Lansford-Coaldale Joint Water Authority, in No. 92-7605 v. Tonolli Corporation Tonolli Canada, Ltd. Ifim International B v. in No. 92-7671

OPINION OF THE COURT

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. § 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.

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 *1213 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

Tonolli Canada is a Canadian Corporation engaged in the business of lead smelting and metal reclamation. In the early 1970’s, To-nolli 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 Nesqu-ehoning, Carbon County, Pennsylvania. To-nolli 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.

Although the Authority’s wells are con-cededly 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. To-nolli 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.

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.

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.

*1214 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 CERC-LA, 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

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.

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.

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 § 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.

*1215 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

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.

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 ¶ 52.06[1], 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 *1216 findings reflected its informed and considered views.

III. CERCLA LIABILITY FOR THE THREAT OF FUTURE CONTAMINATION

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 long-term 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.

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

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.

The AGES study was conducted over a 72-hour period. The AGES consultants installed three monitoring wells between the Tonol-li 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 To-nolli 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 *1217 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.

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 plaintiffs 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

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.

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.

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.

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-pump-ing 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.

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 *1218 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.

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 full-scale pumping during the AGES test.

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

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

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. § 9601(23). It is well-established that under this provision a plaintiff can re *1219 cover 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.

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. §§ 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. § 9607(a)(4); 3) this release or threatened release has caused the plaintiff to incur response costs, 42 U.S.C. § 9607(a)(4); and 4) the plaintiffs response costs are necessary and consistent with the NCP, 42 U.S.C. § 9607(a)(4)(B).

We note that although CERCLA authorizes recovery for monitoring and evaluation costs even when a defendant has not actually contaminated the plaintiffs 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 plaintiffs 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. § 9607(a)(4), these requirements prevent a plaintiff from recovering the costs incurred in instituting a needless and expensive monitoring study.

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. § 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.

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 Tonol-li 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.

B. The Finding that a Release/Threatened Release Caused the Authority to Incur Monitoring and Evaluation Costs

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 re *1220 moval 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

C. “Owner” and “Operator” Status Under CERCLA

1. Background

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).

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).

In this case, the district court considered whether Tonolli Canada should be deemed either an owner or an operator under CERC-LA 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 áre clearly erroneous. We hold that the district court, by applying the “actual control” test, applied the correct legal standard *1221 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

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 ah 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 Lability 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 responsibiLty 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)).

Courts have fashioned two competing standards for the imposition of operator Lability: 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).”

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 LabLity with CERCLA’s remedial purposes. Under the actual control standard, while the longstanding rule of Lmited 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 LabLity 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

*1222 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 Kayser-Roth court explained, “[t]o be an operator requires more than merely complete ownership and the concomitant general authority or ability to control that c