston, is home to the largest refinery in the United States. The facility also has a chemical plant, an olefins plant and a plastics plant.

A hearing on the case is set for Sept. 24 in U.S. District court in Houston, where the case was transferred from the Eastern District of Virginia.

The case is Exxon Mobil Corporation v United States of America, U.S. District Court for the Southern District of Texas, No. 10-02386.

(Additional reporting by Jeremy Pelofsky in Washington; Editing by Gary Hill)