ELR Citation: ELR 20976
No(s). 89-0565P (D.R.I. May 17, 1992)

The court holds that two chemical companies are liable for $3,339,030 plus interest in response costs incurred by the United States at the Picillo Farm site in Rhode Island. In O'Neil v. Picillo, 18 ELR 20893, the court held the companies jointly and severably liable as generators under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The court appointed a special master to determine the amount of the companies' liability, and both the defendants and the plaintiff filed objections to the master's report. The court first allows U.S. Environmental Protection Agency (EPA) payroll expenses and indirect costs, because the documentation for them is adequate. The court accepts the master's recommendation disallowing one redistribution of costs to correct errors and allowing two redistributions of costs from general to site-specific accounts. The court holds that site-specific charges under 14 contracts were adequately documented. The court disallows charges for the services of a national contractor that were documented with a letter report submitted three and one-half years after the services were performed, because the charges were not reconciled by EPA or entered into EPA's accounting system. Also, there was no statement of reasonableness from the EPA project manager, and the letter report was liberally redacted. The court allows Coast Guard expenses of $469,475 for removing hazardous waste drums from the site, because there is no evidence in the record contesting the veracity of the Coast Guard billings. The court disallows indirect costs allegedly incurred by Phode Island under a cooperative agreement with the United States, because the state's method of indirect cost calculation was not sufficiently documented or justified.

The court next holds that the defendants failed to meet their burden of proving that charges for actions challenged as not cost-effective were inconsistent with the national contingency plan (NCP), because cost-effectiveness is not a proper challenge to a charge under the NCP. Further, the defendants' claims and challenges are not supported by reference to the administrative record or through testimony. The court upholds a government challenge to the master's disallowance of an accounting firm's charges resulting from an overlap with work of a previous contractor, because the overlap did not rise to the level of inconsistency with the NCP.

The court holds that the amount the U.S. Department of Justice (DOJ) charged the two companies must be reduced by the amount allocable to other settled cases related to the site, because the court infers that the settling defendants have already borne DOJ costs for obtaining approval of the consent decrees. The court holds that the amount of prejudgment interest calculated by the government must be recalculated, because the government and the court have withdrawn or rejected some damages from the original claim on which the government based its interest calculation. Finally, the court holds that the government is entitled to compounded prejudgment interest.

[Related cases are published at 15 ELR 20426, 16 ELR 20331, 17 ELR 20629, 18 ELR 20893, and 20 ELR 20115.]

Counsel for Plaintiff
Alex A. Beehler
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendants
Dennis E. Sherman
Edwards & Angell
2700 Hospital Trust Tower, Providence RI 02903
(401) 274-9200