ELR Citation: ELR 20062
No(s). 91-2116 (1st Cir. Aug 18, 1992)

The court affirms a district court decision that a public water utility cannot recover response costs incurred as a result of alleged threatened releases of hazardous waste from a truck maintenance facility on the opposite side of a river from the utility's drinking water wells. In March 1979, the utility discovered that two of its wells were contaminated with volatile organic chemicals (VOCs) and constructed a treatment plant to deal with the problem. A few months before the company's announcement that it would construct the plant, a utility employee discovered VOCs in a drainage ditch running from the maintenance facility. Hydrogeologists hired by the utility reported that the maintenance facility was the major cause of contamination at the utility's well field, and the utility sued the maintenance facility's operator under the Comprehensive Environmental Response, Compensation, and Liability Act and state law for response costs allegedly incurred as a result of actual and threatened contamination at the well field. The district court found that the utility failed to prove that the maintenance facility was the source of the contamination and entered judgment for the defendant. On appeal, the circuit court directed the district court to examine the issue of whether the maintenance facility operator may have posed an actionable threat of future contamination, to which the utility responded in an objectively reasonable manner.

On appeal of the district court's second decision against the utility, the circuit court first holds that the clear-error standard applies to its review of the district court's decision. The court rejects the utility's argument that any inquiry into the utility's institutional state of mind was erroneous, because the only legitimate question before the district court was whether, objectively viewed, the maintenance facility posed a threat that warranted responsive action. The utility's theory at the second trial, as expressed in its pleadings, evidence, and trial memoranda, hinged on precisely the same mixed subjective/objective approach it reviles on appeal. Further, the court's opinion in the earlier merits appeal strongly suggested that the utility's institutional state of mind was relevant to the issuance of whether the costs it incurred were threat-related and/or recoverable against the maintenance facility operator on that basis. Also, because the utility's thesis was not asserted below, it is procedurally defaulted.

The court finds that the district court did not require the utility, as a condition precedent to recovery, to identify the party responsible for the threat before beginning to incur response costs. Rather, the district court found, wholly apart from the question of identification, that the actions the utility took were not in response to approaching or threatened releases of any description. The court also notes that the utility does not elucidate any plausible theorem as to how or why the maintenance facility operator should be liable for response costs expended to deal with threats signalled by actual contamination when the operator, during the first trial, was fully exonerated from legal responsibility for that contamination.

Turning to the merits, the court holds that the district court's findings of fact were not clearly erroneous. The district court's characterization of the treatment plant as a response to actual contamination, rather than to threats, is completely plausible. That this expenditure, and the utility's other responses, were not undertaken to deal with threats is strikingly apparent from the utility's inaction in and after 1982, when it incorrectly identified the maintenance facility as the chief culprit with respect to the existing contamination. Also, the utility's own documents state that it retained consultants to search for the source of the pollution, not to assuage a threat of future harm. As to whether the utility knew of the "maintenance facility problem" in 1979, the evidence reflects a legitimate question about whether the surface water testing done for the utility in 1979 was conducted in sufficient proximity to the maintenance facility to alert the utility at that early date to the possibility of a threat emanating from the facility. The district court did not err in refusing to accord decretory significance to a stipulation that the utility alleges was an admission by the facility operator that VOCs existed at the facility in 1979 or thereabouts, because the stipulation at most faintly suggests, rather than compels, the utility's interpretation. Finally, the court holds that a statement in its earlier opinion that the utility believed in 1979 that the maintenance facility was the source of the contamination at its well field was not a finding that the district court was not at liberty to ignore, because the statement did not reflect an adjudication of fact.

[Earlier opinions in this litigation are published at 14 ELR 20838, 16 ELR 20787, 17 ELR 20223, 19 ELR 20487, 20 ELR 20334 and 20340, and 21 ELR 21332. The plaintiffs' brief in opposition to the defendant's motion to dismiss its original claims is digested at ELR PEND. LIT. 65814.]

Counsel for Plaintiffs-Appellants
Thomas F. Holt, Gerald P. Tishler
Brown, Rudnick, Freed & Gesmer
One Financial Ctr., Boston MA 02111
(617) 330-9000

Counsel for Defendant-Appellee
Allan van Gestel, Christopher P. Davis
Goodwin, Procter & Hoar
Exchange Pl., Boston MA 02109
(617) 570-1000

Before SELYA, Circuit Judge, CAMPBELL, Senior Circuit Judge, and PETTINE,^* Senior District Judge.