United States v. Puerto Rico Indus. Dev. Co.
| Decision Date | 17 November 2021 |
| Docket Number | No. 19-1874,19-1874 |
| Citation | 18 F.4th 370 |
| Parties | UNITED STATES of America, Plaintiff, Appellee, v. PUERTO RICO INDUSTRIAL DEVELOPMENT COMPANY, Defendant, Third-Party Plaintiff, Appellant, v. Beckman Coulter, Inc. ; System Engineering Labs, Inc.; Coulter Reagents, Inc; Solar Mat of Puerto Rico Company, Inc.; Puerto Rico Housing Department; Premium Fruit Company, Inc.; Puerto Rico Beverage, Inc.; EIG Agua Pura de Puerto Rico, Inc.; Juan Orozco Ltd., Inc. ; CATPI, Inc.; Orle International Corporation; Municipality of Maunabo; SUNOCO Caribbean, Inc.; Insurer Numbers One - Twelve, Third-Party Defendants. |
| Court | U.S. Court of Appeals — First Circuit |
Juan Rafael González-Muñoz, with whom Juan J. Casillas-Ayala, Diana M. Batlle-Barasorda, and González Muñoz Law Offices, PSC were on brief, for appellant.
Ellen J. Durkee, Attorney, Environment and Natural Resources Division, United States Department of Justice, with whom Jonathan D. Brightbill, Principal Deputy Assistant Attorney General, Eric Grant, Deputy Assistant Attorney General, Anna T. Katselas, Mark A. Gallagher, Richard S. Greene, and Catherine Adams Fiske, Attorneys, Environment and Natural Resources Division, United States Department of Justice, and James Doyle and Henry Guzmán, Attorneys, Office of Regional Counsel, Region 2, United States Environmental Protection Agency, were on brief, for appellee.
Before Lynch and Selya, Circuit Judges, and McCafferty,* District Judge.
In September 2015, the United States brought a civil action under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601 et seq., against Puerto Rico Industrial Development Company ("PRIDCO"), appellant here, as a potentially responsible party ("PRP"). See Atl. Richfield Co. v. Christian, ––– U.S. ––––, 140 S. Ct. 1335, 1352, 206 L.Ed.2d 516 (2020). The United States sought to recover response costs associated with the ongoing cleanup of the Maunabo Area Groundwater Contamination Superfund Site (the "Site"). PRIDCO owns property on the Site which contains elevated levels of hazardous substances in the groundwater (the "Property"). These very same hazardous substances were found downgradient in a public drinking water well run by the Puerto Rico Aqueduct and Sewer Authority ("PRASA").
The district court entered three separate summary judgment opinions and orders against PRIDCO. It first found the United States had established its prima facie case against PRIDCO for liability under CERCLA. See United States v. P.R. Indus. Dev. Co. ("PRIDCO I"), 287 F. Supp. 3d 133, 141 (D.P.R 2017). Next, the district court concluded that PRIDCO had failed to meet its burdens as to the innocent landowner defense set forth in 42 U.S.C. § 9607(b)(3) and the contiguous property owner exception provided in 42 U.S.C. § 9607(q). See United States v. P.R. Indus. Dev. Co. ("PRIDCO II"), 368 F. Supp. 3d 326, 334–37 (D.P.R. 2019). Thereafter, the court held that PRIDCO was liable to the United States for approximately $5.5 million in past response costs and would be liable in future litigation for additional response costs reasonably incurred by the United States. See United States v. P.R. Indus. Dev. Co. ("PRIDCO III"), 386 F. Supp. 3d 162, 167 (D.P.R. 2019). Although the contribution phase remained, in July 2019, the district court entered what it termed the "Amended Final Judgment" to permit the immediate appeal of these orders, citing to Federal Rules of Civil Procedure 54(b) and 58.
PRIDCO appeals from that judgment. PRIDCO's primary appellate argument is that the United States did not satisfy the release prong of § 107(a) of CERCLA, 42 U.S.C. § 9607(a), contending the United States could not succeed on that prong because the record did not show the hazardous substances were released from the surface of the Property.1 PRIDCO also argues that the court erred in finding that PRIDCO had not met its burden to establish the contiguous property owner exception provided in 42 U.S.C. § 9607(q).2 For these and other reasons, PRIDCO argues that the entry of summary judgment and award of response costs against it was error. We disagree, and affirm.
Congress enacted CERCLA in 1980 following the discovery of a large, uncontrolled hazardous waste site in Niagara Falls, New York (Love Canal) and the associated pervasive health problems. Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 120 & n.5 (2d Cir. 2010) (citing S. Rep. No. 96–848, at 8–10 (1980)). CERCLA's purpose is "to address the serious environmental and health risks posed by industrial pollution." Atl. Richfield, 140 S. Ct. at 1345 (internal quotation marks omitted) (quoting Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599, 602, 129 S.Ct. 1870, 173 L.Ed.2d 812 (2009) ). It is designed "to promote the timely cleanup of hazardous waste sites and to ensure that the costs of such cleanup efforts [are] borne by those responsible for the contamination." Id. (alteration in original) (quoting CTS Corp. v. Waldburger, 573 U.S. 1, 4, 134 S.Ct. 2175, 189 L.Ed.2d 62 (2014) ).
The statute has created a comprehensive mechanism for the Environmental Protection Agency ("EPA"), through the President, to investigate and respond to the release of hazardous substances, contaminants, and pollutants into the environment. See 42 U.S.C. § 9601 et seq. ; Atl. Richfield, 140 S. Ct. at 1346 n.1. CERCLA instructs the EPA "to compile and annually revise a prioritized list of contaminated sites for cleanup, commonly known as Superfund sites." Atl. Richfield, 140 S. Ct. at 1346 (citing 42 U.S.C. § 9605). CERCLA empowers the EPA to itself undertake the necessary response measures as to a Superfund site, 42 U.S.C. § 9604(a), as the EPA did here. The EPA is also authorized to sue any PRP(s) to recover "all costs of removal or remedial action incurred by the United States ... not inconsistent with the national contingency plan." Id. § 9607(a); see also id. §§ 9604 – 06, 9615. The statute has enumerated four broad classes of PRPs which "shall be liable" for these costs, including, as relevant here, "the owner and operator of a vessel or a facility ... from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance." Id. § 9607(a).
CERCLA also governs the process by which the EPA selects its response plan. 42 U.S.C. § 9605 ; 40 C.F.R. § 300.400(a). It requires the agency, inter alia, to "establish an administrative record upon which [it] shall base the selection of a response action." 42 U.S.C. § 9613(k)(1). This record "shall be available to the public" during the selection process and its development shall involve the "participation of interested persons, including potentially responsible parties." Id. § 9613(k). The record shall also include the investigations and studies used by the EPA "to assess site conditions and evaluate alternatives to the extent necessary to select a remedy." 40 C.F.R. § 300.430(a)(2), (e) – (f) ; see 42 U.S.C. § 9613(k)(2)(B).
Before adopting a final remedy, the EPA is required to solicit and consider public comments on the proposal. 42 U.S.C. § 9617(a) ; 40 C.F.R. § 300.430(f)(ii). The EPA is then required to document its final remedy selection decision in a Record of Decision ("ROD") "for inclusion in the administrative record." 40 C.F.R. § 300.430(f)(5). The selected remedy shall be "protective of human health and the environment," "maintain protection over time," and "minimize untreated waste." Id. § 300.430(a)(1)(i).
Congress also sets strictures for judicial review of the EPA's actions. Judicial review of the response action(s) taken or ordered by the EPA "shall be limited to the administrative record." 42 U.S.C. § 9613(j)(1). And the EPA's selection of a response action shall be upheld unless, based on this record, it is deemed "arbitrary and capricious or otherwise not in accordance with law." Id. § 9613(j)(2) ; United States v. JG-24, Inc., 478 F.3d 28, 32 (1st Cir. 2007).
PRIDCO is a Puerto Rican public corporation established in 1942 through Act. No. 188 of May 11, 1942, P.R. Laws Ann. tit. 23, § 273, as amended, with a principal purpose of promoting economic development in Puerto Rico through investment. PRIDCO owns industrial property and constructs facilities for lease or sale to qualified investors. PRIDCO has owned the Property, which is the subject of this action, since at least 1968.
The Property is located in the southeastern coastal area of Puerto Rico in the Municipality of Maunabo. The Property contains several buildings or "industrial structures," which have been leased to numerous tenants for decades, as early as 1969. The tenants have used these industrial structures, inter alia, to manufacture modular circuit prints, biomedical and reactive instruments, solar panels, laminated bedroom furniture, fruit juice, guitars, and prefabricated piping for frame walls.
Adjacent to the southern boundary (and downgradient) of the Property is Maunabo Well #1, one of the four groundwater supply wells operated by PRASA in the area. These wells provide drinking water to approximately 14,000 people living in and around Maunabo. Maunabo Well #1 was installed in 1961, retired in 1974, and returned to service in 2001. In the period between 2001 and 2004, tests conducted by PRASA detected elevated levels of volatile organic compounds ("VOCs") -- including tetrachloroethene ("PCE"), trichloroethene ("TCE"), and cis-1,2-dichloroethene ("cis-1,2-DCE") -- in the tap water of its customers from Well #1. Tests in 2002 revealed that the groundwater associated with the well contained the same compounds, with the concentration of PCE exceeding the federal maximum contaminant level. At all times relevant to this case, the EPA has classified these compounds as hazardous substances under CERCLA, and PRIDCO does not dispute the classification. See 40 C.F.R. § 302.4.
The EPA commenced a...
To continue reading
Request your trial