4 F.

3d 1209
62 USLW 2231, 26 Fed.R.Serv.3d 779,
23 Envtl. L. Rep. 21,534

LANSFORD-COALDALE JOINT WATER AUTHORITY,

Appellant in
No. 92-7605
v.
TONOLLI CORPORATION; Tonolli Canada, Ltd.; IFIM
International B.V., Appellants in No. 92-7671.
Nos. 92-7605, 92-7671.

United States Court of Appeals,

Third Circuit.
Argued June 24, 1993.
Decided Sept. 17, 1993.

John M. Hyson (argued), Villanova, PA, Anthony J. Mazullo, Jr.,

Doylestown, PA, for appellant in No. 92-7605.
Bernard A. Labuskes, Jr. (argued), Terry R. Bossert, Scott A. Gould,
McNees, Wallace & Nurick, Harrisburg, PA, for appellants in No. 927671.
Before: BECKER, ALITO and ROTH, Circuit Judges.
OPINION OF THE COURT
BECKER, Circuit Judge.

The plaintiff, the Lansford-Coaldale Joint Water Authority ("Authority"),

provides public water in Carbon County, Pennsylvania. The Authority's
groundwater production and supply wells are adjacent to a site formerly used
for lead smelting that is owned by Tonolli Pennsylvania ("Tonolli PA"). After
learning that there had been releases of hazardous substances on the Tonolli site
and that Tonolli PA had applied for a hazardous waste disposal permit, the
Authority commissioned a study to determine whether there was or would be

any contamination of its wells. Based on this study, the Authority brought suit
against Tonolli PA, its sister corporation, Tonolli Canada, and its parent
corporation, IFIM, alleging that they were owners or operators of the Tonolli
PA facility and that hazardous discharges from their property posed a threat of
future contamination to the Authority's water supply. Because Tonolli PA had
become bankrupt, the Authority subsequently dropped its claims against it, and
the trial proceeded against only Tonolli Canada and IFIM. The Authority's suit
sought to recover response costs under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Sec. 9607(a).
More specifically, the Authority sought to obtain both the costs it would incur
due to the threat of future contamination, e.g., the costs of obtaining an
alternative water supply, and the costs it would incur in monitoring and
evaluation. At the conclusion of the trial, the district court made oral findings
of fact and conclusions of law denying the Authority recovery on all claims.
This appeal followed.
2

At the heart of the Authority's appeal is an attack on the district court's fact
findings. First, the Authority asserts that the findings are tainted because they
were made orally only a few hours after a long and complex trial and were
principally drawn verbatim from Tonolli Canada's proposed findings. Second,
the Authority contends that the district court's finding that the hazardous waste
releases at the Tonolli site posed no threat to the Authority's water supply,
which was based upon a finding of hydrogeologic separation of the Tonolli site
from the Authority site, was clearly erroneous. Third, the Authority contends
that, even if that finding is upheld, we should reverse the district court's failure
to authorize recovery of monitoring and evaluation costs against Tonolli
Canada because it was the owner or operator of the Tonolli PA facility.

We acknowledge that the district court might have made more precise findings
had it taken the time to await the trial transcript and to draft a written opinion.
Moreover, the findings might have been better had they not drawn so heavily on
Tonolli Canada's proposed findings. But the court's oral findings offered the
distinct advantage of fresh recollection and prompt justice. We therefore reject
the Authority's suggestion that the court's findings are deficient because of the
nature of their construction and delivery and hold that they did not violate the
requirements of Fed.R.Civ.P. 52(a). Pursuant to that rule, we review them only
for clear error.

On the most important issue to the parties, the threat posed to the Authority's
water supply, the district court was faced with a "battle of the experts." It found
Tonolli Canada's expert more credible than the Authority's expert and we are
satisfied that the court's findings on this claim are not clearly erroneous.

However, we will vacate the district court's judgment on the monitoring and
evaluation costs claim against Tonolli Canada. In reaching its conclusion that
Tonolli Canada should not be deemed an operator, the district court applied the
correct inquiry for determining whether Tonolli Canada was a CERCLA
operator, i.e., whether it actively participated in the management of the
affiliated corporation during a period of hazardous waste disposal. The federal
courts are divided over this issue, but we hold that this represents the correct
standard. Nevertheless, due to the district court's failure to address several
critical factual issues, we will vacate the judgment on this count and remand for
more detailed fact findings.

Finally, the Authority contends that the district court improperly granted
judgment in favor of the parent corporation, IFIM, which never filed an answer
or otherwise appeared in this case. We will affirm the judgment in favor of
IFIM on the Authority's claim for the costs of obtaining a new water supply
and/or treating its current supply because such a result is dictated by the rule
prohibiting inconsistent judgments. However, with respect to the judgment in
favor of IFIM on the monitoring and evaluation costs claim, because the
district court provided no explanation for its decision and we can discern no
basis for it, we will vacate this portion of the judgment and remand to the
district court for further consideration.

I. BACKGROUND FACTS AND PROCEDURAL HISTORY

7

Tonolli Canada is a Canadian Corporation engaged in the business of lead

smelting and metal reclamation. In the early 1970's, Tonolli Canada decided to
open a smelting facility in the northeastern United States to reduce
transportation costs and improve customer service. It chose a site near
Nesquehoning, Carbon County, Pennsylvania. Tonolli PA was incorporated to
construct and operate the facility, and Tonolli Canada was its sole shareholder
from its incorporation in 1972 until 1976. In 1976, IFIM, a Dutch corporation,
purchased all of the Tonolli PA stock and also became the parent corporation of
Tonolli Canada. The Nesquehoning plant commenced operations in 1975. The
plant site is located approximately 3,100 feet from the Authority's production
wells.

In the early 1980's, the Authority learned through a public announcement that
Tonolli PA had applied for a permit to dispose of hazardous waste at the
Nesquehoning site. The parties have also conceded that Tonolli PA was
responsible for the release of hazardous substances there, although it is unclear
from the record as to when these releases occurred and when the Authority
became aware of them. In any event, sometime after learning about the releases

as well as Tonolli PA's permit application, the Authority commissioned a study

to determine whether there was or would be any contamination in its wells from
the Tonolli site. That study, conducted in July, 1987 and known as the AGES
study,1 forms the Authority's proof regarding a threat of contamination from the
Tonolli site.
9

Although the Authority's wells are concededly upgradient from the Tonolli site,
the Authority claims the study shows that continuous pumping of groundwater
for a 72-hour period resulted in a reversal in the direction of the groundwater
which, if true, means that lead contaminants from the Tonolli site could
infiltrate the Authority's water supply. Tonolli Canada denies that such
conclusions can be drawn from the AGES study, and has offered its own expert
testimony that the Tonolli discharge did not and cannot affect the Authority's
wells.

10

The Authority brought suit against Tonolli PA, Tonolli Canada, and IFIM,
originally alleging only common law claims, but then adding a claim for
private cost recovery under CERCLA. The Authority subsequently dropped its
claim against Tonolli PA, which had become bankrupt, so that the trial
proceeded against only Tonolli Canada and IFIM. IFIM, however, has never
answered or otherwise appeared in the case, although no motion for a default
judgment has been made by the Authority. Without explanation, the district
court entered judgment in IFIM's behalf at the close of the trial. The Tonolli
Canada submissions advance a procedural argument on behalf of IFIM, but the
Tonolli Canada lawyers do not represent IFIM.

11

The liability phase of the trial took nine days, spread out over December, 1991
and January and February, 1992. Within hours of the conclusion of the trial, the
court delivered 150 oral findings, most of which it took verbatim from Tonolli
Canada's proposed findings given to the court at the beginning of the trial.

12

With respect to the Authority's more substantial monetary claim--its allegation

that releases at the Tonolli site have created a threat of contamination that will
cause the Authority either continuously to treat its water supply or to secure a
new one--the court found squarely for the defendants. Most importantly, the
district court found that the Authority had not proved that there is any threat of
future contamination to the Authority's water supply. However, with respect to
the Authority's claim for monitoring and evaluation costs, the court found that a
release at the Tonolli site had induced the Authority to incur monitoring and
evaluation expenses (i.e., the costs of the AGES study). The court nonetheless
denied recovery for these costs because it concluded that the Authority had not
established the other necessary elements of their claim under CERCLA,

specifically, Tonolli Canada's status as an owner or operator under CERCLA,

the necessity of the Authority's expenses and their consistency with the
National Contingency Plan ("NCP"). The district court therefore entered
judgment on all counts for Tonolli Canada, and, as noted above, for IFIM. This
appeal on the CERCLA issues followed. The disposition of the common law
negligence counts has not been appealed.2
II. SCOPE OF REVIEW
13

Both the Authority and Tonolli Canada agree that the issues that surround the
district court's grant of judgment in favor of Tonolli Canada on both claims
present mixed questions of law and fact. The general rule is that we break down
the issues into their legal and factual components and engage in plenary review
of the legal and factual components and engage in plenary review of the legal
components and deferential review of the factual components. See Ram Constr.
Co. v. American States Ins. Co., 749 F.2d 1049, 1053 (3d Cir.1984). There is
disagreement, however, over the appropriate scope of review of the district
court's factual findings in this case. While ordinarily the factual components are
reviewed only for clear error, the Authority contends that the district court's
factual findings here do not satisfy the purposes of Fed.R.Civ.P. 52(a) and
hence should not be reviewed under a clearly erroneous standard.

14

The Authority complains that, despite the complexity of the case, the district
court made its findings within a few hours after the trial ended instead of
waiting for a transcript and taking the time to reflect and craft a written opinion.
It also objects to the court's having requested proposed findings from the
parties only before and not after the trial. These objections seem to us designed
more to undermine the substance of the findings themselves than to advance a
claim of flawed methodology in their creation. However, the Authority also
argues that the district court's findings are not entitled to deference on appeal
because most of them were adopted verbatim from the defendant's proposed
findings of fact.

15

We reject the Authority's contention that, because the district court issued its
findings orally a few hours after the trial without the benefit of proposed
findings submitted by the parties post-trial, the findings do not satisfy the
purposes of Fed.R.Civ.P. 52(a). Rule 52(a) expressly authorizes oral findings.3
In fact, in 1983 Rule 52(a) was amended explicitly to sanction the use of oral
findings in bench trials. See generally 9 Charles A. Wright, Arthur R. Miller &
Frank W. Elliot, Federal Practice & Procedure Sec. 2571, at 225 (Supp.1993).
Not only did the district court's approach not violate the literal language of Rule
52(a), but contrary to the Authority's argument, it did not violate the spirit of

the rule.
16

We do not deny the force of the Authority's contention that the district court
would have been well-served by requesting the parties to submit proposed
factual findings after the close of trial and then articulating its own findings and
legal reasoning in a carefully crafted opinion. In many cases this is the more
desirable course of action. However, the Authority ignores the benefits of the
district court's approach: by issuing oral findings on the day the trial ended, the
district court served the interests of the parties and the legal system in speedy
adjudication. See Fed.R.Civ.P. 1. In addition, by announcing its findings soon
after the conclusion of the trial, the district court ensured that the record was
fresh on its mind, an advantage a court lacks when making findings months
later. Furthermore, the overwhelming demands on a district court's time and
resources also affects its ability to prepare extensive findings. For these reasons
we reject the Authority's suggestion that the district court's oral findings are
somehow suspect or tainted.4

17

We similarly reject the Authority's argument that the district court's verbatim
adoption of many of Tonolli Canada's proposed factual findings contravened
the purposes of Fed.R.Civ.P. 52(a) such that they do not warrant review under
the clearly erroneous standard. This argument has been rejected by the Supreme
Court in Anderson v. Bessemer City, N.C., 470 U.S. 564, 105 S.Ct. 1504, 84
L.Ed.2d 518 (1985), in which the Court held that a district court's findings
should receive no less deferential review when the district court announced its
decision to the parties first and then asked the prevailing party to prepare
findings of fact, many of which it ultimately adopted verbatim. The Court
explained that "even when the trial judge adopts proposed findings verbatim,
the findings are those of the court and may be reversed only if clearly
erroneous." Id. at 572, 105 S.Ct. at 1510-11.

18

In addition, we have squarely held that a district court's findings, when adopted
verbatim from a party's proposed findings, do not demand more stringent
scrutiny on appeal. See, e.g., Hayes v. Community Gen. Osteopathic Hosp.,
940 F.2d 54, 57 (3d Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 940, 117
L.Ed.2d 110 (1992); Hassine v. Jeffes, 846 F.2d 169, 172 n. 1 (3d Cir.1988);
accord Mt. Graham Red Squirrel v. Espy, 986 F.2d 1568, 1571 (9th Cir.1993);
51 James W. Moore, Moore's Federal Practice p 52.06, at 52-127 (1993) ("it is
immaterial whether [findings of fact] were drafted by the judge or by
counsel").5 While we cannot dispute that a district court's verbatim adoption of
many of a party's proposed findings does not always represent a desirable
practice, we are satisfied that the district court's findings here satisfy Rule 52(a)
and should be upheld unless they are not supported by the evidence in the

record. We note that we found no indication in the record that the district court
was unfamiliar with the testimony and exhibits or that it was using the
proposed findings as a crutch; if we had, we might view the matter differently.
Rather, the record suggests to us that the district court's findings reflected its
informed and considered views.
III. CERCLA LIABILITY FOR THE THREAT OF FUTURE CONTAMINATION
19
20

The district court concluded that the Authority had failed to establish that the
Tonolli site posed any future threat of contamination to the Authority's wells. It
therefore held that the Authority was not entitled to recover for the costs of
procuring an alternative water supply or for continuously treating its existing
supply. More fundamentally, in light of its subsidiary factual findings, the court
determined that the Tonolli site was hydrogeologically isolated from the
Authority's water production wells so that contamination on the Tonolli
property would not migrate to the Authority's water supply. The Authority
challenges this factual conclusion, contending that the evidence adduced at trial
overwhelmingly demonstrated that heavy use of the Authority's wells would
draw contamination from the Tonolli site. The Authority submits that the longterm pumping test it conducted, the AGES test, convincingly and unassailably
established that there is a hydrogeological connection between the Tonolli site
and its production wells and hence that the Tonolli site poses a threat of future
contamination to the Authority's water. In short, the Authority submits that the
district court's factual findings are clearly erroneous. We disagree.

21

In our view, the district court's factual determinations are well-supported by the
record such that we are not "left with the definite and firm conviction that a
mistake has been committed." United States v. United States Gypsum Co., 333
U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948). The district court was
faced in this case with extensive expert testimony offering conflicting
interpretations of the reliability of the Authority's scientific study and the data it
produced. The trial was thus a battle of the experts at the end of which the
district court credited the interpretation of Tonolli Canada's expert rather than
that of the Authority. Given that Tonolli Canada's expert provided a reasonable
explanation of the scientific data from the AGES study, we refuse to disturb the
district court's factual conclusions because it is well-established that "[w]here
there are two permissible views of the evidence, the factfinder's choice between
them cannot be clearly erroneous." Anderson v. Bessemer City, N.C., 470 U.S.
564, 574, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985). See also Mendes-Silva
v. United States, 980 F.2d 1482, 1487 (D.C.Cir.1993) (in a battle of the experts,
the factfinder "decide[s] the victor").

A. The AGES Study

22

The dispute between Tonolli Canada and the Authority principally revolves
around the proper interpretation of the results of the AGES test. In July, 1987,
the Authority engaged an engineering firm to perform a long-term pumping test
designed to determine whether contamination from the Tonolli property could
affect the Authority's groundwater supply. The Authority then knew (as has
been stipulated in this case) that the Authority's underground water supply was
upgradient to the Tonolli site, i.e., the underground area from which the
Authority's wells draw their water is higher than the groundwater area
underneath the Tonolli site. Thus, under normal conditions the groundwater
does not flow from the Tonolli site toward the Authority's wells. The Authority
undertook the AGES study to see if long-term, continuous pumping of the
Authority's wells would create a reversal of this normal trend such that
contamination from the Tonolli site could infiltrate the Authority's water
supply.

23

The AGES study was conducted over a 72-hour period. The AGES consultants
installed three monitoring wells between the Tonolli site and the Authority's
supply wells. The test also utilized two previously installed monitoring wells
located between the Authority's production wells and the Tonolli site. For the
72-hour period, the Authority pumped its production wells at full capacity and
the consultants then took two measurements: 1) the groundwater levels in the
Tonolli monitoring wells, and 2) the water quality in the Authority's production
and monitoring wells. According to the Authority, the theory behind this
procedure was that if the water level of the Tonolli monitoring wells dropped
during the test, it would tend to prove that long-term and full-scale pumping
effected a reversal in groundwater direction. Moreover, if the Authority
detected higher levels of contaminants in its wells after the full-scale pumping,
this, according to the Authority, would tend to prove that there was a
groundwater reversal because the contaminants could have come from the
Tonolli site.

24

At the end of the 72 hours of full-scale pumping there was a drop in two of the
Tonolli monitoring wells. The water level in one well dropped by 1.74 feet; in
another monitoring well, the water level fell by 1.26 feet. In addition, slightly
higher levels of lead and volatile organic compounds ("VOCs") were detected
after the test. The Authority thus argues that the AGES study demonstrated that
at some point during the pumping test, the groundwater direction reversed. Dr.
Fungaroli, the geologist in charge of the AGES test and the plaintiff's expert
witness, testified that based on the results of the AGES study, he believed that
the Tonolli site posed a threat of future contamination to the Authority's current

water source.
B. Dr. Earl's Testimony
25

The district court's findings and conclusions are supported by the testimony of
the defendant's expert, Dr. Earl, a hydrogeologist. At the outset, Earl testified
that the decreases in water levels in the AGES report were minimal given the
scale of the pumping test. Earl testified that the drops in the two monitoring
wells after the AGES pumping test may not have been caused by the pumping
and do not necessarily suggest that there was a groundwater reversal. Rather,
according to Earl, the water level drops could have been caused by a wide
variety of factors other than a reversal in groundwater direction. Earl related
that there is no way to tell from the AGES study that the water drops were in
fact caused by a reversal in groundwater flow and not by these other potential
forces.

26

Earl detailed a number of factors that could account for the drop in the
monitoring wells. For example, he testified that seasonal changes or earth tides
could have resulted in the water decreases. Earl further testified that changes in
sunlight, passage of a cold or warm front, groundwater recharge events (i.e.,
proximity to streams or lakes where levels are rising and falling), as well as
man-made influences such as nearby pumping wells and passing railroad trains,
could have caused the water levels to drop as they did. In addition, he stated
that some combination of those forces also may have been responsible for the
drop in the monitoring wells.

27

Earl also criticized the AGES study for not observing and recording the trend in
water levels in the wells before conducting the pumping test. He stated that the
potential causes for the water level decreases that he identified would have
been reflected in data about the trend of the wells' water levels before the test.
Earl testified that without this pre-pumping data, there is no way to discern
whether it was the pumping test or other factors which caused the drops in the
water levels of the monitoring wells. Hence, according to Earl, the AGES
pumping test results are inconclusive.

28

Earl's testimony raised questions about why the water level dropped, questions
that, in his view, could have been answered had the AGES study investigated
the pre-pumping water level trends in the monitoring wells. In this way, Earl's
testimony provided substantial support for the district court's conclusion that
the Authority had not established by a preponderance of the evidence that the
pumping during the AGES test (rather than other factors) caused the water

level decreases. The fact that Earl himself did not establish what caused the
water levels to drop is inconsequential since Tonolli Canada, as a defendant, did
not have the burden of showing the exact cause of the drop in water levels. That
burden was on the Authority.
29

In addition to the questions Earl raised about the conclusiveness of the AGES
study, his testimony also provided affirmative support for the district court's
conclusion that the Tonolli site and the Authority's wells are hydrogeologically
isolated. Based on the data used in the AGES study as well as a topographical
survey of the area under the Tonolli site conducted by Tonolli Canada, Earl
concluded that there is a groundwater divide separating the Tonolli site and the
Authority's wells. Earl also testified that because the Authority's wells draw
their water from a very deep aquifer which is in a discharge zone, the
Authority's wells cannot be contaminated from activity occurring at the surface
level.

30

Earl also raised questions about the Authority's interpretations of the water
quality data gleaned from the AGES study. Specifically, Earl testified that there
was no reason to believe that the VOCs and lead detected in the wells after the
AGES test came from the Tonolli site. Earl pointed to other possible sources,
such as sediments from nearby Tippets Pond and Lake Hauto, which contain
lead as demonstrated by samples taken by Tonolli Canada, and which serve as
recharge sources for the aquifer that supplies water for the Authority's wells.
Moreover, Earl explained that because there were VOC's present in the wells
before the pumping test even began, there clearly is an upgradient source of
VOCs which most likely was the source of the additional VOCs during the fullscale pumping during the AGES test.

31

We are satisfied that Earl's testimony regarding the water quality data
adequately supports the district court's finding that the lead and the higher
levels of VOC's did not come from the Tonolli site.6 In addition, Earl's
testimony as to the hydrogeological separation of the Tonolli site also supports
the district court's findings regarding the water quality data, because the
hydrogeological separation of the Authority's wells and the Tonolli site means,
by definition, that the higher level of contaminants could not have come from
the Tonolli site.7
C. Conclusion

32

We hold that the district court's factual finding that the Tonolli site and the
Authority's wells are hydrogeologically isolated is not clearly erroneous.8 We

thus uphold the district court's conclusion that the Authority did not sufficiently
demonstrate, through the AGES test, that the Tonolli site poses any threat of
contamination to the Authority's water supply.
IV. MONITORING AND EVALUATION COSTS
A. Background
33

Although we affirm the district court's order that there is no threat of future
contamination by Tonolli Canada for which the Authority can recover, we must
still address the Authority's doctrinally distinct claim for recovery of its
monitoring and evaluation costs. CERCLA authorizes recovery for the costs of
"such actions as may be necessary to monitor, assess, and evaluate the release
or threat of release of hazardous substances." 42 U.S.C. Sec. 9601(23). It is
well-established that under this provision a plaintiff can recover its monitoring
and evaluation costs from a release or threatened release without proving that
its property was actually contaminated by the defendant. See Artesian Water
Co. v. Government of New Castle County, 851 F.2d 643, 651 (3d Cir.1988);
accord Dedham Water Co. v. Cumberland Farms Dairy, Inc., 889 F.2d 1146,
1153-54 (1st Cir.1989); Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887,
892 (9th Cir.1986). Even though we uphold the district court's conclusion that
the AGES study failed to establish that the Tonolli site poses any threat of
future environmental harm, the Authority may still recover for the costs of the
AGES study if it establishes that it incurred these costs in response to a release
or threatened release of hazardous material and establishes the other elements
of such a CERCLA claim.

34

CERCLA provides that in order to establish a prima facie case for the recovery
of monitoring and evaluation costs, a plaintiff must establish that: 1) the
defendant falls into one of four categories of "covered persons," 42 U.S.C.
Secs. 9607(a)(1)-(4); 2) there has been a release or a threatened release of a
hazardous substance from a facility, 42 U.S.C. Sec. 9607(a)(4); 3) this release
or threatened release has caused the plaintiff to incur response costs, 42 U.S.C.
Sec. 9607(a)(4); and 4) the plaintiff's response costs are necessary and
consistent with the NCP, 42 U.S.C. Sec. 9607(a)(4)(B).

35

We note that although CERCLA authorizes recovery for monitoring and

evaluation costs even when a defendant has not actually contaminated the
plaintiff's property, it also provides safeguards to ensure that a defendant will
be liable only in situations in which: (1) there was a reasonable risk (although
one that may not materialize) that the defendant's release or threatened release
of hazardous substances would contaminate the plaintiff's property; and (2) the

monitoring and evaluation expenses were incurred by the plaintiff in a

reasonable manner. Because a plaintiff must prove that the defendant was
responsible for a release or threatened release of hazardous substances and that
the costs incurred in response were both necessary and consistent with the NCP,
see 42 U.S.C. Sec. 9607(a)(4), these requirements prevent a plaintiff from
recovering the costs incurred in instituting a needless and expensive monitoring
study.
36

The district court held that although both a release and a threatened release of
hazardous substances at the Tonolli site caused the Authority to incur
monitoring and evaluation costs (the AGES study), the Authority failed to
establish the other elements of a prima facie case under CERCLA. Most
importantly, the district court concluded that Tonolli Canada did not qualify as
a "covered person" under CERCLA, 48 U.S.C. Sec. 9607(a)(1), because it was
neither an "owner" nor an "operator" of Tonolli PA. In addition, the district
court denied the Authority recovery of its monitoring and evaluation costs
because the Authority presented no evidence that the costs it incurred were both
necessary and consistent with the NCP.

37

Tonolli Canada agrees with the district court's finding that it was neither an
owner nor operator of Tonolli PA, but disputes the court's finding that a release
or threatened release of hazardous substances at the Tonolli site caused the
Authority to incur monitoring and evaluation costs. In response, the Authority
contends that there was ample evidence supporting the district court's finding
that a release and a threatened release of hazardous material caused it to incur
monitoring and evaluation costs, but that the district court's finding that Tonolli
Canada was not an owner or operator of Tonolli PA is clearly erroneous.

38

B. The Finding that a Release/Threatened Release Caused the Authority to

Incur Monitoring and Evaluation Costs

39

We reject Tonolli Canada's contention that the district court's finding that the
Authority commissioned the AGES study in response to a release and
threatened release of hazardous substances at the Tonolli PA site was clearly
erroneous. The district court found that the negligent acts of Tonolli PA caused
releases of hazardous substances into the soil at the Tonolli PA facility. It is
undisputed that the federal Environmental Protection Agency (EPA) has
conducted removal actions under CERCLA at the Tonolli site due to a release
of hazardous substances and is currently conducting a remedial investigation
there under CERCLA. In addition, there was testimony at trial that the
Authority was concerned about the threat of future releases because Tonolli PA
had applied for a permit to dispose of hazardous wastes at its facility. Under

this set of circumstances, we cannot say that the district court committed clear
error in finding that the Authority, a provider of drinking water to the public,
instituted the AGES study due to releases of hazardous substances and the
threat of future releases at the Tonolli site. We thus decline to set aside the
finding that a release and a threatened release caused the Authority to incur
monitoring and response costs.9
40

C. "Owner" and "Operator" Status Under CERCLA

1. Background

41

Although the contours of "owner" and "operator" liability under CERCLA

present an issue of first impression for this court, a number of federal courts and
commentators have already considered the issue. See, e.g., United States v.
Kayser-Roth Corp., 910 F.2d 24 (1st Cir.1990), cert. denied, 498 U.S. 1084,
111 S.Ct. 957, 112 L.Ed.2d 1045 (1991); United States v. Mottolo, 695 F.Supp.
615 (D.N.H.1988); Lynda J. Oswald & Cindy A. Schipani, CERCLA and the
"Erosion" of Traditional Corporate Law Doctrine, 86 Nw.U.L.Rev. 259 (1992);
Note, Liability of Parent Corporations for Hazardous Waste Cleanup and
Damages, 99 Harv.L.Rev. 986 (1986). There is general agreement that under
CERCLA, "owner" liability and "operator" liability denote two separate
concepts and hence require two separate standards for determining whether
they apply. See, e.g., John S. Boyd Co. v. Boston Gas Co., 992 F.2d 401, 408
(1st Cir.1993); Richard B. Stewart & Bradley M. Campbell, Lessons from
Parent Liability under CERCLA, 6 Nat. Resources & Env't 7 (Winter, 1992).

42

Under CERCLA, a corporation may be held liable as an owner for the actions
of its subsidiary corporation in situations in which it is determined that piercing
the corporate veil is warranted. See Joslyn Mfg. Co. v. T.L. James & Co., 893
F.2d 80 (5th Cir.1990), cert. denied, 498 U.S. 1108, 111 S.Ct. 1017, 112
L.Ed.2d 1098 (1991). Operator liability, in contrast, is generally reserved for
those situations in which a parent or sister corporation is deemed, due to the
specifics of its relationship with its affiliated corporation, to have had
substantial control over the facility in question. 10 Courts are divided as to
whether operator liability should be predicated on the actual control one
corporation has over the other, or whether the corporation's capacity or
authority to control is sufficient. Compare Kayser-Roth, 910 F.2d at 27
(applying "active involvement" test) with Nurad, Inc. v. William E. Hooper &
Sons Co., 966 F.2d 837 (4th Cir.) (applying "authority-to-control" test), cert.
denied, --- U.S. ----, 113 S.Ct. 377, 121 L.Ed.2d 288 (1992).

43

In this case, the district court considered whether Tonolli Canada should be

43

In this case, the district court considered whether Tonolli Canada should be
deemed either an owner or an operator under CERCLA and concluded that
neither status applied. The Authority argues that the district court applied
incorrect legal standards in deciding these issues and that, in the alternative,
even if the district court utilized the correct standards, its conclusions that
Tonolli Canada is neither an owner nor an operator are clearly erroneous. We
hold that the district court, by applying the "actual control" test, applied the
correct legal standard with respect to the operator liability issue. However,
because the district court's factual findings fail to address a number of key facts
relevant to whether or not Tonolli Canada employees exercised control over the
affairs of Tonolli PA, we will remand the case to the district court for more
detailed fact findings. With respect to owner liability, we conclude that the
district court applied the correct standard and properly concluded that Tonolli
Canada should not be held liable as an owner. We turn first to the operator
liability question because it is the more difficult issue of the two.
2. Operator Liability Under CERCLA

44

Although congressional intent may be particularly difficult to discern with

precision in CERCLA, a statute notorious for its lack of clarity and poor
draftsmanship, see Artesian Water Co., 851 F.2d at 649, it is at least clear that
Congress has expanded the circumstances under which a corporation may be
held liable for the acts of an affiliated corporation such that, when a
corporation is determined to be the operator of a subsidiary or sister
corporation, traditional rules of limited liability for corporations do not apply.11
This expansion of liability is consistent with CERCLA's broad remedial
purposes, most importantly its "essential purpose" of making "those responsible
for problems caused by the disposal of chemical poisons bear the costs and
responsibility for remedying the harmful conditions they created." John S.
Boyd Co., 992 F.2d at 405 (citing Dedham Water Co. v. Cumberland Farms
Dairy, Inc., 805 F.2d 1074, 1081 (1st Cir.1986)).

45

Courts have fashioned two competing standards for the imposition of operator
liability: what we term the "actual control" test and the "authority-to-control"
test. Under the actual control standard, a corporation will only be held liable for
the environmental violations of another corporation when there is evidence of
substantial control exercised by one corporation over the activities of the other,
Kayser-Roth Corp., 910 F.2d at 27. In contrast, under the authority-to-control
test, operator liability is imposed as long as one corporation had the capability
to control, even if it was never utilized. See Nurad, 966 F.2d at 842; Idaho v.
Bunker Hill Co., 635 F.Supp. 665, 670-71 (D.Idaho 1986); United States v.
Nicolet, Inc., 712 F.Supp. 1193 (E.D.Pa.1989).

46

We reject the Authority's contention that the authority-to-control standard

should govern. We believe that test sweeps too broadly and we thus adopt the
actual control standard, which appears to strike the appropriate middle ground,
balancing the benefits of limited liability with CERCLA's remedial purposes.
Under the actual control standard, while the longstanding rule of limited
liability in the corporate context remains the background norm, a corporation
cannot hide behind the corporate form to escape liability in those instances in
which it played an active role in the management of a corporation responsible
for environmental wrongdoing. In contrast, we believe that a rule which
imposes liability on a corporation which never exercised its general authority
over its subsidiary or sister corporation may unduly penalize the corporation for
a decision by that corporation to benefit from one of the well-recognized and
salutary purposes of the corporate form: specialization of management, see
Frank H. Easterbrook & Daniel R. Fischel, Limited Liability and the
Corporation, 52 U.Chi.L.Rev. 89, 90-94 (1985).12

47

We follow the test adumbrated in Kayser-Roth, supra, and CPC Int'l, Inc. v.
Aerojet-General Corp., 777 F.Supp. 549 (W.D.Mich.1991). As the KayserRoth court explained, "[t]o be an operator requires more than merely complete
ownership and the concomitant general authority or ability to control that
comes with ownership. At a minimum, it requires active involvement in the
activities of the subsidiary." 910 F.2d at 27. Whereas a corporation's "mere
oversight" of the subsidiary or sister corporation's business in a "manner
appropriate and consistent with the investment relationship" does not ordinarily
result in operator liability, a corporation's "actual participation and control"
over the other corporations's decision-making does. CPC Int'l, 777 F.Supp. at
573.

48

The determination whether a corporation has exerted sufficient control to

warrant imposition of operator liability requires an inherently fact-intensive
inquiry, see John S. Boyd Co., 992 F.2d at 408, involving consideration of the
totality of the circumstances presented. The factors courts should consider
focus on the extent of the corporation's involvement in the other corporation's
day-to-day operations and its policy-making decisions.13 See CPC Int'l, 777
F.Supp. at 573. We understand the actual control standard to hold accountable
for environmental violations those corporations which are not mere investors in
other corporations, but instead have actively and substantially participated in
the corporation's management.

49

In addition, because the essential focus of the actual control test is the control
of one corporation over another, not only may a parent corporation be deemed
the operator of its subsidiary, but a corporation may also be considered the

operator of its sister corporation. In other words, the test is concerned with
control rather than ownership and there is no reason not to hold a corporation
liable when it exercises substantial management control over an affiliated
corporation.
50

3. Should Tonolli Canada Be Deemed An Operator?

51

In view of the foregoing discussion, we reject the Authority's claim that the
district court applied the wrong legal standard regarding operator liability, since
it expressly applied the actual control test and manifested a correct
understanding of it. We therefore review its application of that standard to the
facts here for clear error only. See John S. Boyd Co., 992 F.2d at 408; KayserRoth, 910 F.2d at 27. Although much of the evidence supports the district
court's conclusion that Tonolli Canada should not be deemed the operator of
Tonolli PA, the court's findings fail to address a number of key factual issues
concerning the role of several Tonolli Canada officers in the management of
Tonolli PA. The dearth of findings on these issues leaves us with important
unanswered questions such that we cannot affirm the conclusion that Tonolli
Canada was not an operator of Tonolli PA without further findings. Hence we
will remand to the district court for additional proceedings.

52

The following basic facts were adduced at trial. From 1972 until 1976, Tonolli
Canada was the parent and sole shareholder of Tonolli PA. In 1976, Tonolli
Canada divested its Tonolli PA stock, selling it for value to IFIM, a company
which also became the parent corporation to Tonolli Canada. Tonolli PA did
not begin operations until September, 1975, which was only shortly before it
was sold to IFIM. After Tonolli Canada sold its Tonolli PA stock, Tonolli PA
and Tonolli Canada shared the same president, Elvio Del Sorbo, and the same
chief financial officer, Vincent Bailini. From 1984 to 1985, the American Bank
& Trust Company of Pennsylvania, a creditor of Tonolli PA, exercised strict, if
not total, control over Tonolli PA's operations.

53

In support of its conclusion that the two corporations were largely selfsupporting and self-sufficient entities during the period that Tonolli PA was
operational, the district court made a number of subsidiary findings about the
relationship between the two companies which support this conclusion and are
supported by the record. For example, although Tonolli Canada had guaranteed
Tonolli PA's financial liabilities when it was the latter's parent corporation,
Tonolli Canada conditioned its sale of Tonolli PA stock to IFIM on the
cancellation of these guarantees.14 The district court also found that to the
extent that Tonolli Canada had advanced money to Tonolli PA during its startup period, these advances were all repaid by Tonolli PA shortly after it began

operations in 1976. It was also established that each corporation's lead smelting
process was fully operational without support from the other. In addition, each
corporation owned its own equipment and procured its own supplies and raw
materials. Similarly, each corporation had its own customers, sales staff, legal
staff, and engineering consultants.
54

The district court found that the two companies were kept separate in numerous
other respects: they maintained separate corporate minutes; they kept their
funds and assets separate; the two companies were separately audited,
producing independent financial statements. Each company paid its own bills
and conversely neither accepted payment for the other's products and services
provided to third parties. There was no overlap among any non-officer
employees, and all facets of the companies' personnel policies were separate.
All of these findings are supported by the record.

55

The district court also found that all financial transactions between the two
companies were conducted on an arm's-length basis, including, most
importantly, the annual management contracts between the two companies. The
Authority has argued that the management contracts are actually strong
evidence of the operational and financial unity of the two companies. However,
the trial testimony established that these annual contracts--in which Tonolli PA
paid Tonolli Canada for services it received--were primarily to compensate
Tonolli Canada for basic services it provided during the course of a year, i.e.,
bookkeeping work and computer consulting. There is no indication in the
record that Tonolli PA's payments pursuant to these contracts amounted to
anything but the market value of the services it received. In addition, there was
no other evidence that the two operated on anything but an arm's-length basis;
there was, for example, no evidence that Tonolli PA was undercapitalized or
that Tonolli Canada siphoned off its assets or otherwise used Tonolli PA merely
as a source of cash.15 The record, therefore, contains ample evidence supporting
the district court's conclusion as to the separate nature of the two companies.16

56

However, there are several potentially significant facts that the district court's
findings do not address and which we find disquieting. The two companies
shared common officers during the period in question: it is uncontroverted that
Del Sorbo served as president and Bailini as chief financial officer of both
Tonolli PA and Tonolli Canada. On one hand, the fact that the same people
served as the president and chief financial officer for the two corporations is
not, without more, enough to conclude that one corporation should be deemed
the operator of the other. Because a corporate officer may be a figurehead, there
must be evidence that the officer actually exerted control over both
corporations. On the other hand, the existence of common high-level officers is

troubling and raises serious questions about the independence of the two
companies.
57

Despite the importance of this issue, the district court failed to make any
specific findings about what role Bailini and Del Sorbo played in the
management of Tonolli PA. This omission is particularly problematic in light of
the fact that in 1984 Bailini signed Tonolli PA's consent order with the
Pennsylvania Department of Environmental Regulation (D.E.R.), which raises
questions about his involvement in Tonolli PA's environmental policies.17 It is
further disquieting in light of a document prepared by Del Sorbo containing job
descriptions and describing his responsibilities as president of Tonolli PA and
Tonolli Canada as well as the responsibilities of several vice-presidents. This
document, which stated an effective date of January, 1979, described the two
corporations operating as one entity, with the officers of both corporations
reporting to the shared president, Del Sorbo. According to this document, the
president served in more than a symbolic capacity, exerting final
decisionmaking authority over all facets of the two companies' operations and
management.

58

Despite the substantial questions raised by this document, the district court
made no mention of it in its findings. While it may be that the district court
credited Bailini's testimony that this document was never put into effect,18 we
simply do not know. Given the potential import of this document, the district
court erred by failing to provide an explanation of its meaning and effect on the
operator liability issue.

59

Although the district court failed to make findings about the respective roles of
Bailini and Del Sorbo in the management of Tonolli PA, it did make several
findings regarding Sergio Legati. Legati was the vice-president of
manufacturing of Tonolli Canada and served as Tonolli PA's plant manager
during 1975-1976 (the start-up period) and again in 1984-85. Legati testified
that at other times he intermittently worked on behalf of the Tonolli facility.19
Regarding Legati's two stints as plant manager for the Tonolli facility, the
district court found that, "[a]lthough Legati remained an employee of Tonolli
Canada[,] ... his role was that of an individual employee temporarily on loan."
Regarding Legati's part-time work for Tonolli PA, the district court found that
Legati worked for the company only as a consultant.

60

Notwithstanding these findings about Legati, the district court's findings leave
critical unanswered questions about Legati's role. More specifically, the district
court failed to make any findings regarding Legati's role, if any, with respect to
Tonolli PA's release of hazardous substances. Along with Bailini, Legati signed

Tonolli PA's consent order with the D.E.R., raising questions about his role in
environmental decisions at the Tonolli site. In addition, although the district
court found that there were releases of hazardous substances into the soil at the
Tonolli facility, it is unclear from both the record and the court's findings when
the releases occurred. We thus cannot tell whether these releases occurred
during the period when Legati served as a full-time plant manager for Tonolli
PA. We similarly cannot tell whether they occurred when the American Bank
had control over Tonolli PA.
61

In sum, although the district court made a number of subsidiary findings

supporting its conclusion that Tonolli Canada did not exert sufficient control
over Tonolli PA to be deemed an operator, its findings do not address a number
of critical issues about the roles of several Tonolli Canada officers. We thus
remand for the entry of more detailed findings on these issues.

62

4. Should Tonolli Canada Be Deemed An Owner?

63

It is well-established that under CERCLA a corporation may be held liable as

the owner of another corporation when the attendant circumstances warrant
piercing the corporate veil. See, e.g., Joslyn Mfg. Co., 893 F.2d at 83; John S.
Boyd Co., 992 F.2d at 408; United States v. Mottolo, 695 F.Supp. 615
(D.N.H.1988). In addition, given the federal interest in uniformity in the
application of CERCLA, it is federal common law, and not state law, which
governs when corporate veil-piercing is justified under CERCLA. See United
States v. Kimbell Foods, Inc., 440 U.S. 715, 99 S.Ct. 1448, 59 L.Ed.2d 711
(1979); see also In re Acushnet River & New Bedford Harbor Proceedings re
Alleged PCB Pollution, 675 F.Supp. 22, 30-31 (D.Mass.1987) (applying federal
common law to owner/operator liability under CERCLA). See generally Evelyn
F. Heidelberg, Comment, Parent Corporation Liability Under CERCLA:
Toward a Uniform Federal Rule of Decision, 22 Pac.L.J. 854 (1991).

64

The Authority argues that the district court failed to recognize that operator and
owner liability are predicated on different inquiries. It submits that the court
therefore did not apply a separate standard to determine whether Tonolli
Canada should be held liable as an owner. We disagree. We cannot dispute that
the district court's discussion of the owner liability issue is somewhat vague
and that at one point it misspoke by referring to the owner liability issue when
it apparently meant the operator liability issue. However, based on our reading
of the district court's findings of fact and conclusions of law, we conclude that
the district court did in fact recognize that separate standards govern the
imposition of owner and operator liability, applied the appropriate standard to
determine whether Tonolli Canada should be deemed an owner, and correctly

concluded that it should not.

65

It is undisputed that Tonolli Canada sold all of its stock in Tonolli PA to IFIM
for value in 1976, shortly after the Tonolli PA facility commenced operations.
Therefore, for the bulk of the relevant period--the period during which Tonolli
PA was operational--Tonolli Canada was Tonolli PA's sister corporation and no
longer its parent. While that fact is inconsequential with respect to the
imposition of operator liability, it is generally relevant with respect to owner
liability. Put simply, while Congress has provided little guidance in CERCLA
as to the appropriate standard governing owner liability, having defined an
"owner" circuitously to be any person owning a facility, 42 U.S.C. Sec.
9601(20)(A)(ii), it is nonetheless clear that owner liability can ordinarily only
attach if the defendant meets the common definition of that term and is at least
a partial owner of the corporation responsible for the substantive CERCLA
offenses. Thus, in contrast to operator liability, corporate ownership is generally
a pre-requisite for this status to apply, and Tonolli Canada was not Tonolli PA's
parent corporation for the bulk of the period in question here.

66

In addition, as we discussed above with respect to the operator liability issue,

see supra pages 1222-23, the record establishes that corporate formalities were
adhered to, that the two corporations entered transactions on an arm's length
basis, and that Tonolli PA was not undercapitalized. Thus, there is no indication
that the circumstances warranted piercing the corporate veil. We will therefore
uphold the district court's conclusion that owner liability should not be
imposed.

67

D. Necessity of Expenses and Consistency with the NCP

68

In its response to the Authority's motion for reconsideration, the district court
stated that the Authority had failed to provide any evidence that the costs it
incurred for the AGES study were necessary and consistent with the NCP, two
elements of a prima facie case under CERCLA. See supra page 1219. However,
in a pre-trial order responding to a motion in limine by Tonolli Canada, the
district court bifurcated the trial into liability and damages phases and ordered
all evidence that the Authority's expenses were necessary and consistent with
the NCP to be reserved for the damages phase. Given the district court's
conclusions that Tonolli Canada was not liable on either count, the district
court, of course, never reached the damages phase.

69

We accept the Authority's contention that its failure to introduce evidence that
its monitoring and evaluation costs were both necessary and consistent with the

NCP was due to its compliance with the district court's bifurcation order. Under
these circumstances, the Authority's failure to present evidence regarding
necessity and consistency with the NCP is not dispositive. On remand, should
the district court reach the issue of the necessity of the Authority's expenses
and their conformity with the NCP, it should give the Authority opportunity to
present relevant evidence.20
V. IFIM'S LIABILITY
70

Finally, we turn to the district court's decision to enter judgment in favor of

IFIM on the Authority's claim for the cost of an alternative water supply and/or
treatment of its current supply, and its claim for monitoring and evaluation
costs. The Authority argues that the district court erred in entering judgment in
favor of IFIM since IFIM never answered the Authority's complaint, and, under
Fed.R.Civ.P. 8(d), when a party fails to respond to a complaint, it is deemed to
have admitted all the allegations in the complaint. Although Tonolli Canada
does not represent IFIM, it points out that the Authority never moved for the
entry of a default judgment, as required by Fed.R.Civ.P. 55(b)(2). The district
court provided no explanation for its decision to grant judgment in favor of
IFIM on either count.

71

Despite the absence of an explanation for the district court's decision, we will
affirm the judgment in favor of IFIM on the Authority's claim for the costs of
securing a new water supply and/or continuously treating its existing water
supply because the rule requiring consistency in judgments supports this
portion of the judgment. See Frow v. De La Vega, 82 U.S. (15 Wall.) 552, 21
L.Ed. 60 (1872). See generally 6 James W. Moore, Walter J. Taggart & Jeremy
C. Wicker, Moore's Federal Practice p 55.06 (2d ed. 1993). The district court
found that the Authority's wells are not threatened by contamination from the
Tonolli site due to the hydrogeological separation of the Authority's wells and
the Tonolli site. This finding, of course, applies as fully to IFIM as to Tonolli
Canada and means that IFIM cannot be held liable for contamination that will
not occur. We will thus affirm the district court's judgment on this claim.

72

However, the rule against inconsistent judgments does not support the
judgment in favor of IFIM on the claim for monitoring and evaluation costs
because we are vacating the district court's judgment on the monitoring and
response costs claim with respect to Tonolli PA. This rule is further
inapplicable to this claim, at least with respect to the operator liability issue,
because a conclusion about a subsidiary corporation's control over a sister
company may have no bearing on the parent corporation's control over that
company. Given the lack of evidence at trial either way regarding IFIM's

liability, and the district court's failure to provide the reason for its judgment in
favor of IFIM, we will vacate the judgment of the district court in favor of
IFIM on the Authority's claim for monitoring and response costs and will
remand to the district court. On remand, the district court should articulate a
basis for its judgment in favor of IFIM, and, if the Authority makes a proper
motion, it should consider whether the Authority is entitled to a default
judgment.
VI. CONCLUSION
73

For the foregoing reasons, the district court's order, to the extent that it grants
judgment in favor of Tonolli Canada and IFIM on the claim for recovery for
the costs of securing an alternative water supply and/or treating the water from
its existing supply wells, will be affirmed. With respect to the Authority's claim
against Tonolli Canada and IFIM for monitoring and evaluation costs, the
district court's judgment will be vacated and remanded for further proceedings.
Tonolli Canada has filed a cross-appeal challenging the district court's denial of
its motions for sanctions against the Authority. We hold that the district court
did not abuse its discretion in denying sanctions, and hence the district court's
judgment on that issue will be affirmed.

AGES is the acronym for Applied Geotechnical and Environmental Service

Corp

The district court had jurisdiction under 42 U.S.C. Sec. 9613(b). We have
jurisdiction under 28 U.S.C. Sec. 1291

Rule 52(a) states in relevant part:

In all actions tried upon the facts without a jury or with an advisory jury, the
court shall find the facts specially and state separately its conclusions of law
thereon.... Findings of fact, whether based on oral or documentary evidence,
shall not be set aside unless clearly erroneous, and due regard shall be given to
the opportunity of the trial court to judge of the credibility of witnesses.... It
will be sufficient if the findings of fact and conclusions of law are stated orally
and recorded in open court following the close of the evidence....
Fed.R.Civ.P. 52(a) (emphasis added).

We similarly reject the Authority's argument that the district court erred by
requesting proposed findings and conclusions of law from the parties before
and not after trial. Although the district court may request proposed findings of

fact and conclusions of law in order to aid it in its decisionmaking process, the
terms of Rule 52(a) impose no requirement that the district court do so. Rather,
it is within the district court's broad discretion whether and when to request
proposed findings of fact and conclusions of law, and the district court here
clearly acted within the ambit of that discretion
5

The Authority relies heavily on our decision in Roberts v. Ross, 344 F.2d 747
(3d Cir.1965). In Roberts, we accorded the district court's factual findings less
weight because the district court followed essentially the same practice utilized
by the district court in Anderson: it first announced its decision, then requested
the prevailing party to submit proposed findings, which the district court
adopted verbatim. Id. at 752. Not only is the procedure we addressed in Roberts
more questionable than the one followed by the district court here, but Roberts
has been superseded by both Anderson and our decision in Hayes, see supra.
We observe, too, that Roberts was the product of halcyon days when district
court dockets were not burdened with the volume that they carry today, or with
as many complex cases requiring voluminous findings. We thus reject the
Authority's claim that Roberts requires us to review more stringently the district
court's factual findings here

As with the water level decreases detected by the AGES study, the fact that
Earl could not identify with any precision what caused the higher level of
VOC's is not determinative, since the Authority, and not Tonolli Canada, bore
the burden of demonstrating by a preponderance of the evidence that the
Tonolli site poses a threat of future contamination to the Authority's water
supply. See supra page 1217

As we have explained above, we will not disturb the district court's decision to
credit the reasonable testimony of one of two competing experts. We have
reviewed the testimony of the Authority's expert, Dr. Fungaroli, and while he,
not surprisingly, presents a different interpretation of the data from the AGES
test, we cannot say that the district court erred in its decision to reject
Fungaroli's interpretation. We also note that the district court expressly stated
that it found Earl's greater experience in hydrogeology made him the more
credible witness. This type of credibility determination is within the sole
province of the factfinder and provides further reason why we cannot say that
the district court's findings were clearly erroneous

We also reject the Authority's argument that the district court should have
applied the "substantial factor" causation standard applied by the First Circuit in
a "two site" case. Denham Water Co. v. Cumberland Farms Dairy, Inc., 889
F.2d 1146 (1st Cir.1989) (addressing situation in which two possible sites might
have caused contamination). By finding that the Tonolli PA facility and the

Authority's water wells are hydrogeologically isolated, the district court

appropriately concluded that the decrease in water levels and the higher level of
VOCs could not have been caused by the Tonolli site. We thus fail to see how
the Dedham Water causation standard could apply
9

However, as we discuss below, see infra pages 1224-25, the district court's
findings fail to specify when Tonolli PA was responsible for releasing
hazardous substances into the soil at the Tonolli PA facility. As this is relevant
to the operator liability issue, on remand the district court should clarify this
point

10

Courts have also considered the scope of operator liability under CERCLA of
corporate officers, directors, and employees. See, e.g., Riverside Market
Development Corp. v. International Bldg. Prods., Inc., 931 F.2d 327 (5th Cir.),
cert. denied, --- U.S. ----, 112 S.Ct. 636, 116 L.Ed.2d 654 (1991); United States
v. Northeastern Pharmaceutical and Chem. Co., 579 F.Supp. 823
(W.D.Mo.1984), aff'd in part and rev'd in part, 810 F.2d 726 (8th Cir.1986),
cert. denied, 484 U.S. 848, 108 S.Ct. 146, 98 L.Ed.2d 102 (1987). However, we
do not here address the scope of liability for such individuals

11

CERCLA's language supports the view that corporations may be held liable for
the acts of subsidiary and sister corporations, notwithstanding the traditional
rule of limited liability in the corporate context. CERCLA states that an
"operator" is a potentially liable party, 42 U.S.C. Sec. 9607(a)(4). While
"operator" is defined circularly as any person operating a facility, see 42 U.S.C.
Sec. 9601(20)(A)(ii), "person" is defined broadly to include a firm, corporation,
or commercial entity, among other things, see 42 U.S.C. Sec. 9601(21).
CERCLA's language, therefore, indicates an intent to hold a corporation liable
for the environmental violations of its subsidiaries and sister corporations, if it
is otherwise determined to have operated the facility in question

12

We note that the position that the actual control standard establishes the
appropriate intermediate ground comports with the views of a number of
commentators. See, e.g., Richard B. Stewart & Bradley M. Campbell, Lessons
from Parent Liability Under CERCLA, 6 Nat. Resources & Env't 7 (Winter,
1992); Lynda J. Oswald & Cindy A. Schipani, CERCLA and the "Erosion" of
Traditional Corporate Law Doctrine, 86 Nw.U.L.Rev. 259, 301-15 (1992)

13

We agree with the Kayser-Roth court that evidence of control over a sister or
subsidiary corporation's environmental decisions is "indicative of the type of
control necessary to hold a ... corporation liable as an operator." 910 F.2d at 27
n. 8. However, operator liability may be established even without evidence that
a corporation controlled the environmental decisions of an affiliated

corporation as long as there exist other factors which sufficiently demonstrate

pervasive control. See id
14

The district court found that one guarantee remained for several years after the
sale to IFIM but this was due to a procedural delay caused by a bank

15

It is uncontroverted that Tonolli PA ultimately went bankrupt due solely to the

declining price of lead and not due to its relationship with Tonolli Canada

16

The findings mentioned thus far also strongly support the district court's
conclusion that Tonolli Canada was not an owner of Tonolli PA. See infra page
1225

17

We note, however, that the district court should make findings not only about
Bailini's involvement vel non in the environmental decisions of Tonolli PA, but
also with respect to any other way in which he participated in the management
of the company. As we explained above, see supra note 13, a company may be
considered an operator even if it did not exert control over the hazardous waste
disposal decisions of an affiliated corporation, as long as there is otherwise
sufficient indicia of substantial management control over the affairs of the
affiliate

18

There is no testimony from Del Sorbo about the meaning of this document
because Del Sorbo was not called to testify

19

During this entire period Legati was employed by Tonolli Canada as a vicepresident of manufacturing. Legati testified that he officially remained a vicepresident of Tonolli Canada even when working full-time for Tonolli PA in
order to preserve his pension and other employment benefits

20

We do not reach here the question whether the district court erred in postponing
all evidence concerning whether the Authority's costs were necessary and
consistent with the NCP to the damages phase of the trial