Government must pay portion of toxic hazard cleanup in SD harbor, 9th Circuit rules

The United States government must pay to clean up hazardous chemicals contaminating soil and groundwater in the San Diego harbor.

On Wednesday, a three-judge panel of the 9th U.S. Circuit Court of Appeals ruled that the government bore some responsibility for the materials, which were released into the area over several decades by a military contractor now known as TDY Holdings LLC, under the Comprehensive Environmental Response Compensation and Liability Act, a federal law known as CERCLA.

“[E]ncumbering a military contractor with 100 percent of CERCLA cleanup costs that were largely incurred during war-effort production was a 180 degree departure from our prior case law, and the out-of-circuit authority that the district court relied upon does not warrant such a sharp deviation,” wrote Judge Morgan Christen. TDY Holdings LLC v. U.S., 2017 DJDAR 9686.

Ryan Aeronautical Company, TDY’s predecessor company, opened a 44-acre manufacturing plant in San Diego in 1939. The site was operational until 1999 and during that time, the company produced airplanes and airplane parts. More recently, it produced helicopter equipment and drones.

Over the years, almost all of the company’s business was with the U.S. government, the opinion said.

Many of the company’s products required the use of chromium compounds, chlorinated solvents, and polychlorinated biphenyls, which are all hazardous. The opinion said that government contracts often required TDY to use chromium compounds and chlorinated solvents.

In 2007, TDY settled a lawsuit with the Port of San Diego and agreed to clean up the materials. Shortly thereafter, TDY sued the government under the federal law in an effort to get the government to contribute financially to the cleanup efforts.

U.S. District Judge Cathy Ann Bencivengo of San Diego ruled in 2012 that TDY was liable for the chemicals and ordered it to pay 100 percent of the cleanup costs.

At the time of the decision, the cleanup process — which continued past the 2012 ruling — had cost the company $11 million, TDY’s attorney Randall M. Levine said.

But the 9th Circuit’s Wednesday ruling said that Bencivengo improperly interpreted circuit case law, specifically United States v. Shell Oil Co., 294 F.3d 1045 (9th Cir. 2002), and Cadillac Fairview/California, Inc. v. Dow Chem. Co., 299 F.3d 1019 (9th Cir. 2002), in which the court held the government liable for similar cleanups.

Judge Paul J. Watford concurred with the opinion, but said that the government was only minimally responsible.

Judge J. Clifford Wallace, the third member of the panel, joined Christen’s opinion.

The judges declined to assign a percentage of responsibility in their opinion, a task which will go back on remand to Bencivengo.

Levine, a partner at Morgan, Lewis & Bockius LLP, said that he will likely argue that the government should foot 90 percent or more of the bill, as TDY argued at the district level and on appeal.

Between the 1970s and 1990s, the government had paid for cleanup costs after the chemicals were listed as hazardous substances by the under the Clean Water Act.