CHEMICALS:

Military contractors were granted legal indemnity for hazardous substances

Several high-profile military contractors pushed for and won legal indemnity from the Pentagon before starting projects that involved exposure to chemical weapons and other highly hazardous substances, according to documents released yesterday by Rep. Earl Blumenauer (D-Ore.).

Overall, more than 120 Pentagon contracts include indemnity language that could shift liability from private firms to taxpayers if lawsuits arise from the companies' defense work, Blumenauer's office said. The Oregon lawmaker called for disclosure of Pentagon indemnity provisions as part of his support for 21 home-state National Guardsmen suing contractor KBR Inc. -- which has yet to say whether it would seek government help if found liable -- over their exposure to toxic hexavalent chromium during the early days of the Iraq war.

The data uncovered by Blumenauer shows that the Pentagon paid legal bills for at least one firm that invoked its indemnity provisions. Emergent BioDefense Operations Lansing Inc., manufacturer of an anthrax vaccine widely used by the military, was reimbursed for nearly $650,000 after billing the Army for more than $1.5 million in 2008.

The original Pentagon memo granting indemnity to Emergent described, as did the KBR contracts that prompted the National Guardsmen's lawsuits, the nature of the "unusually hazardous" risks facing the biotechnology company.

"Production and testing of [the anthrax vaccine] require interaction with one of the most lethal biological agents known to man," the November 2000 memo stated, providing for an indemnity claim by Emergent in case of the "release (or alleged release) of an infectious agent or toxic chemical into the environment in connection with" work required by the contract.

An indemnity provision also was granted to Cangene Corp., which supplied the military with an agent that combats adverse reactions to the smallpox vaccine. A third recipient of indemnity, Mason & Hanger Corp., provides security and maintenance at the Newport, Ind., facility where storage and neutralization of the lethal chemical known as VX nerve gas took place.

"Given Mason and Hanger's role as the operating contractor for this facility and the destructive damaging capabilities of chemical agents, explosives, or other incendiary material, a catastrophic incident occurring during the performance of this contract may subject [the company] to an enormous financial liability," then-acting Army Secretary Pete Geren wrote in April 2007.

Subsidiaries of Bechtel Corp. received indemnity from the Pentagon for their work designing and running programs to gradually shut down chemical weapons depots in Pueblo, Colo., and Richmond, Ky. Both facilities store hundreds of tons of mustard gas and nerve gas and are midway through the neutralization process.

Neither Bechtel, Mason & Hanger nor Cangene has received federal money in conjunction with the indemnity provisions, according to the Pentagon documents.

In a statement accompanying yesterday's data release, Blumenauer's office said indemnity language for contract work performed domestically showed "a diligent, responsible process" for determining taxpayer liability -- but "far looser standards" for contracts governing Iraq-based projects.

Blumenauer vowed in a statement to continue his push for declassification of the KBR contract linked to the hexavalent chromium lawsuit (E&E Daily, Sept. 30). "I remain concerned that KBR's contract may be much more loosely drawn, removing incentives for the contractor to behave responsibly and exposing taxpayers to enormous liability and our troops to harm," he said.

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