Opinion ID: 203878
Heading Depth: 2
Heading Rank: 2

Heading: Analysis of the District Court Proceedings

Text: The district court here was not mindful of the limitations of a preliminary injunction proceeding. A review of the record reveals that the district court impermissibly prejudged the merits of the case at the preliminary injunction stage and, having reached a conclusion as to liability, determined that it was unnecessary to do the full preliminary injunction analysis. This conclusion flows inevitably from the district court's explanation of its preliminary injunction order and its statements in the post-injunction proceedings.
The court began by reciting a number of factual findings. It found that Esso had, until October of 2008, operated the service station [6] and owned one diesel and two gasoline USTs, as well as related pumps, pipelines, and servicing equipment, on the property. In 1992, Esso replaced the existing steel diesel UST with a fiberglass tank, as it did for the two steel gasoline tanks in 1998. In connection with the 1998 replacement of the gasoline USTs, Esso also removed some of the soil surrounding the tanks. The district court expressed concern that lead contamination had potentially occurred during this 1998 tank replacement, finding that the steel tanks had held leaded gasoline for many years before unleaded gasoline became available in 1988. The court stated that Esso's excavation and disposition of the soil and its failure to acknowledge the possibility that the soil was contaminated reflected willful blindness indicative of a potential RCRA violation. Besides the potential for lead contamination, the district court also found that the service station facility and equipment discharged hazardous petroleum-related products and discarded hazardous waste and related contaminants into the surrounding soils and groundwater. The court concluded that Esso had known about the contamination since at least 1993. [7] The court then observed that in November 2001, Esso hired Environmental Resource Technologies (ERTEC) to perform a subsoils evaluation of the site, the results of which became available in November 2003. The report found levels of Total Petroleum Hydrocarbon (TPH) of 3,290 mg/kg in the soil above the groundwater surrounding the diesel tank, which exceeded the acceptable 100 mg/kg limit set by EQB. The report further recommended that the diesel tank and pipeline be tested in accordance with EQB regulations, a test which, the court found, was never performed. In September 2006, Esso again hired ERTEC, this time to perform an assessment known as a Phase II Environmental Evaluation. The ensuing report indicated that the groundwater below the service station was contaminated with benzene, [8] a hazardous petroleum-related hydrocarbon which is heavily regulated by the EPA due to its known carcinogenic properties. [9] The court noted that, although federal regulations establish a Maximum Contaminant Level (MCL) for benzene of 5 mg/l in groundwater and .5 mg/l in drinking water, the Phase II report revealed concentrations as high as 2,800 mg/l. The report concluded that the contamination was apparently related to discharges emanating from the southeast area of the site, where the USTs are located, and the northeast area, which contains the grease traps. According to the district court, a review of the EQB UST Program File for the Dolores Service Station confirmed that Esso had never reported the contamination documented in the Phase II report to the EQB, and this non-reporting likely explained why the station was not listed in the EQB's Leaking Underground Storage Tank facility list. The court determined that Esso had never conducted the tests required to investigate the extent of the petroleum-related contamination or performed an organic lead analysis on the property. For this reason, the court concluded that Esso had distanced itself from its duty to confront the contaminated status of the property and ha[d] only taken bland mitigation measures, without committing itself to removing the contamination as required. In sum, the court stated that Esso appear[ed] to be in continuous violation[ ] of EQB rules and their federal counterparts, and that Esso's derelict conduct bordered on egregious, reflecting a goal to hopefully duck legal responsibility or have others, such as the Plaintiffs or another incoming petroleum company, deal with the problem generated by Esso's actions. It noted that the costs associated with pre-cleanup studies and actual cleanup can reach astronomical monetary figures, and Esso must bear responsibility as required by law. After making these factual and legal findings, the district court explicitly stated that it saw no need to make a boilerplate exposition of irreparable harm and injunction law, because it is patently clear that this case fit[ ] the most restrictive measure for that remedy. The actual order itself directed the parties to submit recommendations for companies that could perform a comprehensive site assessment before the court further orders Esso to remediate soil and groundwater contamination at the site originating from . . . petroleum-based products dispensed at the service station between 1982 and October 31, 2008. [10] The court then scheduled a hearing to consider the implementation of the comprehensive site assessment at Esso's expense. The order concluded by declaring: In addition, and subject to the results of the scheduled ... hearing, Esso is not only enjoined and restrained from contributing by action or inaction to further environmental contamination at the site, but Esso will be ordered, depending on the results of the Comprehensive Site Assessment, to pay for all necessary testing, corrective actions, and removal of all pollution and contamination within the site and into adjacent areas as previously described.
On December 19, 2008, Esso moved for reconsideration of the preliminary injunction order pursuant to Fed.R.Civ.P. 59, asking the court to modify certain factual findings, including the determination that Esso would be responsible for paying for all of the necessary testing, corrective actions, and removal of contamination within and adjacent to the site. Three days later, at a hearing on December 22, 2008, the court denied Esso's motion for reconsideration without explanation. Also at the December 22 hearing, the district court selected a site assessment team made up of court-approved experts from both sides and ordered that the bills for the work performed be submitted to the court for payment by Esso. Carlos Alvarez, an expert hired by plaintiffs to assist with the site assessment, estimated that the assessment would cost between $50,000 and $75,000, which was consistent with the $75,000 estimate offered by Jose Hernandez, Esso's expert. The court entered a scheduling order indicating that it would meet with counsel and the experts to discuss the comprehensive site assessment on January 15, 2009. On January 14, 2009, the day before the first status conference, Esso asked the court to require plaintiffs, pursuant to Fed.R.Civ.P. 65(c), to post a bond in the amount of $75,000 to cover the anticipated cost of the site assessment. In a written opinion denying the motion issued the next day, the court characterized Esso's request as predicated upon the fact that the court has ordered Esso to pay for the comprehensive site assessment that will let ... the court know the extent of the documented environmental damage caused by Esso's use of the [station] for the sale of gasoline and petroleum-based products for a good number of years. (Emphasis added.) The court stated that it would dispense with security altogether, because the grant of the preliminary injunction carrie[d] no risk of monetary loss for Esso in the face of the documented contamination resulting from Esso's violation of regulatory safeguards designed to prevent environmental contamination and pollution that adversely affect[ed] not only Plaintiff, but the general public. The only issue, the court stated, was the extent of the contamination and the extent of measures to be taken to remedy the situation. Because Esso was liable as a matter of law for any contamination and environmental damage resulting while it had the service station under its direct supervision and control, the court perceived no risk of monetary loss to Esso that would necessitate the posting of a bond: the only issue seem[ed] to be the extent of the liability. Indeed, the court characterized Esso's expenditures associated with the court's effort to fairly determine the extent of Esso's liability (i.e., the site assessment) as de minimis, and stated that they paled in comparison to the public interest in remediating damage to the environment. The district court also denied, on similar grounds, Esso's January 30, 2009 request to stay enforcement of the preliminary injunction pending this interlocutory appeal. The court repeated its conclusion that Esso had violated federal environmental regulations, listing six actions that Esso had failed to take in contravention of those regulations. Finally, the court noted that Esso had participated fully in proceedings to fashion interim measures, (presumably a reference to the comprehensive site assessment). It thus found the stay motion to be a belated delay tactic employed in bad faith.
We acknowledge that the district court used some qualifying language in its various opinions. It occasionally described Esso's conduct as apparent violations, stated that the injunction hearing had yielded a limited record, and characterized the nature of the relief it awarded as preliminary. Additionally, as we have mentioned, in response to our ruling on Esso's emergency Motion to Stay, the district court issued a Notice stating that it was never its intention to require Defendant to undertake any remedial measures in advance of the preparation of a remedial plan, except as may become necessary to remedy any emergent threat to human health or safety. Nevertheless, the court failed to amend the injunction order itself, which remained intact, and the court's nominal references to the preliminary nature of the proceedings do not undermine the overwhelming impression, conveyed by the portions of the record quoted above, that the court has already conclusively resolved the liability issue against Esso. The result was a de facto consolidation, without notice, which we cannot condone. See, e.g., T.M.T. Trailer Ferry, Inc. v. Union De Tronquistas De P.R., Local 901, 453 F.2d 1171, 1172 (1st Cir.1971)(even where there was no indication that [a party] would have produced further testimony if notified earlier that the entire case would be disposed of after the preliminary injunction hearing, this did not sanction the court in changing, sub silentio, the nature of the game at halftime). The evidence of the court's conclusive determination of liability is inescapable. In addition to the language used in its findings and the order itself, the district court explicitly refused to consider the other factors of the preliminary injunction analysis, stating that it saw no need to make a boilerplate exposition of irreparable harm and injunction law because it was patently clear that injunctive relief was warranted in this case. The district court's refusal to address these other factors, in contravention of the requirements of Rule 65(d)(1), was a clear error of law. This refusal also confirmed that the court had already decided that the plaintiffs had prevailed on the merits, not merely that they were likely to do so. That same conclusive determination of liability pervades the court's denial of Esso's request for a bond: The comprehensive site assessment that has been ordered is the only way in which the court will be able to determine the extent of Esso's liability, and the cost of such studies cannot serve as a basis for a claim of probable loss or monetary loss to Esso. No material damage to Esso will result from this litigation, where the only issue seems to be the extent of the liability. Here again the court announces that Esso's liability for the pollution at issue, whatever its scale, has been decided in the preliminary injunction proceedings. As we have described, the purpose of a preliminary injunction is to preserve the status quo before the merits have been resolved. Certainly, the traditional fourpart inquiry requires that a court make some assessment of the plaintiffs' likelihood of success on the merits. But these assessments should only aid the court in deciding whether some type of interim relief is necessary. Ultimate findings of liability should be made only after all parties have had ample opportunity to employ the liberal discovery processes offered by the Federal Rules and to otherwise prepare the matter in detail for presentation to [the] Court in a manner conducive to sound and deliberate legal determination. School Dist. of Omaha, 367 F.Supp. at 194; Benson Hotel Corp., 168 F.2d at 698. Despite plaintiffs' representations to the contrary, Esso has not yet had that opportunity. Because the court's ultimate findings of liability were made before Esso had the benefit of the process which it was due, [11] the injunction, as issued, cannot stand. [12]