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Artesian Water Co. v. Government of New Castle County

filed as amended july 28 1988.: June 29, 1988.

ARTESIAN WATER COMPANY, APPELLANT IN NO. 87-3622
v.
THE GOVERNMENT OF NEW CASTLE COUNTY, DEFENDANT/THIRD-PARTY PLAINTIFF V. LANDFILL, INC., A DELAWARE CORPORATION, MATERIAL TRANSIT, INC., A DELAWARE CORPORATION, EDGAR THOMAS HARVEY, EDGAR THOMAS HARVEY, JR., W. LAWRENCE KNOTTS, HENRY A. TWARDUS, WILLIAM Q. SAIENNI, ELME D. SAIENNI, SALVATORE J. SAIENNI, DOMINIC CANTERA, MARIAN CANTERA, DELAWARE SAND AND GRAVEL COMPANY, A DELAWARE CORPORATION, ANITA DELL AVERSANO, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF JOSEPH DELL AVERSANO, VINCENT DELL AVERSANO, MARCELLA DELL AVERSANO, STAUFFER CHEMICAL CO., A DELAWARE CORPORATION, HAVEG INDUSTRIES, INC., A DELAWARE CORPORATION, CHAMPLAIN CABLE CORPORATION, A DELAWARE CORPORATION, ANGELO TERRANOVA, STANLEY J. TWARDUS & SONS, INC., A DELAWARE CORPORATION, AND SCA SERVICES, INC., A DELAWARE CORPORATION, THIRD-PARTY DEFENDANTS NEW CASTLE COUNTY, APPELLANT IN NO. 87-3623



Appeal from the United States District Court for the District of Delaware, D.C. Civ. No. 83-854 MMS.

Weis, Greenberg, and Aldisert, Circuit Judges.

Author: Weis

Opinion OF THE COURT

WEIS, Circuit Judge.*fn*

On this appeal a private water utility seeks damages for the loss of potential withdrawals from artesian wells threatened by pollution from an adjacent landfill. The district court denied recovery except for the expense of monitoring the movement of the contamination leachate. We will affirm primarily on the ground that under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) the cause of action for damage to natural resources is generally restricted to governmental entities and is not available to private organizations.

The district court entered summary judgment in favor of plaintiff on its claim for monitoring expenses, granted summary judgment to defendant New Castle County on the remaining claims, and certified the judgments under Fed. R. Civ. P. 54(b). Plaintiff appealed, and defendant cross-appealed.

Plaintiff, Artesian Water Company, is a privately-owned public utility that provides drinking water to the residents of New Castle County, Delaware. Artesian wishes to recover expenses incurred, and to be incurred, allegedly as a result of the release of hazardous substances from a neighboring landfill owned by the County of New Castle, one of the defendants. Plaintiff brings this suit for "costs of response" pursuant to CERCLA, 42 U.S.C. ยง 9607.

Artesian secures its water from wells located in the area it services. One of its primary sources is the Llangollen Wellfield in Delaware, which draws water from the productive Upper Potomac Aquifer, an underground sand formation through which water molecules pass under natural pressure into well casings. This groundwater system is not a series of underground streams or lakes, but consists of subterranean layers of sand which surface at various points and are fed by rainfall.

The water molecules move through the sand strata at a very slow rate -- only a few feet per year -- but the amount and direction can be altered by pumping activities. When an aquifer is pumped at a greater rate than it is recharged by precipitation, the natural water level will eventually drop below the top of the aquifer. This reduced hydraulic pressure can cause contaminants from other levels, as well as saltwater, to be drawn into the aquifer.

Artesian began developing the Llangollen Wellfield in 1946. By 1966, the company was withdrawing 1.62 million gallons per day ("MGD") and by 1969, was pumping 2.35 MGD. The state of Delaware, in the meantime, had enacted a regulatory scheme requiring prior governmental approval for any increase in groundwater withdrawal after July 1, 1966. Regulations promulgated in 1969, established administrative procedures for approval of all increased pumping rates between 1966 and 1969. Significantly, Artesian did not make application and never obtained formal state approval for its augmented pumpage.

Despite the lack of prior governmental approval, Artesian continued to expand its operations in the Llangollen field. The company contends that by 1971 it had boosted its average daily rate to 3.85 MGD and had peaked at a withdrawal rate of 5.35 MGD.

In 1972, Delaware informed Artesian that ground water contamination had been discovered in the vicinity of the Llangollen Wellfield. In 1973, to prevent migration of the pollution, the state curtailed Artesian's withdrawals from that field, limiting the company to 2.0 MGD. In 1980, the state formally authorized Artesian to withdraw 2.0 MGD.

The most likely source of the contamination is the county's Army Creek Landfill located approximately 3,000 feet north-northeast of the Llangollen field. In the past, this site had been used as a solid waste disposal facility. Another inactive landfill, owned by the Delaware Sand and Gravel Company, sits several hundred feet to the east. It contains industrial and municipal waste. Both dumps appear on the EPA's National Priority List -- a register compiled by the federal agency to rank the disposal sites posing substantial risks of danger to public health and welfare. The record before us does not establish whether the contamination originated solely at the county's landfill, Delaware Sand & Gravel's site, or at both.

By early 1974, the county had installed a containment system utilizing a network of wells adjacent to the Army Creek Landfill. Because of the nature of an aquifer supply system, contamination may be intercepted before it reaches a "down stream location." By constructing a "ground water divide" that acts as a hydraulic barrier, the county has been able to stop the contamination from reaching Artesian's fields. To create this "barrier," however, the county must pump 2.0 MGD from the aquifer sands and then discharge the water via a purification process into the Delaware River. By removing this water before it migrates to the Llangollen Wellfield, the county essentially reduces the total potential gallonage Artesian conceivably could pump from the aquifer.

The containment system is effective because a balance is maintained between the amount of contaminated water the county withdraws "up gradient" and the water Artesian pumps "down gradient" of the dividing point. If Artesian were to pump to the full capacity of its equipment, that balance would be upset and contaminants probably would seep into the Llangollen Wellfield. For that reason, as well as the additional complication of possible salt water intrusion, the state continues to enforce the 2.0 MGD restriction on Artesian.

Since 1972, the county has spent more than $3.8 million designing, implementing, and operating programs to control the leachate from the dumps. Whatever its initial source, the leachate now extends no more than 300 feet from the county landfill and does not intrude into the area in which Artesian's wells are located.

Artesian [Text Deleted by Court Emendation] has been able to provide adequate service to its customers despite the 2.0 MGD withdrawal rate, but claims to be damaged by denial of the opportunity to pump more water. Artesian's alleged losses are (1) costs of monitoring and evaluating the contamination's impact on Llangollen; (2) expense of equipment idled by the pumping restriction; (3) differential costs of temporary replacement water supplies; (4) costs of construction for an inter-connection with neighboring Chester Water Authority to obtain permanent replacement water supplies; and (5) present value of differential costs of purchasing permanent water supplies from the Chester Water Authority until 2008, the last year of the estimated useful life of the Llangollen Wellfield.

In 1976, Artesian filed suit in the Delaware Court of Chancery against New Castle County and other defendants, seeking damages and injunctive relief. The court held that under state law sovereign immunity prevented recovery for damages from the county, but that Artesian might be entitled to injunctive relief if the county had maintained a public or private nuisance. The Vice Chancellor denied the plaintiffs motion for summary judgment, finding that because of the limitation imposed by the state, Artesian did not have an absolute right to use water in excess of 2.0 MGD.

In view of the administrative regulations adopted in 1969 by the state's Water and Resource Commission, the Vice Chancellor concluded that usage rights exercised by Artesian in that year were "grand-fathered" so long as they amounted to a reasonable use of the groundwater." Accordingly, if Artesian's use of 2.35 MGD during that period was reasonable, the utility need not have applied for formal approval. However, the state agency had never made a determination of reasonableness. The Vice Chancellor cautioned, "the reasonable use may be of necessity restricted or even diminished should conditions not foreseen in 1969 require a diminution of plaintiffs reasonable use of the water in order to accommodate the right of others."

Because of the status of the record, the Vice Chancellor declined to rule whether the county could assert that, even though it had caused the contamination, its use of the ground water was reasonable and superseded the rights of the plaintiff. The Vice Chancellor observed that Delaware law does not create an absolute ownership right to groundwater; instead, the state adopts the "reasonable user" rule by which a right of use exists subject to government limitation. The right to use water thus constitutes a "recognizable property interest in the usufructuary rights to groundwater lying below [a landowners] property." The Supreme Court of Delaware refused to entertain an appeal on the sovereign immunity issue, and the Chancery Court case has remained dormant since that time.

In 1983, plaintiff brought the present CERCLA suit in the district court asserting that necessary "response" costs had been incurred and, as owner of the landfill, the county was strictly liable. The district court determined that the county's sovereign immunity was not a defense under CERCLA, but denied recovery because Artesian had not obtained prior governmental approval for the ...


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