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Lamb v. Martin Marietta Energy Sys., Inc.

ELR Citation: 24 ELR 20575
Nos. No. 90-0005 P(J), 835 F. Supp. 959/(W.D. Ky., 07/27/1993)

The court holds that the government contractor defense was available to an operator of a gaseous diffusion plant in an action by neighboring landowners for environmental contamination of their property, but that the operator failed to establish the defense, and that state law does not permit recovery for diminution in property value where the level of contamination is well below the federally mandated safety levels. Addressing the operator's three potential defenses, the court first rejects the operator's argument that it is entitled to derivative sovereign immunity. U.S. Supreme Court case law suggests that cost-plus contractors for profit have not been so incorporated into the government structure as to become instrumentalities of the United States that may enjoy governmental immunity. Addressing the operator's defense based on intergovernmental immunity, the court holds that federal facilities are not entirely exempt from state tort law under intergovernmental immunity principles, but that state tort law may not apply a standard of care that is inconsistent with any applicable federal laws and guidelines. The court holds that the government contractor defense may be applied to this action, because the duties alleged under state law may not be contrary to the federal interests identified in the Federal Tort Claims Act (FTCA).

The court holds that the operator failed to satisfy the three elements of the government contractor defense. First, assuming government personnel gave their approval for every activity at the plant, the operator failed to demonstrate that the government officials' approval involved the permissible exercise of policy judgment. Second, even if the government had approved all activities that were to take place at the plant, the operator failed to demonstrate, beyond showing general custom, that contractor personnel faithfully adhered to all the government's orders. Third, the operator failed to provide specific evidence regarding directions and orders the government gave with respect to waste management units at the plant, which is necessary because even though a regulatory agency did not impose fines or penalties for exceeding permit levels, the operator may still be held liable in tort for breach of its duties and a pollution discharge violation that caused damage.

The court next holds that the landowners may not recover in nuisance for diminution in property value, because there is insufficient evidence to show that the groundwater contaminated by the operator has affected the owners' property. The contaminated groundwater plume is not headed toward the owners' property. Moreover, the defenses of intergovernmental immunity and federal preemption preclude liability for contractors complying with federal law, and state law that allows recovery where the level of contamination is well below federally mandated safety levels would conflict with both principles.

The court holds that the owners' strict liability claim is precluded by intergovernmental immunity and federal preemption. Even though the government is not a defendant in this action, the strict liability claim is based on the government's operation of the facility, and as a result, the suit would thwart the government's retained immunity if the owners were permitted to pursue the action. Moreover, state-law strict liability significantly conflicts with the federal discretionary function exception to the FTCA, preemption of state law is required. Additionally, Kentucky law would not recognize the cause of action for strict liability because the activity is carried on in pursuance of a public necessity. The plant is one of only two plants in the country that produce the enriched uranium necessary for commercial reactors and weapons production.

Counsel for Plaintiffs
Len W. Ogden Jr.
The Sinnott House
228 N. 9th St., Paducah KY 42001
(502) 444-0232

Counsel for Defendants
W. Pelham McMurry, Stephen E. Smith Jr.
McMurry & Livingston
Citizens Bank Bldg., P.O. Box 1700, 7th Fl., Paducah KY 42001
(502) 443-6511