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U.S. Government, Former Owner of Manufacturing Facility, Found 0% Liable for Site's Contamination

Environmental law attorneys are persistently reminded to avoid overuse of acronyms, lest we forget what they mean, and a ruling from the Southern District of California recently provided an example of why we should remember to break these acronyms down to their roots.  The Court’s opinion showed that a PRP is just that, a potentially responsible party, as it held that the United States government was 0% liable for the environmental contamination of a site, even though it was deemed a former “owner” of the facility under CERCLA.

In TDY Holdings, LLC v. United States, Case No. 3:07-CV-787 (S.D. Ca. July 29, 2015), the Honorable Judge Cathy Ann Bencivengo of the United States District Court for the District of Southern California issued a ruling in a former defense contractor’s CERCLA contribution suit against the federal government, the Department of Defense, and the Secretary of Defense, holding that the defense contractor was 100% liable for the past and future remediation costs at its manufacturing facility, despite the Government's ownership of equipment that was at least partially responsible for the contamination at the facility during its operation.

The defense contractor, TDY Industries, was the successor in interest to Ryan Aeronautical Company, which manufactured aircrafts and aircraft parts at the site in San Diego dating back to the beginning of WWII.  In all, the site was in operation for approximately sixty years (1939-1999), manufacturing defense-related products, 90% of which were sold to the Government.  The Government owned various pieces of equipment at the TDY Site until at least 1979, and it would periodically send representatives to oversee the manufacturing process to ensure that the products being purchased met its strict technical requirements. 

The site was contaminated with three types of hazardous substances:   chromium compounds, chlorinated solvents, and polychlorinated biphenyls  (PCBs).  The evidence and expert opinions provided to the Court showed that the contamination was likely the result of small, intermittent spills and incidents from the equipment that were not considered serious by regulatory or industry standards at the times of their occurrences.  The contamination pattern and the available corporate records suggested that no dumping, major failures, spills, or releases occurred at the facility and that TDY was generally compliant with environmental standards in place during the times of its operation.

Based upon this evidence, the Court held that while the Government met the definition of an “owner” of the facility because of its ownership of this equipment, it was nevertheless 0% responsible for the contamination, placing blame squarely on TDY, which was responsible for “the manner in which equipment was operated and/or maintained.”  Without any indication that TDY’s policies broke from the environmental standards at the times of operation or that it was responsible for any major release, the definitiveness of Judge Bencivengo’s ruling is a remarkable reminder that being a PRP doesn't necessarily mean being liable.