The US Court of Appeals for the District of Columbia Circuit agreed with reasoning in an amicus brief filed by the firm in the case of Lockheed Martin Corp. v. United States.
The dispute stemmed from the clean-up of three California sites where Lockheed manufactured rockets for the Defense Department. The government entered into an agreement with Lockheed allowing the company to pay its clean-up costs and then receive reimbursement by allocating clean-up costs over time as indirect contract costs charged to the government. After incurring substantial clean-up costs, Lockheed filed a Superfund cost recovery claim against the federal government. In response, the government invoked the Superfund law’s double-recovery bar under a section of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Lower courts ruled in favor of Lockheed, and the DC court found no double recovery in the case.
Filed on behalf of the National Defense Industrial Association and the Aerospace Industries Association of America, Inc. in support of Lockheed, the brief argues that the government’s position would put contractors that have been undertaking prompt clean-up of hazardous waste sites at a competitive disadvantage “because they will be forced to build environmental remediation costs into their proposals to account for the government’sshare of responsibility for remediating the contamination, as opposed to recovering such costs directly from the government pursuant to CERCLA. This would frustrate CERCLA’s dual purposes of ensuring that environmental cleanup is undertaken promptly and that the cleanup is paid for by those actually responsible for the contamination. This Court should therefore affirm the lower court’s decision that government contractors are not precluded from recovering under CERCLA where those contractors have included environmental remediation as indirect costs under government contracts.”
Partner Jessica Ring Amunson, one author of the brief, is quoted in a Bloomberg article about the case (subscription required). She observed that the court “rightly rejected the government’s arguments and affirmed that government contractors are not precluded from seeking to hold the government responsible under CERCLA where those contractors have included environmental remediation as indirect costs under their government contracts.”