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Maxus Energy Corp. v. United States

ELR Citation: 26 ELR 20337
Nos. No. 3:92-CV-1655-X, 898 F. Supp. 399/(N.D. Tex., 09/01/1995)

The court holds that the U.S. government is not liable as an operator or arranger under §107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for response costs arising from the cleanup of dioxin and other waste from a private party's production of herbicides, including Agent Orange, for the government. The court first holds that the U.S. government is not liable as an arranger under §107. The government never owned the raw materials from which the private party manufactured the Agent Orange and, therefore, could not have retained ownership of hazardous substances throughout the manufacturing process. The government merely facilitated acquisition of the raw materials. The court also holds that the government is not liable as an operator under §107. Applying the "actual control" test for operator liablity, the court finds that the government never exerted actual or substantial control over operations at the facility at which private party produced Agent Orange. The government did not specify any particular production process to be used and did not control or participate in the facility's waste disposal activities, and U.S. personnel did not hire, fire, discipline, or manage any facility personnel. The court alternatively finds that under the "authority to control" test for operator liability, the government is similarly not liable. The government never had the authority to control the operations or decisions involving the disposal of hazardous substances at the facility. Finally, the court rejects the private party's claim that the Walsh Healey Act and Defense Production Act provide the necessary level of control by the U.S. government over the facility for imposing CERCLA liability. Plaintiff chose to bid for the Agent Orange contracts, and any changes plaintiff made to its operations to produce Agent Orange resulted from its own decision to seek the government's wartime business. The relationship between the government and private party under the Defense Production Act is one of buyer seller.

Counsel for Plaintiff
Michael M. Gordon
Cadwalader, Wickersham & Taft
100 Maiden La., New York NY 10038
(212) 504-6000

Counsel for Defendant
Vicki A. O'Meara
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000