The Environmental Protection Agency last night abruptly canceled plans to hire private lawyers at a cost of as much as $70,000 to help defend Administrator Anne M. Gorsuch against a contempt-of-Congress charge, hours after the move was questioned by the White House and a House subcommittee.
In addition, it was learned yesterday, the law firm the EPA had intended to hire represented a company the agency is prosecuting in an administrative proceeding for discharging toxic wastes into the harbor of New Bedford, Mass.
The Boston firm of Ropes & Gray represented Aerovox Inc., a defendant in a case arising from a New Bedford hazardous-waste site ranked by the EPA as one of the 160 most dangerous in the country and by Massachusetts officials as the worst in the state, EPA spokesman Byron Nelson confirmed.
According to several administration sources, the Aerovox link was viewed as potential political dynamite. Certain documents from its case are among hundreds Gorsuch refused to turn over to the House after they were subpoenaed last month, calling them too "sensitive" to be released without jeopardizing agency prosecutions.
"Here's a counsel for one of the defendants, who in the course of representing Mrs. Gorsuch could very well examine the same documents that are supposed to be so sensitive we can't show them to Congress," said an administration official who asked to remain anonymous. "That's pretty tough to explain."
Under orders from President Reagan, Gorsuch invoked executive privilege and withheld the papers. The House responded by citing her for contempt on a lopsided, bipartisan vote of 259 to 105, the first time in history that the charge was lodged against a Cabinet-level official.
Rep. Elliott H. Levitas (D-Ga.), chairman of the House investigations and oversight subcommittee that sponsored the contempt citation, last night denounced the Aerovox connection as "a signal that this affair that began with a display of arrogance by the administration is threatening to grow into a full-blown scandal."
Nelson said the decision to break off negotiations with Ropes & Gray had nothing to do with the firm's ties to Aerovox, which he said were unknown to the EPA until yesterday, or with questions raised by White House counsel Fred Fielding and a House subcommittee about hiring outside lawyers.
"We decided that Ropes & Gray had given us all the help we needed for now to get through the extraordinary and novel legal issues we're facing," Nelson said last night.
Two lawyers from Ropes & Gray had been working for EPA on a "word of mouth" arrangement since Dec. 20, four days after Gorsuch was cited for contempt, Nelson said. The agency will pay the lawyers for that work, Nelson said, adding that the EPA and the lawyers had not agreed on a fee.
Until last night, however, the EPA apparently had planned to hire the two lawyers, G. Marshall Moriarty and Thomas M. Susman, for a longer time.
An EPA official said earlier yesterday that the agency planned to sign a contract "very soon," hiring the two as consultants through the 1983 fiscal year at an estimated cost of $70,000. The fee for work that began Dec. 20 was to be set in that contract, the official said.
EPA officials said they believed they needed expertise other than that of the Justice Department to advise them on constitutional issues raised by the unprecedented case.
Nelson said Moriarty and Susman had signed a letter agreeing that they "will have no access" to law-enforcement documents, which would include Aerovox papers. However, the letter also said they "may gain access" to such papers. In that case, the letter said, the firm "will maintain the confidentiality" of the information.
That letter was not signed until Monday, when the lawyers had been working at the EPA for two weeks, Nelson said. But he said that they had agreed orally to these terms.
Nelson also said they had informed the EPA that the agency was suing some of their clients for "unrelated" cases in New England. Not until yesterday, he added, did the EPA learn that the firm represented Aerovox in the New Bedford case.
Ropes & Gray declined comment.