The United States Allocated 40% of Liability for Contamination Caused by a Contractor’s Manufacturing Operations

A recent decision by a federal court in the Central District of California found the United States liable for 40% of the response costs related to contamination from the manufacture of ammunition and rocket motors for the United States under governmental contracts. The court issued its holding despite the fact that it found there had been “inadequate care” and admitted violations of state and federal environmental laws by the owner and operator, a private party with day-to-day operational control of the manufacturing facilities. The case provides important precedent for private parties involved in cleanup sites where the United States is a party but not itself an owner or direct operator, and may prove important where private parties have likewise contracted for goods, the manufacture of which results in contamination.

The decision was issued in the context of the allocation phase of a contribution claim brought under CERCLA in American International Specialty Lines Insurance Co. v. United States, Case No. CV09-01734 AHM(RZx), 2013 WL 135405 (Jan. 9, 2013). The court stated that the most applicable allocation factors were the degree of involvement of the various parties in the generation, transportation, treatment, storage and disposal of hazardous waste, the degree of care exercised by the parties with respect to the waste, and the degree of cooperation with federal, state, and local regulators. The court also considered the United States’ knowledge and acquiescence in the contaminating activities and the benefit the United States received from the activities, including the value to the United States in furthering national defense efforts.

The United States will often claim little or no liability for contamination resulting from contracted services.  The court in American International Specialty Lines Insurance Co. recognized that the United States played a significant role and was liable despite its limited onsite activities as the customer.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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