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MAXUS ENERGY CORP. v. UNITED STATES

September 1, 1995

MAXUS ENERGY CORPORATION, Plaintiff,
v.
UNITED STATES OF AMERICA, Defendant.



The opinion of the court was delivered by: JOE KENDALL

 Before the Court are:

 1) Plaintiff's Motion for Summary Judgment, filed July 15, 1994;

 2) Defendant's Response, filed August 24, 1994;

 3) Plaintiff's Reply, filed September 19, 1994;

 4) Plaintiff's Supplemental Brief, filed December 9, 1994; and

 5) Defendant's Response, filed December 15, 1994; and

 6) Defendant's Motion for Summary Judgment, filed July 15, 1994;

 7) Plaintiff's Response, filed August 24, 1994; and

 8) Defendant's Reply, filed September 19, 1994.

 After carefully considering the motions, briefs, supporting evidentiary submissions, and applicable law, the Court determines that no issues of material fact exist with respect to the issues raised in the motions for summary judgment. Therefore, Defendant's Motion for Summary Judgment is GRANTED and Plaintiff's Motion for Summary Judgment is DENIED.

 BACKGROUND

 In this CERCLA *fn1" case, Plaintiff Maxus Energy Corporation ("Maxus") seeks to recover response costs and to obtain contribution from the United States concerning the cleanup of a Superfund Site. In August 1951, Maxus's predecessor Diamond Alkali Company ("Diamond") acquired a chemical manufacturing plant in Newark, New Jersey (the "Newark Plant"). Agricultural chemicals had been manufactured at the Newark Plant since the 1940s. From 1951 through July 1969, the Newark Plant manufactured a variety of materials, including phenoxy herbicides that included as active ingredients esters, amines or salts of 2,4-dichlorophenoxyacetic acid ("2,4-D") and/or 2,4,5-trichlorophenoxyacetic acid ("2,4,5-T").

 During its ownership and operation of the Newark Plant, Diamond produced more than three dozen phenoxy herbicide products containing 2,4-D, 2,4,5-T, or a mixture of both for the commercial agricultural chemicals market. Phenoxy herbicide products containing 2,4,5-T were widely used in the United States during the 1950s and 1960s. Diamond sold products containing 2,4-D and 2,4,5-T to commercial customers prior to selling herbicides to the United States as well as after the government contracts were terminated.

 The starting ingredients for Diamond's manufacture of 2,4,5-T were 1,2,4,5-tetrachlorobenzene ("TCB"), caustic, and methanol. The staring ingredients for Diamond's manufacture of 2,4,5-T were mixed and heated in an autoclave reactor to produce the intermediate product sodium 2,4,5-trichlorophenol ("trichlorophenol"). During this reaction step, 2,3,7,8-tetrachlorodibenzo-p-dioxin and related isomers (collectively, "dioxin") were formed in trace amounts as a result of unwanted side reactions that occurred in the autoclave. The generation of hazardous substances was inherent in the production process for phenoxy herbicides.

 During the Vietnam war, the United States used herbicides to defoliate jungles and destroy crops in Southeast Asia as an integral part of its war strategy. To implement this strategy, the United States procured, through rated order contracts, a number of phenoxy herbicides from domestic manufacturers, the most widely used of which was a formulation known as "Agent Orange." From 1961 to 1968, Diamond produced and delivered to the United States over 820,000 gallons of Agent Orange pursuant to ten rated order contracts. The herbicides Diamond provided to its commercial customers were sold in a diluted form with inert ingredients, whereas the herbicides Diamond provided to the United States were sold in an undiluted form without any inert ingredients.

 The United States assigned code names to four phenoxy herbicide formulations. Those code names were "Agent Orange" (50% the n-butyl ester of 2,4-D and 50% the n-butyl ester of 2,4,5-T with no inert ingredients), "Agent Pink" (approximately 60% the n-butyl ester of 2,4,5-T and 40% the iso-butyl ester of 2,4,5-T, "Agent Purple" (approximately 50% the n-butyl ester of 2,4-D, 30% the n-butyl ester of 2,4,5-T, and 20% the iso-octyl ester of 2,4,5-T), and "Agent Green" (100% the n-butyl ester of 2,4,5-T). Some of the dioxin present in the trichlorophenol carried forward into the 2,4,5-T acid, the 2,4,5-T ester and the Agent Orange.

 From 1961 through 1964, Diamond accepted five contracts from the Army, Air Force, and Defense Petroleum Supply Center to produce Agent Pink, Agent Purple, and Agent Orange. From 1966 through 1968, Diamond accepted five additional contracts from the Defense General Supply Center to produce approximately 923,000 gallons of Agent Orange. Each of Diamond's rated contracts set forth the specifications for the herbicide to be supplied, and provided that Diamond was responsible for controlling product quality and for offering only material that conformed to contractual requirements. The United States held no financial ownership interest in the land, buildings, tools, machinery or other equipment used by Diamond during the period of time in which Diamond produced herbicides for the United States.

 In Diamond's rated contracts, the United States specified the manner in which the product was to be identified and shipped, and specified what information was or was not to be placed on the Agent Orange drums. Each of Diamond's contracts was assigned a priority rating by the United States. Diamond's rated contracts provided that full responsibility for fulfillment of the contract would remain with the contractor. The contracts between Diamond and the United States did not specify any particular production process to be used in manufacturing herbicides pursuant to the contracts. The United States did not ...


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