ELR Citation: ELR 20491
No(s). s. 94-1946 et al (8th Cir. Jan 31, 1995)

The court holds that the U.S. government is not liable as an operator or arranger under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for response costs arising from the cleanup of dioxin and other waste from a private defendant's production of Agent Orange for the government. The court first holds that the government cannot be held liable as an operator under CERCLA §107(a)(2) because it did not exercise actual or substantial control over the operations at the facility. The contractor that owned the facility elected to bid for the Agent Orange government contracts, and to the extent it had to change its operations to produce Agent Orange, those changes resulted from its own decision to seek the government's wartime business. Also, no representative of the United States ever managed or supervised any of the contractor's personnel during the relevant time period and the United States never exerted substantial control over operations at the facility while the contractor was producing Agent Orange. The court next holds that the government cannot be held liable under §107(a)(3) as an arranger for contamination at the facility. The government did not own or possess hazardous substances merely because it had a statutory or regulatory authority to control activities that involved the production, treatment, or disposal of hazardous substances. Moreover, the government did not immediately supervise, or have direct responsibility for, the transportation or disposal of any hazardous substances generated at the facility. Although circumstances may exist when a government contract involves sufficient coercion or governmental regulation and intervention to justify governmental liability as an arranger, such circumstances are not present in this case. Also, although the government took steps to facilitate the contractor's acquisition of the necessary raw chemicals, the government was never actively involved in supplying the contractor with any such raw materials. The court next holds that §707 of the Defense Production Act (DPA) does not shield the contractor from liability it may have under CERCLA arising out of its performance of the Agent Orange contracts. Such immunity would exceed the risk imposed by DPA §101(a), which authorizes the President to designate certain government contracts for priority over other contracts when necessary or appropriate to promote the national defense. Finally, the court holds that the contractor's argument that it is entitled to indemnity from the government arising out of its immunity under §707 must fail because the contractor is not entitled to immunity under §707.

[Prior decisions in this litigation are published at 10 ELR 20709, 15 ELR 20002, 21 ELR 20925, 22 ELR 21210, and 24 ELR 20760.]

Counsel for Plaintiff
John Sheehan, Scott Jordan
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendant
V. Robert Denham Jr.
Powell, Goldstein, Frazer & Murphy
191 Peachtree St. NE, 16th Fl., Atlanta GA 30303
(404) 572-6600

Before Wollman and Hansen, JJ.