Blogs

Patrick Paul[1]

Snell & Wilmer

          The Southern District of California Federal District Court recently held that the federal government was not responsible for cleanup costs associated with the production of military aircraft parts at a 44-acre manufacturing site in San Diego, despite the fact the majority of manufacturing performed onsite was to fulfill government contracts over sixty years of operation. TDY Holdings, LLC v. United States, 2015 U.S. Dist. Lexis 102490 (July 29, 2015).  Manufacturing operations at the subject property ceased in 1999 and the associated buildings were eventually demolished and removed. Thereafter, California’s Regional Water Quality Control Board ordered a sitewide investigation of soil, soil gas, and groundwater to identify areas requiring remediation. Although the manufacturer acknowledged its responsibility for the costs incurred to investigate and remediate the property, it sought contribution from the government as “owner of facilities” pursuant to 42 U.S.C. § 9613(f). 

          During sixty years of manufacturing operations, a variety of aeronautical products - including unmanned aerial vehicles, trainer airplanes, aerial targets, and various components for the Apache helicopter - were produced at the subject property. The court determined that the manufacturer had made a significant and lasting contribution to the nation’s aeronautical defense program that benefited both the federal government and the manufacturing company itself. The court also noted that the products manufactured for the government were not, in and of themselves, contaminants of concern and did not contain the contaminants at issue. Rather, the court determined that the three hazardous substances at issue, namely, chromium compounds, chlorinated solvents, and PCBs, had been utilized in some of the manufacturing processes and/or were present in some of the equipment utilized in the manufacturing process.

          The court further determined that there was no dispute that the federal government (1) benefited from the manufacturing on the property, (2) owned equipment related to the contamination, and (3) had knowledge of the production processes and maintenance practices that released the subject contaminants into the environment. Nevertheless, the court maintained it was necessary to review the nature and source of each contaminant before it could decide whether to allocate any portion of response costs to the federal government. Ultimately, the court determined  for CERCLA purposes that the manufacturer was an operator, and the federal government could be no more than a prior owner of certain equipment utilized at the property. The manufacturer attempted to persuade the court that the federal government was in fact an operator on the site, controlling and directing all manufacturing operations at the facility that resulted in contamination.

          Among other things, the court declined to adopt a general rule that contracts for the production of military products automatically make the federal government responsible for the contamination created by the manufacturer. It determined that the manufacturer was liable under CERCLA as an owner of facilities and the operator of the site for the contamination at issue.  Although acknowledging the government’s role as past owner of facilities at the property, the court also determined that the government was not the responsible party for the introduction of the contaminants at issue into the environment. Given the totality of the circumstances, the court allocated 100% of the past and future response costs for the remediation of chromium, chlorinated solvents, and PCBs to the manufacturer.