Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-14-05302/USCOURTS-caDC-14-05302-0/pdf.json

Parties Involved:
Lockheed Martin Corporation
Appellee
National Defense Industrial Association and the Aerospace Industries Association of America, Inc.
Amicus Curiae for Appellee
United States of America
Appellant

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 2, 2015 Decided August 19, 2016

No. 14-5302

LOCKHEED MARTIN CORPORATION,

APPELLEE

v.

UNITED STATES OF AMERICA,

APPELLANT

Appeal from the United States District Court

for the District of Columbia

(No. 1:08-cv-01160)

J. David Gunter II, Attorney, U.S. Department of Justice, 

argued the cause for appellant. With him on the briefs were 

John C. Cruden, Assistant Attorney General, and John E. 

Sullivan and Justin D. Heminger, Attorneys.

Dan Himmelfarb argued the cause for appellee. With him 

on the brief were Marcia G. Madsen and E. Brantley Webb. 

Raymond B. Ludwiszewski entered an appearance. 

Jessica Ring Amunson was on the brief for amici curiae 

National Defense Industrial Association and the Aerospace 

Industries Association of America, Inc. in support of appellee.

USCA Case #14-5302 Document #1631150 Filed: 08/19/2016 Page 1 of 31
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BEFORE: GARLAND,

⃰

Chief Judge, PILLARD, Circuit Judge,

AND EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge PILLARD.

PILLARD, Circuit Judge: The United States appeals its 

liability under the Comprehensive Environmental Response, 

Compensation, and Liability Act (CERCLA) for a portion of the 

cost of cleaning up hazardous substances at three California 

facilities owned by Lockheed Martin (Lockheed or the 

Company). The government’s involvement at the facilities dates 

to the Cold War, when the Department of Defense contracted 

with Lockheed to build state-of-the-art, solid-propellant rockets.

Lockheed’s production of those rockets severely contaminated 

the sites, with the contamination migrating into groundwater 

miles away. The United States and Lockheed acknowledge their 

joint responsibility for the contamination. Neither party 

challenges the district court’s percentage allocations of liability. 

The parties’ disagreement stems from the fact that the 

government has been and remains Lockheed’s principal source 

of business, and in that capacity has agreed to allow Lockheed to 

charge costs incurred in cleaning up the sites—including 

Lockheed’s own CERCLA liability—to new federal contracts

unrelated to these facilities and contracts. The government, in 

other words, acknowledges its own share of CERCLA liability 

and also that it agreed to reimburse Lockheed’s share via 

overhead charges on unrelated contracts. The only question here 

is whether the government has a valid claim that the particular 

mechanism by which the United States will pay its share of the 

costs of environmental remediation under CERCLA interacts 

 ⃰

Chief Judge Garland was a member of the panel at the time the case 

was argued but did not participate in this opinion.

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with the parties’ agreed-upon contract-based reimbursement 

method in a way that impermissibly requires the government to 

make double payment. We conclude that, in the circumstances 

of this appeal, the government’s claims fail.

I.

A. CERCLA’s Cost-Recovery and Contribution Provisions

Congress enacted CERCLA, 42 U.S.C. §§ 9601-75, in 1980 

“in response to the serious environmental and health risks posed 

by industrial pollution.” United States v. Bestfoods, 524 U.S. 

51, 55 (1998) (citing Exxon Corp. v. Hunt, 475 U.S. 355, 358-59 

(1986)). Congress thereby sought “to promote the timely 

cleanup of hazardous waste sites and to ensure that the costs of 

such cleanup efforts [a]re borne by those responsible for the 

contamination.” Burlington N. & Santa Fe Ry. Co. v. United 

States, 556 U.S. 599, 602 (2009) (internal quotation marks and 

citation omitted). The statute imposes strict liability for 

environmental remediation, assigning responsibility for cleaning 

up even pollutants disposed of according to then-acceptable 

practices before they were known to be hazardous. 

CERCLA section 107 creates a cause of action through 

which entities that have incurred costs cleaning up contaminated 

sites may sue to recover cleanup costs from parties that may 

have played a role in causing the pollution, whom CERCLA 

refers to as potentially responsible parties (PRPs). See United 

States v. Atl. Research Corp., 551 U.S. 128, 135-36 (2007). 

PRPs may include, as relevant here, owners or operators of 

facilities contaminated by hazardous substances, such as 

Lockheed, and entities that arranged for disposal or treatment of 

such substances. See 42 U.S.C. § 9607(a)(2)-(3). In this case, 

Lockheed filed a section 107 claim against the United States, 

alleging that the government played a critical role in the 

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activities leading to contamination of the three California sites 

and seeking reimbursement of a portion of the response costs 

Lockheed incurred at those sites. 

The United States responded to Lockheed’s CERCLA claim 

with a counterclaim under CERCLA section 113(f), id.

§ 9613(f), asserting that Lockheed was the owner and operator 

of the sites and had transported and arranged for disposal of 

hazardous wastes there. Section 113(f) authorizes courts to 

“allocate response costs among liable parties using such 

equitable factors as the court determines are appropriate.” 42 

U.S.C. § 9613(f). Under section 113(f), a defendant seeking to 

avoid being assigned more than its fair share of liability in a 

section 107 action may “blunt any inequitable distribution of 

costs by filing a [section] 113(f) counterclaim” against the 

section 107 plaintiff. Atl. Research Corp., 551 U.S. at 140. 

“Resolution of a [section] 113(f) counterclaim would necessitate 

the equitable apportionment of costs among the liable parties, 

including the PRP that filed the § 107(a) action.” Id. The 

United States counterclaimed that its liability under CERCLA 

should be reduced to reflect only its proportionate responsibility 

for the contamination.

CERCLA also codifies in a number of provisions a general 

principle of avoiding double recovery of response costs. See, 

e.g., 42 U.S.C. § 9607(f)(1) (prohibiting “double recovery under 

this chapter for natural resource damages”); id. § 9612(f) 

(prohibiting double recovery out of CERCLA’s Superfund for 

any response costs); id. § 9613(f)(2) (reducing PRP liability for 

CERCLA response costs by dollar amount of settlements paid 

on the same matter to the state or federal government). The 

government here invokes CERCLA’s principal double-recovery 

bar, which appears in section 114. Section 114(a) defines 

CERCLA’s relationship to other law, including non-preemption 

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of state tort or environmental law beyond the liabilityCERCLA

imposes, and coordination with other federal laws. Section 

114(b), in turn, states that “[a]ny person who receives 

compensation for removal costs or damages or claims pursuant 

to any other Federal or State law shall be precluded from 

receiving compensation for the same removal costs or damages 

or claims as provided in this chapter.” Id. § 9614(b). In its 

answer to Lockheed’s section 107 complaint, the United States 

invoked section 114(b), contending that Lockheed’s suit 

unlawfully sought recovery for the same removal costs the 

United States had already paid as overhead on contracts with 

Lockheed for other goods and services. 

B. Federal and Defense Agency Procurement Regulations

The second principal authority the government invokes is

federal procurement law. The Federal Acquisition Regulations

(FAR), 48 C.F.R. §§ 1.000-53.303, together with agencyspecific acquisition regulations, see, e.g., id. §§ 201.1-253.3

(Defense FAR Supplement), govern federal government 

contracts for goods and services, see id. § 1.101. The FAR 

authorize two types of government contracts: fixed-price and 

cost-reimbursement. See id. § 16.101(b). For fixed-price 

contracts, the parties set a price based on an estimate of the total 

allowable costs and profits, id. § 16.202-1, with sharply 

circumscribed opportunities thereafter to adjust those estimates 

(and hence the contract price), see, e.g., id. § 15.407-1(b). Costreimbursement contracts, by contrast, set a ceiling on the 

government’s price, and authorize payment up to that ceiling 

based on allowable costs the contractor incurs in performing the 

contract, plus profit at an agreed-upon rate. See id. § 16.301-1. 

Allowable costs under either type of contract include “direct 

costs,” e.g., material and labor, as well as “indirect costs” that 

comprise the company’s overhead not directly related to a 

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specific contract. Id. § 31.201-1; see also id. §§ 31.202-.203. 

The FAR provide that the government may only reimburse a 

contractor for indirect costs that are: “allowable,” id. § 31.201-

2(a), i.e., “reasonable,” or of a kind that would be “incurred by a

prudent person in the conduct of competitive business,” id. 

§ 31.201-3(a); “allocable,” i.e., “necessary to the overall 

operation of the business, although a direct relationship to any 

particular cost objective cannot be shown,” id. § 31.201-4(c); 

and not otherwise specifically disallowed, id. § 31.201-6. If the 

contractor’s cost of performance is cheaper than anticipated, the 

overall contract price drops only if it is a cost-reimbursement 

contract; if the contract is fixed-price, the contractor retains the 

excess.

The Defense Contract Audit Agency (DCAA) “was 

established to provide necessary audit services to government 

officers in contract administration.” Cuneo v. Schlesinger, 484 

F.2d 1086, 1088 (D.C. Cir. 1973). The DCAA in its internal 

Manual provides specific guidance on application of the FAR’s 

legal limitations to environmental costs from defense contracts. 

See DEFENSE CONTRACT AUDIT AGENCY MANUAL (Dec. 12, 

2012) (DCAA MANUAL). The DCAA Manual states that, if a 

contractor that complied with applicable law and exercised due 

care to avoid contamination nonetheless experiences 

contamination not caused by its own wrongdoing, its 

environmental cleanup costs may be treated as “normal business 

expenses.” DCAA MANUAL § 7-2120.3, J.A. 493; see id. §§ 7-

2120.1, 7-2120.5, 7-2120.13, J.A. 493-94, 497. The DCAA 

Manual also limits that principle: For purposes of the 

government’s payment through defense procurement contracts, 

“the allowable environmental cost should only include the 

contractor’s share of the clean-up cost based on the actual 

percentage of the contamination attributable to the contractor.” 

Id. § 7-2120.9(a), J.A. 496. A contractor thus cannot pass 

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through to the government in its defense contracts any cleanup 

costs not attributable to the contractor under CERCLA.

Government contracting law also prohibits double charging. 

Where a contractor receives from another source any portion of 

a cost that it has already charged to the government as an 

indirect cost, the FAR require that the payment received for 

those same costs “shall be credited to the Government either as a 

cost reduction or by cash refund.” 48 C.F.R. § 31.201-5; see 

also id. § 52.216-7(h)(2). In other words, if the government has 

paid a contractor a dollar in indirect costs for a specific overhead 

cost, the contractor must credit back to the government any 

portion of a dollar it otherwise receives (from another 

responsible party or an insurer, for example) to cover that same 

cost.

C. Factual Background

In the 1980s and 1990s, Lockheed and state and local

agencies discovered hazardous substances at and emanating 

from three Lockheed facilities in Redlands and Beaumont, 

California—the Redlands facility, the Potrero Canyon facility, 

and the LaBorde Canyon facility (the sites or the facilities)—

with the bulk of contamination located at the Redlands facility. 

See Lockheed Martin Corp. v. United States (Lockheed II), 35 F. 

Supp. 3d 92, 105-09 (D.D.C. 2014). Lockheed’s corporate 

predecessor, Lockheed Propulsion Company, had manufactured 

solid-propellant rockets pursuant to government contracts at 

those facilities between 1954 and 1975 using myriad hazardous 

substances, including the organic solvents trichloroethylene and

1, 1, 1-trichloroethane, polychlorinated biphenyls (PCBs), and 

ammonium perchlorate. Id. at 99-109. To dispose of those 

substances, Lockheed Propulsion Company had, among other 

things, pumped waste into shallow, concrete-lined “evaporation 

pits” resulting in evaporation-pit sludge and other propellant 

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wastes, burned such wastes in unlined earthen “burn pits,” and 

simply poured onto the ground toxic substances and wastewater 

contaminated from rinsing those substances from equipment. Id.

at 104-05. Those operations allowed hazardous substances to 

seep into the ground and infiltrate nearby groundwater. Id. at 

105-06. For example, trichloroethylene, a probable carcinogen, 

and perchlorate, a constituent of ammonium perchlorate known 

to decrease thyroid hormone production, migrated approximately

four miles from the facilities to form the “Redlands plumes” of 

groundwater contaminants, exceeding applicable drinking-water 

standards for those hazardous substances. Id. & nn. 8-9. The 

government had a significant presence at the sites during rocket

production, mostly conducting inspections for quality assurance 

and safety purposes but also acquiescing in waste disposal by 

Lockheed Propulsion Company employees. Id. at 146-51. 

After discovering decades later that each facility was 

severely contaminated, Lockheed undertook containment and 

remediation measures at the three sites and their environs in 

compliance with orders from and consent decrees with various 

state and local agencies. Id. at 106-09. By the time of trial of 

the CERCLA claim against the United States in this case,

Lockheed had incurred environmental response costs at the 

facilities of nearly $287 million and estimated that it would cost 

another $124 million to complete the cleanup. Id. at 105. 

Lockheed did not ultimately bear those costs, however. 

Instead, as it paid cleanup costs at these and other sites over the 

roughly twenty years from the initiation of the cleanup to the 

judgment in this case, Lockheed received reimbursement by 

allocating cleanup costs incrementally over time as indirect 

contract costs charged to all of its customers. Id. at 109.

Because the United States constitutes the vast majority of 

Lockheed’s customer base, Lockheed had by the time of the 

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district court’s final judgment recovered through indirect 

charges on its federal government contracts approximately $208 

million of the total $287 million, or 72 percent, of the response 

costs it had thus far incurred for cleanup at the three facilities. 

Id. And, because the government’s share of Lockheed’s salesis

now larger than it was in the past, if Lockheed were to continue 

charging to its contracts all costs it incurred at the sites postjudgment, the percentage of its future response costs at the three 

sites that Lockheed would pass through to the government, as 

opposed to Lockheed’s other contract counterparties, would be

expected to rise to about 87 percent. Id. at 109, 113.

When Lockheed began charging those environmental 

response costs to its clients, the government took the position 

that the FAR’s cost-reimbursement provisions did not allow it to 

pay such costs at sites where all operations had been 

discontinued. Oral Arg. Rec. 3:45-3:49; Br. of Appellant United 

States 31. Lockheed sued the United States under the Contract 

Disputes Act and, in September 2000, the parties entered into 

the Discontinued Operations Settlement Agreement (the Billing 

Agreement) to resolve that payment-authority dispute. See

Lockheed II, 35 F. Supp. 3d at 111-12; see generally Billing 

Agreement, J.A. 564-73. The Billing Agreement creates the 

“Discontinued Operations Pool” (DiscOps Pool), an account or 

“corporate overhead pool” to which the Agreement authorizes 

Lockheed to debit various costs it had incurred or will incur

cleaning up facilities discontinued before January 2000—

including but not limited to the facilities at issue here. Billing 

Agreement ¶ 1.8, J.A. 566. 

Under the Billing Agreement, costs debited to the DiscOps 

Pool, called Settled DiscOps Costs, are deemed “allowable” 

indirect costs that may be allocated to Lockheed’s business 

divisions, and thus charged by those divisions as overhead in 

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their federal government contracts. Id. ¶¶ 2.4-2.5, 2.8, J.A. 568-

69. The Billing Agreement directs that all such costs be 

amortized over five years, beginning the year after Lockheed 

incurs the cost. Id. ¶ 2.17, J.A. 570. In other words, a cleanup 

cost Lockheed incurred in 2005 was not simply charged all at 

once to the contracting partners for which Lockheed happened to 

work the next year, but was spread across contracts during the 

ensuing five years. See Lockheed II, 35 F.Supp. at 112. The 

costs the Billing Agreement allows Lockheed to charge the 

government are wide ranging. They include traditional 

environmental remediation costs (for demolition, groundwater 

remediation, and soil remediation) as well as workers’

compensation costs and even Lockheed’s toxic tort settlement

paymentsto third parties. Billing Agreement ¶ 1.8, J.A. 566-67.

The Billing Agreement contains a crediting provision under 

which Lockheed commits that it “shall not realize a double 

recovery with regard to any Settled Discontinued Operations 

Costs,” a bar that applies equally to “past or future Settled 

Discontinued Operations Costs” when calculated “on a 

cumulative basis,” and that it will “reimburse the United States 

for any such double recovery of Settled Discontinued Operations 

Costs under government contracts.” Id. ¶ 4.7, J.A. 572. 

According to evidence presented at trial, Lockheed credited 

CERCLA recoveries it obtained in other cases to the DiscOps 

Pool and allocated them across all its contracts, thereby partially 

offsetting cleanup costs debited to the pool. See Trial Testimony 

of Robert Gatchel, Vice President of Government Finance, 

J.A. 448. Thus, if Lockheed recovered from other PRPs under 

CERCLA any of the response costs it previously had debited to

the DiscOps Pool, it credited those recoveries to the DiscOps 

Pool (with certain exceptions not at issue here), as the Billing 

Agreement requires. The Billing Agreement also providesthat it

“does not settle claims, if any, arising under CERCLA,” Billing 

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Agreement ¶ 4.18, J.A. 573, thereby permitting this lawsuit to 

proceed. 

D. Procedural History

After the United States agreed for more than a decade to toll 

the statute of limitations on Lockheed’s CERCLA claims against 

it, in July 2008 Lockheed filed thissection 107(a) cost-recovery 

action under CERCLA against the United States as a PRP. 

Lockheed sued to recover the government’s share of the costs of 

cleanup at the three California facilities. The United States 

answered and counterclaimed for contribution under section 

113(f), generally denying Lockheed’s allegations and seeking 

equitable allocation of response costs. The government invoked 

CERCLA’s section 114(b) double-recovery bar to oppose what 

it saw as Lockheed’s effort to obtain from it under the Act “the 

same removal costs” it had already recovered from the 

government as contract overhead. 42 U.S.C. § 9614(b). The 

government also contended, more generally, that Lockheed is 

barred from recovering from the United States under section 

107(a) because the government “has already paid its share” of 

cleanup costs, so cost collection under CERCLA would be 

inequitable under section 113(f). Answer, J.A. 197

The government moved for partial summary judgment on its 

section 114(b) double-recovery defense, and Lockheed crossmoved on the same issue for judgment on the pleadings. In 

September 2009, the district court ruled in favor of Lockheed on 

both motions. See Lockheed Martin Corp. v. United States 

(Lockheed I), 664 F. Supp. 2d 14 (D.D.C. 2009). The court 

concluded that section 114(b) does not bar Lockheed’s 

CERCLA claim. See id. at 18-20. The court explained that,

“[p]ursuant to the FAR,” the government indirectly pays 

contractors “costs that are not associated with a specific 

contract—essentially, overhead,” such as the cleanup costs at 

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issue here. Id. at 16. The court rejected the government’s

section 114(b) defense on the ground that the indirect-cost 

payments for environmental response did not amount to 

“compensation . . . pursuant to . . . Federal . . . law” within the 

meaning of section 114(b). Id. at 18-19. That was because “the 

government-as-client’s indirect cost payments are not made in 

recognition of, or in compensation for, the government’s 

CERCLA liability for those response costs.” Id. at 19. 

The court specifically recognized that Lockheed’s indirectcost charges would be reduced if some of the liability were

apportioned to the government under CERCLA: If it were 

determined that “Lockheed is only partially liable for the 

response costs it is incurring at the Site, it should not have to 

include all its response costs in the [DiscOps] Pool,” and a 

CERCLA judgment against the government would limit 

Lockheed “in its dealings with the government-as-client” to 

charging as contract overhead “only . . . those costs for which it 

[Lockheed] is actually liable.” Id. at 20. The court’s 

anticipation that any CERCLA recovery would be excluded 

from the DiscOps pool tracked its understanding of these same 

parties’ coordination of CERCLA and indirect-cost payment 

under an earlier settlement, when the government paid Lockheed 

“directly for a percentage of the response costs incurred,” and 

“that portion of the costs was excluded from the [DiscOps] pool, 

to ensure that Lockheed did not recover the same costs twice.” 

Id. at 17. The court further reasoned that, even if costs that 

CERCLA assigned to the government were charged to the 

DiscOps pool, the FAR’s crediting requirement, reinforced by 

the crediting requirement in the Billing Agreement, would as a 

practical matter prevent any double recovery or other windfall to 

Lockheed. Id. at 19-20. 

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The court denied the government’s motion for 

reconsideration. It rejected the government’s argument that it 

had paid costs “pursuant to” federal “law” within the meaning of 

section 114(b). Although the FAR are federal law, the court 

held, the contracts pursuant to which the government paid 

Lockheed’s indirect costs are not. 

Before trial of Lockheed’s CERCLA claim, the government 

stipulated that Lockheed had incurred response costs for cleanup 

at the three facilities, and both parties stipulated that they were 

liable as PRPs under section 107(a), leaving for disposition only 

the question of what share of liability each bore. When the 

originally assigned trial judge retired, the case was transferred to 

another judge. The new judge presided over a twelve-day bench 

trial, which she characterized as a “battle of the experts” on 

numerous issues. Lockheed II, 35 F. Supp. 3d at 119. Most of 

the trial evidence pertained to contamination at the three sites 

and the extent to which each party bore responsibility for that 

contamination, id., issues not challenged in this appeal, see Br. 

of Appellant United States 25, 45. The parties also spent “a 

significant amount of trial” on the accounting issues surrounding

Lockheed’s indirect-cost billing and crediting. Id. at 119. On 

those issues, the court received testimony of four experts—two 

for each party—as well as testimony of Lockheed’s vice 

president of government finance. Id. at 119-20.

In April 2014, the court issued a comprehensive 

memorandum opinion apportioning liability between the United 

States and Lockheed. See Lockheed II, 35 F. Supp. 3d 92. 

Beginning from a baseline allocation following “the per capita 

approach: a fifty-fifty split between Lockheed and the 

government,” id. at 132, the court made a “traditional equitable 

allocation” in light of the equitable factors often employed by 

courts to assign responsibility and corresponding CERCLA 

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liability, id. at 122-24, 132-53. The court found that, although

Lockheed had exercised significantly more control than the 

government over the day-to-day disposal of hazardous waste at 

the facilities, the government had acquiesced in some of 

Lockheed’s disposal operations, to varying extents at each 

facility, and thus bore a fraction of responsibility for the

contamination. See id. at 150-51. The court allocated liability

as follows: at the Redlands facility, a 30 percent share of 

liability for the government and a 70 percent share for 

Lockheed; at the Potrero Canyon facility, a 25 percent share for 

the government and a 75 percent share liability for Lockheed; 

and at the LaBorde Canyon facility, a 20 percent share for the 

government and an 80 percent share for Lockheed. Id. at 153. 

Next, the court addressed as an equitable matter the issue of 

Lockheed’s indirect-cost recovery, in light of which the 

government contended that any judgment against it under 

CERCLA would yield double recovery. Id. at 153-62. 

Recognizing “the narrowness of the statutory [section 114(b)] 

bar on double recovery,” the court explained, “courts have 

developed a broader equitable double recovery theory” under 

section 113(f) to prevent a CERCLA judgment from granting a 

windfall to the plaintiff. Id. at 154-55. The court found that 

Lockheed had already indirectly recovered from the government,

through overhead charges on ensuing contracts, more than 72

percent of the response cost incurred to date for the three 

facilities. Id. at 154. Thus, the court determined that, with 

regard to the portion of the cleanup that had been completed,

“the government’s ‘effective share’ is already well over two 

times higher than its [20 to 30 percent] equitable share.” Id.

The court noted that a CERCLA judgment against the 

United States would not award Lockheed double recovery “in 

the traditional sense.” Id. at 155. Even if the court were to 

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require the government to pay Lockheed under CERCLA for 

costs it had already reimbursed under the Billing Agreement, the 

trial judge, like the judge who had ruled on the pretrial motion 

under section 114(b), noted that FAR’s crediting mechanism 

would require Lockheed to credit any CERCLA recovery for 

those costs to the DiscOps Pool, and that such credits would be 

passed through to Lockheed’s contracts in the same way as 

costs. Id. Thus, Lockheed could not be left with more in 

response costs than it initially paid. 

Notwithstanding its rejection of the government’s equitable

double-recovery defense, the district court in its equitable 

allocation under section 113(f) found that Lockheed had 

received substantial economic benefits from charging 

environmental cleanup as an indirect cost in its government 

contracts over the preceding two decades. Id. at 156-57. The 

court excluded from the government’s share of liability for past

costs the more than $18 million in prejudgment interest that the 

government would otherwise owe on its CERCLA liability. See

42 U.S.C. § 9607(a). It did so because Lockheed had already 

charged the government’s cleanup costs as contract overhead,

and so had use of the funds at issue during the relevant period.

See Lockheed II, 35 F. Supp. 3d at 159-60. Lockheed also had 

charged through the DiscOps Pool the more than $10 million in 

attorney’s fees and costs it incurred in bringing the CERCLA 

action. Id. at 161. Because CERCLA does not authorize

collection of such costs, see Key Tronic Corp. v. United States, 

511 U.S. 809, 819 (1994), the court concluded, a further 

equitable reduction in the government’s share was warranted, 

see Lockheed II, 35 F. Supp. 3d at 161. Additionally, the court 

found that Lockheed had received significant excess economic 

benefit from its application of a profit factor on the responsecosts increment of its indirect contract charges. Id. at 157-59. 

Finally, the district court found that, with respect to both past 

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and future costs, Lockheed received some excess benefit from its

collection of cleanup costs through its fixed-price contracts. Id. 

at 160-61. For those reasons, the district court allocated 100

percent of already-incurred response costs to Lockheed, reducing 

to 0 percent the government’s share of those past costs. Id. at 

161. 

The court found that, going forward, Lockheed would as a 

transitional matter benefit from fixed-price contracts that it had 

priced with reference to 100 percent of cleanup costs. Id. at 162. 

Because Lockheed had many such contracts that remained in 

effect for several years after the court limited Lockheed’s actual 

share of future response costs to a maximum of 81 percent, the 

court made a 1 percent reduction to the government’s overall 

share of the entire future-cost liability. Id. 

Thereafter, the parties stipulated to a process for payment of 

future costs. See Joint Stipulated Order Regarding Payment of 

Future Costs (Dkt. No. 158), Lockheed II, 35 F. Supp. 3d 92 

(No. 1:08-cv-10060). Under their post-judgment agreement,

every six months Lockheed will make a written demand to the 

United States for payment of the government’s equitable share 

of response costs Lockheed incurred during the preceding sixmonth period. Id. ¶¶ 2(a), 3(a)-(e). The government will pay 

that amount within 120 days of receiving Lockheed’s demand,

less any amount it disputes. Id. ¶ 3(f)-(g). Lockheed and the 

United States further agreed that Lockheed “will follow its 

current disclosed and established practices including . . . all 

applicable requirements under the Federal Acquisition 

Regulation, the Cost Accounting Standards, and the 

requirements of the [Billing Agreement], with respect to 

environmental remediation costs and credits for the sites under 

the Federal Contracts.” Id. ¶ 6. The government timely 

appealed. 

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II.

A. Standard of Review

In contribution actions under CERCLA section 113(f), the 

district court has significant discretion to “allocate response 

costs among liable parties using such equitable factors as the 

court determines are appropriate.” 42 U.S.C. § 9613(f)(1); see 

PCS Nitrogen Inc. v. Ashley II of Charleston LLC, 714 F.3d 161, 

186 (4th Cir.), cert. denied, 134 S. Ct. 514 (2013). Courts “have 

described the district court’s authority in this area as ‘broad and 

loose.’” NCR Corp. v. George A. Whiting Paper Co., 768 F.3d 

682, 695 (7th Cir. 2014) (quoting Browning-Ferris Indus. of Ill.,

Inc. v. Ter Maat, 195 F.3d 953, 957 (7th Cir. 1999)). “CERCLA 

not only entrusts the district court to make the ultimate equitable 

allocation of costs, but it also grants the court the authority to 

decide which equitable factors will inform its decision in a given 

case.” Id. 

We do not simply “rubber-stamp” a district court’s 

equitable allocation, id. at 696, but review it for abuse of 

discretion, see Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 

602 F.3d 204, 216 (3d Cir. 2010); United States v. 

Consolidation Coal Co., 345 F.3d 409, 412 (6th Cir. 2003); 

Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1187 (9th Cir. 

2000); cf. Massachusetts v. Microsoft Corp., 373 F.3d 1199, 

1207 (D.C. Cir. 2004) (“We review the district court’s decision 

whether to grant equitable relief only for abuse of discretion.”). 

“An abuse of discretion occurs when the district court’s decision 

rests upon a clearly erroneous finding of fact, an errant 

conclusion of law or an improper application of law to fact.” 

Agere Sys., Inc., 602 F.3d at 216 (internal quotation marks and 

citations omitted). In the equitable allocation context, we ask 

“(1) whether the district court failed to consider a relevant factor 

that should be been given significant weight; (2) considered and 

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gave significant weight to an irrelevant or improper factor; or 

(3) considered all proper factors and no improper ones, but in 

weighing those factors, committed a clear error of judgment.” 

K.C. 1986 Ltd. P’ship v. Reade Mfg., 472 F.3d 1009, 1017 (8th 

Cir. 2007) (internal quotation marks omitted).

We review de novo the district court’s grant of Lockheed’s 

motion for judgment on the pleadings and its denial of the 

United States’ motion for partial summary judgment. See 

Defenders of Wildlife v. Gutierrez, 532 F.3d 913, 918 (D.C. Cir. 

2008); Thomson v. Dist. of Columbia, 530 F.3d 914, 915-16 

(D.C. Cir. 2008).

B. Analysis

The United States has played two roles relevant to this 

appeal: The federal government is (1) Lockheed’s primary 

source of ongoing business, and (2) a partially responsible party 

under CERCLA with a legal duty to pay its share of the cleanup 

costs. The United States voluntarily assumed the first role, 

agreeing to pay the Company higher prices on unrelated goods 

and services to reimburse Lockheed for its environmental 

cleanup costs. Although the government initially had resisted 

such charges, its 2000 Billing Agreement with Lockheed 

authorized the Company to include as routine contract overhead 

on any new contracts a charge for remediation of past 

environmental contamination at its discontinued operations, 

including the three sites at issue in this case. Billing Agreement

¶¶ 1.8, 2.4-2.5, 2.8, J.A. 566, 568-69. The United States does 

not here dispute that by this arrangement it agreed to reimburse 

Lockheed’s own share of the cleanup costs. See Br. of 

Appellant United States 54; Reply Br. 1, 18; see also Oral Arg. 

Rec. 13:30-14:00, 15:30-16:00. In its second role, the 

government stipulated that it bore partial responsibility for 

causing the environmental damage at the sites, and is therefore 

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obligated by CERCLA to pay its own proportionate share of the 

cleanup costs. Each party admittedly contributed to the 

problem; what Lockheed and the United States dispute on appeal 

is how they will pay to remedy it.

Lockheed filed suit in 2008, asking the court to identify and 

order the United States to pay the government’s share as a PRP

under CERCLA. Neither party challenges the district court’s 

percentage allocation of responsibility following trial or any of 

the district court’s detailed factual findings. Nor do the parties

contest the district court’s decision in the exercise of its

equitable powers to reduce the government’s share to 0 percent

for past costs, and to reduce by 1 percent the 20 to 30 percent

responsibility the court initially allocated to the government for 

future costs. 

The only issue raised on appeal is whether the United States 

must pay under CERCLA the 19 to 29 percent of the postjudgment response coststhe district court awarded to Lockheed. 

The United States contends that its contractual payments

already fulfilled its CERCLA obligation. It presses two 

CERCLA defenses that it says should have completely barred 

Lockheed’s recovery in this case, even for response costs yet to 

be incurred. It invokes CERCLA section 113(f), which requires 

courts to apply equitable principles to prevent excess recovery in 

allocating response costs between liable parties. 42 U.S.C. 

§ 9613(f). The government claims the district court should have 

exempted it from all liability against it under CERCLA, given 

that it has already paid far more than its equitable share, and 

Lockheed far less. The government also relies on CERCLA 

section 114(b), which bars recovery of “the same removal costs”

by any party that has already received “compensation for 

removal costs” if such compensation was made “pursuant to any 

other Federal or State law.” 42 U.S.C. § 9614(b). The 

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government contends it already compensated Lockheed 

“pursuant to” federal government contracting law. 

Each of the government’s theories boils down to an 

objection against double recovery. If the government were to 

pay what is at most a 29 percent CERCLA share of the 

approximately $124 million in estimated future costs, its total 

CERCLA exposure for the future cost portion at the end of the 

cleanup would be approximately $36 million. Even adding the 

past costs, for which the court allocated the government a 0

percent share in light of its payments to date, a 29 percent share 

of the estimated overall total of $411 million would not exceed 

$120 million. And yet, as noted above, the government has 

already paid out $208 million via contract overhead—before 

paying the CERCLA judgment from which it now appeals. 

Stated another way, the government emphasizes, it “has already 

paid 55 percent of the total past and future response costs that 

Lockheed is expected to incur,” Br. of Appellant United States 

23, and even absent a CERCLA judgment, it will eventually pay 

83 percent of total response costs at the site—well above its 

court-allocated equitable share of only 19 to 29 percent of 

future costs incurred in cleaning up the three sites, id. at 43-44. 

The crediting mechanism in the Billing Agreement would not fix

the problem, the government maintains; as 87 percent of 

Lockheed’s customer base, the United States would only receive 

87 percent of any credited CERCLA award while 13 percent

would inure to the benefit of other Lockheed customers. The 

government reasons that, because it has already paid more than 

its share and any additional payment would increase its effective 

share even further, it should not have to pay more.

Lockheed counters that neither defense holds water. It 

insists that there is no possibility of double recovery as either an 

equitable or a statutory matter, because the Billing Agreement’s 

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crediting mechanism would require any CERCLA recovery from 

the government to be credited back to Lockheed’s customers, 

more than offsetting the government’s payments toward those 

costs. Section 114(b) poses no bar, Lockheed contends, because 

indirect-cost payments for unrelated goods and services pursuant 

to contract do not constitute “compensation for removal costs 

pursuant to . . . Federal law.” 

1. The United States’ primary equitable argument, with 

which we begin, hassome intuitive appeal. Under CERCLA, to 

the extent that the government did not cause the pollution, 

taxpayers should not be “required to shoulder the financial 

burden” of environmental cleanup. B.F. Goodrich Co. v. 

Murtha, 958 F.2d 1192, 1198 (2d Cir. 1992). In its uncontested, 

careful, and detailed analysis of the parties’ relative 

responsibility for the contamination at the site, the district court 

concluded that Lockheed—not the government—was largely 

responsible. Lockheed II, 35 F. Supp. 3d at 132-53. One would 

think, then, that Lockheed—not the taxpayers—would shoulder 

the lion’s share of the costs. But, as described above, that is not 

what is happening. The government has indirectly paid the vast 

majority of past cleanup costs, and Lockheed will continue to 

bill its own remediation costs to its current and future 

contracts—principally federal government contracts—until 

Lockheed is fully reimbursed. All the while, Lockheed has 

maintained an extraordinarily lucrative business dominated by 

U.S.-government contracting, with strong cash generation, 

record earnings and profit margins, and exceptional stock 

performance since the cleanup began. Id. at 141 & n.66; see 

Consolidated Statement of Earnings, Lockheed Martin 

Corporation Annual Report (2012) at 55, J.A. 554. 

A taxpayer might reasonably ask whether it makes sense for 

the government to play both roles identified by the district court

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here—that of a contracting party paying the majority of 

Lockheed’s unrelated remediation costs and that of a PRP with a 

share of CERCLA liability—or whether instead it should play 

just one role. The government has long since paid for the 

rockets Lockheed built. And CERCLA’s liability-allocation 

provisions are not designed to provide a government-funded 

cleanup program, but to assign environmental response costs 

proportionally to the parties responsible for causing them. It is 

not obvious how it comports with CERCLA’s basic principle of 

making responsible parties internalize the costs of their pollution 

that Lockheed (1) profits mightily from its defense contracting 

business, and (2) passes through to the taxpayer its share of the 

environmental harm it wreaked. It might seem more sensible for 

Lockheed to have to charge its own corporate surplus, not the 

United States taxpayer, for its own CERCLA share of response 

costs. At the end of the day, the government laments, Lockheed 

internalizes none of the costs associated with the remediation of 

the hazardous waste sites its business created, and the decision 

of the district court does nothing to change that. 

Contrary to the government’s claim, however, in the 

circumstances of this limited appeal, we, too, are powerless to 

shift Lockheed’s share of the removal costs from the taxpayer 

back onto the Company. To be sure, there is ample authority for 

the government’s basic proposition that the law forbids a 

polluter like Lockheed from recovering from the government 

twice for the same environmental response costs. CERCLA, the 

Federal Acquisition Regulations, the parties’ own Billing 

Agreement, and the district court’s final judgment in this case 

are unanimous on the point: No party may lawfully demand 

double recovery of the money it spent cleaning up hazardous 

waste. See 42 U.S.C. § 9614(b); 48 C.F.R. §§ 31.201-5, 52.216-

7(h)(2); Billing Agreement ¶ 4.7, J.A. 572; Lockheed II, 35 F.

Supp. 3d at 154-55. And, as the district court recognized, 

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Lockheed II, 35 F. Supp. 3d at 154-55, courts have invoked

principles of equity under section 113(f) to bar CERCLA relief

where double recovery would otherwise result, even in 

circumstances in which further recovery is not barred by 

CERCLA section 114(b). See, e.g., Litgo New Jersey Inc. v. 

Comm’r of the N.J. Dep’t of Envtl. Prot., 725 F.3d 369, 391 (3d 

Cir. 2013) (holding equitable allocation must be offset by 

settlements); Friedland v. TIC-The Indus. Co., 566 F.3d 1203, 

1206-07 (10th Cir. 2009) (holding equitable allocation must be 

offset by amount plaintiff received from insurance settlements); 

K.C. 1986 LP, 472 F.3d at 1017 (holding settlement credits 

“present a significant allocation factor” under CERCLA); Akzo 

Nobel Coatings, Inc. v. Aigner Corp., 197 F.3d 302, 307-08 (7th 

Cir. 1999) (holding equitable allocation must be offset by 

settlement credits); Yankee Gas Servs. Co. v. UGI Utils. Inc., 

852 F. Supp. 2d 229, 255-56 (D. Conn. 2012) (holding equitable 

allocation must be offset by insurance payments); Basic Mgmt. 

Inc. v. United States, 569 F. Supp. 2d 1106, 1122-23 (D. Nev. 

2008) (holding equitable allocation must be offset by insurance 

payments). It is well settled that “any level of double recovery is 

inequitable in CERCLA contribution actions.” NCR Corp., 768 

F.3d at 708. 

But here, the district court’s CERCLA judgment did not 

create any double recovery. The reason the government will end 

up paying far more than its own 19 to 29 percent share of future 

costs is that it voluntarily agreed to let Lockheed pass through its 

share, too. It was the government’s choice to accept the Billing 

Agreement, authorizing Lockheed to assign to the DiscOps Pool 

and charge as indirect contract costs certain cleanup costs 

relating to facilities at which Lockheed had discontinued 

operations prior to December 31, 1999. Billing Agreement

¶¶ 1.7-1.8, 2.4-2.5, 2.8, 2.13, 4.3, J.A. 566-70. The Billing 

Agreement specifies that itemized environmental remediation 

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costs, as well as myriad other costs incurred by the company 

related to discontinued facilities, id. ¶ 1.8, J.A. 566-67, “will be 

recognized and reimbursed and treated as allowable and 

allocable costs between the parties,” id. ¶ 2.5, J.A. 568. 

That settlement required the government to pay all past 

cleanup costs Lockheed incurred at the specified sites (except 

for the small portion Lockheed passed through its few contracts 

with other customers). Indeed, the government does not dispute 

that it agreed in the parties’ 2000 Billing Agreement to pay even 

Lockheed’s share of the remediation costs. It acknowledged in 

its briefing to this court that “[t]he consequence of the 

government’s execution of the [Billing] Agreement . . . was that 

it likely would pay a much higher share of Lockheed’s response 

costs than it would bear under an equitable allocation.” Br. of 

Appellant United States 54; see also, e.g., Reply Br. 1 (“The 

United States does not complain here about the price of its 

contracts, even though its payment of indirect contract costs for 

Lockheed’s cleanup far exceeds its equitable share of those 

costs.”). At oral argument the government conceded that, by 

operation of the Billing Agreement, at the end of the day it will

pay nearly 100 percent of the response costs incurred at the sites, 

whether through indirect payments alone or through a 

combination of indirect payments and a CERCLA judgment. 

Oral Arg. Rec. 15:30-16:00; see also Oral Arg. Rec. 13:30-14:45 

(government counsel noting that the government does not 

contest the validity, or seek reimbursement, of the indirect-cost 

payments it made to Lockheed in excess of the government’s 

share of liability). Given the government’s decision to enter the 

Billing Agreement to reimburse Lockheed’s share of cleanup 

costs together with its CERCLA liability setting its own share, 

the only portion of the cleanup bill the government will not foot 

is the relatively small portion paid by Lockheed’s other 

customers.

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The extent of the government’s payment thus results from 

the government’s own choice. Even after the government pays 

its percentage of the future remediation bills, it will still be left 

paying the vast majority of Lockheed’s proportionate share in 

addition to its own. But the government agreed to that 

consequence by entering a settlement that allowed Lockheed in 

its new contracts to charge the government for the company’s 

own CERCLA liability at the discontinued sites. Like the 

district court, we are in no position to “save the government 

from the natural and probable consequences of its own conduct.” 

Lockheed II, 35 F. Supp. 3d at 156. Indeed, given that our 

review of the district court’s equitable judgment is for abuse of 

discretion, we are even more powerless than the district court to 

do so. 

2. Also unavailing is the government’s protest that the 

crediting mechanism does not help, but instead harms it further.

Lockheed insists that the government has no ground for any 

double-payment concern, because the government will soon get 

back its CERCLA payment. After all, says Lockheed, the 

governent’s CERCLA payment will be credited to the DiscOps 

pool. But the government is unmoved, pointing out that 

Lockheed’s other customers get a portion of any credit to the 

DiscOps pool. In particular, the United States asserts, it would 

only receive 87 percent of any credited CERCLA award, while 

13 percent would benefit Lockheed’s other customers. 

As an initial matter, we note that nothing in the FAR, the 

DCAA Manual, the Billing Agreement, or the District Court 

opinions requires the parties to funnel the now-established 

governmental share of future response costs through the 

DiscOps pool. In fact, the Audit Manual notes that 

“environmental laws usually require each [PRP] for 

contamination at a site to be individually liable for the complete 

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clean-up of the site” and specifically states that “[t]he allowable 

environmental cost should only include the contractor’s share of 

the clean-up costs based on the actual percentage of 

contamination attributable to the contractor.” DCAA AUDIT 

MANUAL § 7-2120.9(a), J.A. 496 (emphasis added). The parties 

have not identified any authority for using the Billing 

Agreement’s indirect-cost billing-and-crediting process for 

anything beyond Lockheed’s share. Now that the district court 

has set the parties’ relative shares of responsibility, it is unclear 

why the government would notsimply pay its share of CERCLA 

liability directly to Lockheed as Lockheed incurs remediation 

costs.

Nothing in the district court’s judgment requires that the 

government’s CERCLA payments be routed through the 

DiscOps pool. In rejecting the government’s section 114(b) 

defense, the court observed that, “[i]f Lockheed is only partially 

liable for the response costs it is incurring at the site, it should 

not have to include all its response costs in the Settled [DiscOps]

Pool.” Lockheed I, 664 F. Supp. 2d at 20. Instead, the court

explained, “Lockheed may recover separately under CERCLA 

from the government-as-PRP . . . , burdened in its dealings with 

the government-as-client only by those costs for which it is 

actually liable.” Id.;see also Lockheed II, 35 F. Supp. 3d at 117.

Similarly, the district judge who made the post-trial 

equitable-allocation decision noted that, “pursuant to a 

declaratory judgment in this case, the government should 

reimburse Lockheed for its response costs as those costs are 

incurred.” Lockheed II, 35 F. Supp. 3d at 162. The court 

contemplated that the government’s direct CERCLA payments 

to Lockheed would, in all likelihood, predate and be wholly 

separate from any post-judgment indirect-cost contract payments

to cover Lockheed’s share. See id. at 161 n.97. The court made 

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clear that it did not expect—let alone require—Lockheed to 

charge the government’s share to future contracts as indirect 

costs nor credit the government’s CERCLA payment to the 

DiscOps pool. Indeed, it pointed out that in some ways

Lockheed would be “worse off following a direct CERCLA 

recovery from the government because it loses profits [on that 

portion of its overhead charges] that it would otherwise earn if 

those costs were allocated to contracts . . . through the [Billing 

Agreement].” Id. at 162. Were the parties to take the

straightforward approach set forth in the Audit Manual and 

contemplated by the district court, the government would 

reimburse only Lockheed’s share through indirect-cost contract

payments, paying its own share directly as the costs are incurred.

In that event, the 13 percent loss of which the government 

complains would not occur. 

But here, again, only the government’s own choice appears 

to constrain its path forward. Nothing in the district court’s 

decision requires the parties to use the DiscOps pool to charge 

out the government’s share of future costs; the parties appear to 

be using that system solely because of their Billing Agreement, 

extended by their post-judgment stipulation. As the district 

court explained, “[b]ecause the [government’s] CERCLA 

allocation payment for a given year’s response costs would 

predate Lockheed’s indirect recovery for those costs through 

government contracts, the [Billing Agreement]—and not the 

CERCLA allocation for future costs—is the source of the 

government’s rub.” Id. at 161 n.97. Although the Billing 

Agreement by itself does not appear to mandate the approach of 

which the government now complains, the parties did not elect 

any different payment system in their post-judgment, stipulated 

order regarding payment of future costs. See Joint Stipulated 

Order Regarding Payment of Future Costs (Dkt. No. 158) ¶ 6, 

Lockheed II, 35 F. Supp. 3d 92 (No. 1:08-cv-10060). The loss 

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to the government from the crediting process is not a result of 

the judgment of the district court; it is a problem of the 

government’s own making. 

3. Even assuming we were in a position to review the 

equities of the parties’ own choice in their Billing Agreement to 

resort to the indirect-cost billing and crediting mechanism and 

their apparent decision to use that mechanism for payment and 

crediting of future costs, the government has not clearly 

identified how the crediting mechanism is a source of inequity. 

As the district court explained, the FAR and the Billing 

Agreement, where they apply, require Lockheed to credit any

CERCLA recovery to the DiscOps Pool and to assign credits to

Lockheed’s contracts in the same way as costs. Lockheed II, 35 

F. Supp. 3d at 111-12, 154-55 (citing Settlement Agreement 

¶ 4.7, J.A. 572, and Trial Testimony of Robert Gatchel, Vice 

President of Government Finance, J.A. 448). Under the Billing 

Agreement, Lockheed does not bill the government directly. 

Instead, it first charges all remediation costs to contract 

overhead. It then must credit back to its contracting customers 

any CERCLA recovery it receives. In that respect, this case is 

similar to those in which courts have declined to reduce a 

utility’s equitable allocation based on its collection of those 

same costs through rates, where a utility that previously charged 

its customers costs of remediation must later reduce its prices by 

any CERCLA judgment the utility received to cover those costs. 

See Yankee Gas Servs. Co., 852 F. Supp. 2d at 255; see also 

N.Y. State Elec. & Gas Corp. v. FirstEnergy Corp., 808 F. Supp. 

2d 417, 528-29 (N.D.N.Y. 2011), aff’d in part, vacated in part, 

remanded, 766 F.3d 212 (2d Cir. 2014). The district court acted 

within its sound discretion in concluding that Lockheed 

ultimately would not twice recover the government’s share of 

CERCLA response costs. 

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Moreover, it is apparent that the government will not have 

paid its 19 to 29 percent equitable share more than once. Based 

on evidence presented at trial, the district court found that 

Lockheed had recovered from the government through higher 

contract prices more than 72 percent of the total of its past 

response costs for the sites, a figure anticipated to rise to an 

average of approximately 83 percent because the government 

now represents a larger share of Lockheed’s business than it did 

in the past. Lockheed II, 35 F. Supp. 3d at 113, 154. The court 

also found that the government will receive through credits the 

benefit of only 87 percent of any CERCLA judgment the 

government pays Lockheed. Id.

The government cites these findings to support its 

contention that it only will receive 87 percent of its CERCLA 

judgment through the crediting mechanism. Br. of Appellant 

United States 52-53. However, that contention ignores the 

court’s first finding. Because the government only pays as 

indirect costs, or contract overhead, a percentage of response 

costs corresponding to its percentage of Lockheed’s business at 

a given time, it will only have paid a commensurate percentage 

of the total response costs, including only a percentage of its 

own proportionate share of the future response costs. Lockheed 

II, 35 F. Supp. 3d at 113, 154. The government has not shown 

how it would be inequitable to credit to the government 87

percent of its CERCLA payments after the government will have 

paid only a similar percentage of the corresponding costs 

through indirect-cost contract payments.

The government’s only retort is that it should not be 

required to pay anything beyond its 19 to 29 percent share of 

liability, because it has already paid 83 percent of the overall 

remediation costs. Br. of Appellant United States 43-44, 50. As 

discussed above, that argument contests not overpayment 

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beyond the government’s equitable share under CERCLA, but 

the consequence of the government’s own decision to pay 

Lockheed’s share pursuant to the Billing Agreement. We 

therefore conclude that the district court did not abuse its 

discretion in declining to eliminate the government’s share of 

liability on the basis of an equitable double-recovery theory.

4. Finally, the United States has appealed from the district 

court’s pretrial ruling rejecting the government’s claim that 

section 114(b) altogether bars Lockheed’s CERCLA claim. In 

view of the district court’s final judgment and the government’s 

failure to identify how that decision imposes any double liability 

or double recovery, however, we need not delve into the parties’ 

textual and purposive section 114(b) arguments. At this 

juncture, on appeal from the district court’s judgment imposing 

no liability on the government for past costs, section 114(b) 

simply is not implicated. The only costs the government has 

already paid are indirect-cost contract payments covering the 

bulk of past costs Lockheed incurred cleaning up the sites. 

Lockheed II, 35 F. Supp. 3d at 113. But the district court 

exercised its equitable discretion to reduce the government’s 

share to 0 percent of past costs, id. at 162, and that decision 

remains unchallenged. The judgment simply does not impose 

on the government any risk of paying those past costs again. 

The government’s CERCLA payments for its 19 to 29 percent of 

future costs will not be “for the same removal costs” within the 

meaning of section 114(b) as those already paid, and thus do not 

implicate that section’s double-recovery bar. 42 U.S.C. 

§ 9614(b).

With respect to future costs, as discussed above, nothing in 

the FAR, the DCAA Manual, the Billing Agreement, or the 

District Court opinions requires the parties to employ the Billing 

Agreement’s indirect-cost billing-and-crediting process for 

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anything more than Lockheed’s share, now that the parties’ 

shares have been established. We therefore decline to evaluate 

the interplay of federal contracting law and section 114(b), an 

issue of first impression in the courts of appeals. We need not

pass on that question here.

* * * 

For the foregoing reasons, we affirm the judgment of the 

district court.

So ordered.

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