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Lockheed Martin Corp. v. United States

United States Court of Appeals for the District of Columbia Circuit · 2016 · Civil Procedure

Civil ProcedureCERCLAcost recoverycontributionequitable allocationdouble recoveryCERCLASection 107

Facts

Lockheed's predecessor manufactured rockets for the Department of Defense at three California sites, and those operations contaminated soil and groundwater with hazardous substances. Lockheed later incurred large cleanup costs, but over many years it charged those costs as indirect overhead on its contracts, most of which were with the federal government under a 2000 Billing Agreement. The government also stipulated that it was a potentially responsible party under CERCLA, and the district court allocated to it 20 to 30 percent responsibility at the three sites while assigning the remainder to Lockheed. The government argued that because it had already reimbursed Lockheed for much of the cleanup through contract overhead, any CERCLA recovery would amount to impermissible double payment.

Issue

Whether the government's prior and ongoing reimbursement of Lockheed's cleanup costs through contract-overhead payments barred or required elimination of Lockheed's CERCLA recovery for future response costs under either CERCLA § 113(f)'s equitable allocation principles or § 114(b)'s bar on double recovery. More specifically, the question was whether the district court erred in requiring the government to pay its 19 to 29 percent share of future cleanup costs.

Rule

In a CERCLA contribution action, a court may use equitable principles to prevent double recovery, but no equitable bar applies when any excess payment results from the defendant's own separate contractual agreement to reimburse the plaintiff's share of cleanup costs rather than from the CERCLA judgment itself. Section 114(b) bars recovery only for the same removal costs already compensated under other law, and it is not implicated where the judgment imposes no liability for past costs already paid and requires payment only of future costs.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Ridgeway Aerotech cleaned contamination at a former testing site near Tucson, Arizona. For years, it had billed all of its own cleanup expenses as allowable overhead on unrelated federal supply contracts under a negotiated reimbursement agreement. In later CERCLA litigation, the United States was allocated 25% of future response costs, while Ridgeway remained responsible for the rest.

The United States argues the court should reduce its CERCLA liability for future costs to zero because, through the overhead agreement, it has already paid far more than 25% of the total cleanup in the aggregate. What is the strongest response?

Explanation. Under the majority opinion, a CERCLA court may use equitable principles to avoid double recovery, but it need not erase a defendant’s CERCLA share when the complained-of overpayment stems from the defendant’s own separate agreement to reimburse the plaintiff’s share of cleanup costs. The key question is whether the CERCLA judgment itself creates the double payment. Here, it does not; the extra payment flows from the separate overhead arrangement.