Lockheed Martin Corp. v. United States

• Decision Date: 22 April 2014
• Docket Number: Civil Action No. 08–1160 ESH UNDER SEAL
• Citation: Lockheed Martin Corp. v. United States, 35 F. Supp. 3d 92 (D. D.C. 2014)
• Parties: Lockheed Martin Corporation, Plaintiff, v. United States, Defendant.
• Court: U.S. District Court — District of Columbia

35 F.Supp.3d 92

Lockheed Martin Corporation, Plaintiff

v.United States, Defendant.

Civil Action No. 08–1160 ESH UNDER SEAL

United States District Court, District of Columbia.

Signed April 22, 2014

Raymond B. Ludwiszewski, David Fotouhi, Justin A. Torres, Michael K. Murphy, Stacie B. Fletcher, Gibson, Dunn & Crutcher, LLP, Washington, DC, for Plaintiff.

John E. Sullivan, Erica M. Zilioli, James Garlin Gentry, Jennifer E. Powell, Jessica O'Donnell, Justin D. Heminger, Madeline P. Fleisher, William D. Johnson, U.S. Department of Justice, Washington, DC, for Defendant.

MEMORANDUM OPINION

ELLEN SEGAL HUVELLE, United States District Judge

Lockheed Martin Corporation brings this action against the United States under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq., for recovery of past and future response costs to remediate the environmental contamination caused by its corporate predecessor's operation of three rocket motor-production facilities—Redlands, Potrero Canyon, and LaBorde Canyon—in California from 1954 to 1975.Both parties admit to being liable as potentially responsible parties(“PRPs”) for the contamination at the three facilities under CERCLA § 107(a).The Court held a twelve-day bench trial from February 10 to March 14, 2014, to determine the equitable allocation of response costs between the parties.Having considered the evidence, the controlling law, and all relevant equitable factors, the Court has determined that an equitable allocation for the past response costs for all three facilities is 0% liability to the United States and 100% liability to Lockheed.In contrast, the Court will equitably allocate future response costs between the parties differently for each facility: 29% to the United States and 71% to Lockheed for the Redlands facility; 24% to the United States and 76% to Lockheed for the Potrero Canyon facility; and 19% to the United States and 81% to Lockheed for the LaBorde Canyon facility.

TABLE OF CONTENTS

BACKGROUND...98

I.History of the Sites...98

A.Government contracts for solid propellant rockets at the Sites...98

B.Solid propellant rocket operations at the Sites...101

C.General waste disposal practices at the Sites...104

II.Cleanup of the Sites...105

A. Redlandsfacility...105

1. Trichloroethylene...106

2. Perchlorate...107

B. Potrero Canyon facility...108

C. LaBorde Canyon facility...109

III.Lockheed's indirect recovery of response costs through U.S.-government contracts...109

A.The Federal AcquisitionRegulations...110

B.The Discontinued Operations Settlement Agreement (“DOSA”)...111

C. Lockheed's treatment of response costs for the Sites under the DOSA...113

IV.Procedural history...114

A.Related actions while the CERCLAstatute of limitations was tolled...114

B.The government's partial motion for summary judgment...116

C.Trial on equitable allocation...118

LEGALFRAMEWORK...120

FINDINGS OF FACTS AND CONCLUSIONS OFLAW...124

I.Sources of contamination at the Sites...124

A. Redlandsfacility...124

1. Perchlorate...124

2. Trichloroethylene...128

B. Potrero Canyon facility...130

C. LaBorde Canyon facility...131

II.Traditional equitable allocation...132

A.Limited value of certain equitable factors...132

1.Waste attributable to each party...132

2.Parties' relative benefits from waste disposal activities...132

3.Degree of cooperation...132

4.The government's ownership of waste...133

5.The government's ownership of facilities...135

6.Knowledge of risk of pollution from AP and TCE...135

7.Violation of California water quality laws...137

8.Ability to pay...141

9.Indemnification provisions...141

B. LPC exercised significantly more control than the government over the day-to-day hazardous waste disposal operations at the Sites...144

C.The government acquiesced in many of LPC's disposal operations at the Sites...150

D.Some of LPC's disposals at the Sites violated internal LPC rules or government requirements...151

E.Conclusion under traditional equitable allocation...153

III.Effect of indirect recoveries on equitable allocation...153

A. Lockheed's recovery of past response costs would unfairly burden the taxpayer...154

B. Lockheed's recovery of future response costs would not unfairly burden the taxpayer...161

CONCLUSION...162

BACKGROUND¹

I.HISTORY OF THE SITES

The environmental contamination that underlies this action arose from the operation of solid propellant rocket production facilities by Lockheed Propulsion Company(“LPC”)² at three locations in Redlands and Beaumont, California—the Redlands facility, the Potrero Canyon facility, and the LaBorde Canyon facility (collectively the “Sites”)—between 1954 and 1975.

A.Government contracts for solid propellant rockets at the Sites

LPC researched, developed, and manufactured state-of-the-art solid propellant rocket technologies at the Sites in support of military and scientific programs critical to the United States' Cold War efforts.(RomanDecl. ¶¶ 21, 23.)Government interest in the development of solid propellant rocket technologies grew significantly in the 1950s following the Soviet Union's successful nuclear tests in 1949 and the Sputnik launches in 1957.(Id.¶¶ 19, 24– 25.)Rocket motors using solid propellants offered, at a lower cost, several benefits over their liquid-based counterparts—greater safety, operational readiness, and reliability.(Id.¶ 24, 27.)The Eisenhower administration's decision to initiate the development of several large missile programs and to prioritize the research and development of solid propellants created the market for a private solid propellant industry.(Id.¶ 33.)As the only purchaser of advanced solid propellant rockets at the time, the United States held monopsonistic control over the solid propellant industry.(TrialTr. 65–66(Roman);RomanDecl. ¶¶ 5, 34.)

LPC was one of the largest participants in that industry, and as a contractor, it developed or manufactured rockets for eight major Cold War programs: the Vanguard artificial satellite, the Explorer artificial satellite, the Nike–Zeus anti-ballistic missile system, Project Mercury, the Apollo Program, the Large Solid Propellant Motor Program, the TAGBOARD reconnaissance drone, and the Short Range Attack Missile (“SRAM”) program.(RomanDecl. ¶¶ 7, 35.)President Eisenhower designated four of these programs—Vanguard, Nike–Zeus, Mercury, and Apollo—as of the “highest national priority.”(Id.¶¶ 7, 23.)

As described by three aeronautics scholars, “[t]he brief life of the Lockheed Propulsion Company was marked by rather modest, but notable historical and technical achievements in solid rocket development.”(PX0088at 14.)LPC contributed to four major Cold War space programs both as a developer and manufacturer of solid propellant rocket motors.In the 1950s, LPC developed and manufactured the third-stage motor for the Vanguard satellite program and loaded solid propellants into motors for the Explorer satellite program.Following the first of many successful launches into orbit in 1958, both Vanguard and Explorer were foundational space race programs.(RomanDecl. ¶¶ 8, 36–37.)LPC later developed and manufactured launch escape motors for Project Mercury, the United States' first manned space program.The escape motors—critical for the safety of the astronaut in the event of an emergency during a launch—had a 100% reliability rate over numerous tests and missions.(Id.¶¶ 10, 40–41.)Finally, LPC developed and manufactured the launch escape and pitch control motors for the Apollo manned lunar exploration program.The motors were part of the space capsule for eight Apollo lunar missions, including Apollo 8, the first manned orbit of the moon in December 1968, and Apollo 11, the first manned lunar landing in July 1969.(Id.¶¶ 11, 42–43.)

From 1958 to 1974, LPC also researched, developed, and tested large solid propellant motors for NASA and the Department of Defense(“DOD”).Large solid propellant motors were necessary to generate enough thrust to lift large vehicles into space.Under the Large Solid Propellant Motor Program, LPC designed, fabricated, and tested the first 120–inch and 156–inch solid propellant motors and contributed to numerous technological advances later incorporated by competitors in the Space Shuttle and ballistic missile programs.For instance, the “Lockseal” device developed by LPC as a solution to solid propellant rocket thrust vector control became a mainstay in the solid propellant rocket industry.(Id.¶¶ 12–13, 44–45.)

LPC also contributed as a developer and manufacturer to the conventional Cold War arms race.LPC developed the second-stage motor for the Nike–Zeus missile, a surface-to-air missile designed to destroy incoming nuclear warheads.The Nike–Zeus missiles were successfully tested in 1958 and 1959.(Id.¶¶ 38–39.)LPC also developed and produced forty-five motors for the then-highly classified TAGBOARD reconnaissance drone program in the late 1960s. LPC designed motors capable of allowing the unmanned drone to reach an altitude and speed that would ignite the drone's ramjet.Once the ramjet ignited, the drone could reach speeds in excess of Mach 3 and photograph an area sixty miles wide and 3000 miles long in a single flight.The government ultimately discontinued TAGBOARD in 1971 for technical and political reasons.(Id.¶¶ 49–50;see alsoPX0088at 13.)

LPC's largest contracts, however, were for the SRAM program.The SRAM was a nuclear-armed air-to-ground missile designed for use on the aerial front lines in the case of an American invasion into Soviet territory.(RomanDecl. ¶ 51.)LPC developed and manufactured a revolutionary two-pulse solid propellant rocket motor, which enabled an individual SRAM to shut down and then restart mid-flight.This innovation created the possibility for three distinct flight profiles and an “omni-directional” striking capability for each missile.(Id.¶¶ 51, 54, 70–71;see alsoTrial Tr.at 68(Roman).)

The Air Force developed the...