United States v. PR Industrial Development Co.

United States Court of Appeals
For the First Circuit
No. 19-1874
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.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Francisco A. Besosa, U.S. District Judge]
Before
Lynch and Selya, Circuit Judges,
and McCafferty,* District Judge.
* Of the District of New Hampshire, sitting by designation.
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.
November 17, 2021
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LYNCH, Circuit 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, 140 S. Ct. 1335, 1352 (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).
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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.
1 PRIDCO concedes that the other prongs have been met.
2 PRIDCO does not contest in this appeal the district
court's determination that PRIDCO failed to meet its burden as to
the innocent landowner defense. See 42 U.S.C. § 9607(b)(3).
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I.
A. Legislative Background
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. 559,
602 (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 (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
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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).
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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).
B. The Facts
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.
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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.
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The EPA commenced a preliminary investigation of the
Site in 2005, and its test results confirmed those of PRASA. The
EPA began investigating PRIDCO, among others, as a potential source
of the contamination. The agency added the "Maunabo Area Ground
Water Contamination Superfund Site" to the National Priorities
List in 2006.3 71 Fed. Reg. 56399, 56403 (Sept. 27, 2006).
Based on extensive groundwater testing, the EPA
concluded that the Site contained three distinct plumes of
contaminated groundwater. The EPA identified one contaminated
plume as the "cis-1,2-DCE plume" (or the "PRIDCO Plume"), which is
present under the surface of PRIDCO's property and extends
downgradient towards Maunabo Well #1. The data shows that the
PRIDCO Plume contains high concentrations of TCE and cis-1,2-DCE,
a degradation product of TCE. The EPA reports show there are no
test results which have detected these two contaminants on the
Property in the soil directly above the PRIDCO Plume. Those same
reports state that "[t]he configuration of the cis-1,2-DCE plume
indicates that a release of Site-related contaminants . . .
occurred at or near the [PRIDCO] property." That is where cis-
1,2-DCE "exceed[ed] the groundwater screening criteria." The
parties agree the contamination is not naturally occurring.
3 The National Priorities List is a compilation of the
most contaminated sites in the United States. See 40 C.F.R.
§ 300.425.
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In 2012, the EPA completed its Final Remedial
Investigation/Feasibility Study Report, solicited and considered
public comments on a proposed response plan, and held a public
meeting on the matter. PRIDCO participated in the comment period
by contesting its designation as a PRP. PRIDCO otherwise did not
challenge the proposed response plan. The EPA rejected PRIDCO's
concerns because "site related contamination was detected in the
groundwater on the [PRIDCO] property and immediately downgradient
[thereof]," which follows the direction the groundwater flows.
After studying the environmental conditions at the Site,
evaluating various cleanup options, and considering the public
comments, the EPA issued the ROD in 2012. The EPA concluded that
the "site-related groundwater data contamination . . . does pose
a significant threat to human health or the environment; therefore,
remediation is necessary." The EPA conducted a comparative
analysis of alternative remedies, which it summarized in the ROD.
As to the remedy for the PRIDCO Plume, the EPA evaluated "monitored
natural attenuation" and "air sparging/soil vapor extrusion"
remedies, among others, based on the nine criteria for evaluation
set forth in 40 C.F.R. § 300.430(e)(9). The EPA describes
monitored natural attenuation as routine monitoring of
biodegradation in the plume used to assess the rate at which
contamination levels are decreasing naturally. The agency
characterizes the air sparging remedy as an active treatment which
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would accelerate the reduction of the PRIDCO Plume contaminant
concentrations to protect the area's drinking water supply.
The ROD selected the air sparging remedy for the PRIDCO
Plume, noting that the remedy would "serve to reduce the
concentration of contaminants in groundwater being drawn into the
Maunabo [Well] #1, providing protection of human health." The ROD
further reported that the air sparging remedy would "provide the
greatest permanent mass reduction of contamination within the cis-
1,2-DCE plume within the shortest period of time." It rejected
the remedy of monitored natural attenuation, explaining that,
"[i]f natural attenuation does not occur within a reasonable time
frame, there is the potential that the concentrations [of
contaminants would increase and] enter the Maunabo [Well] #1 in
the future, potentially impacting human health." The EPA also
noted that "the total volume of contaminated groundwater . . .
might increase if natural attenuation processes are unable to
contain the plume."
At the time the judgment appealed from was entered, the
air sparging system had not been constructed.4
4 The EPA has since completed construction of the air
sparging system and is now operating the remedy.
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C. The Procedural History
In 2015, the United States initiated this action against
PRIDCO, seeking reimbursement for the response costs incurred by
the EPA in connection with the PRIDCO Plume. PRIDCO filed a third-
party complaint against other PRPs, namely, some of the tenants
that occupied and operated the Property during the relevant time
period and their insurers.5 On the United States' motion, the
trial proceedings were then trifurcated into liability, cost, and
contribution phases.
The United States moved for summary judgment as to
liability in July 2017 ("Phase I motion"). PRIDCO opposed the
motion and requested the deferral of its consideration under
Federal Rule of Civil Procedure 56(d) pending further expert
analysis of the contested source of the contamination found at the
Property. In a 43-page opinion and order entered in December 2017,
the district court granted in part and denied in part the Phase I
motion, and denied PRIDCO's request to defer the motion's
resolution. PRIDCO I, 287 F. Supp. 3d at 137. The court held
that the United States had met its burden, on the undisputed facts,
to establish PRIDCO's prima facie liability. Id. at 141, 145. It
also held that additional expert analysis on this issue was
unnecessary. Id. at 139. The court reasoned that "identifying
5 None of these parties have participated in this
appeal.
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the source of contamination is immaterial to the prima facie
liability analysis" when, as here, unnatural hazardous substances
are found on the defendant's property. Id. at 139; see id. at
144. Subject to a few narrow exceptions, the court explained,
CERCLA imposes strict liability on any property owner whose
groundwater is contaminated, regardless of fault. Id. at 144.
The court added that CERCLA places the burden on the property owner
to show a lack of causation as an affirmative defense or exception.
See id. at 147–49.
In the same opinion, the district court denied the United
States' Phase I motion as to PRIDCO's innocent landowner defense
and contiguous property owner exception. Id. at 147–49. The court
permitted the United States to renew this challenge to the defense
and exception after the completion of discovery. Id. at 148–49.
Following discovery, PRIDCO and the United States filed
cross-motions for summary judgment as to the innocent landowner
defense and contiguous property owner exception. PRIDCO II, 368
F. Supp. 3d at 329–30, 333. The United States also sought summary
judgment as to the amount of response costs owed by PRIDCO ("Phase
II motion") and moved to limit the scope of judicial review of the
remedy selected. Id. at 333. In another opinion and order, the
district court granted summary judgment in favor of the United
States for each defense and exception. Id. at 334–35. The court
concluded that PRIDCO fell short of its burden to establish as a
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triable issue that an unrelated third party was the sole cause of
the contamination. Id. at 335–36. The court denied without
prejudice the United States' motion to limit the scope of judicial
review and ordered the United States to provide further information
on the issue of costs. Id. at 343.
A few months later, the United States filed a
Supplemental Report clarifying its cost calculation. In a third
opinion and order, the district court granted the United States'
Phase II motion. PRIDCO III, 386 F. Supp. 3d at 165. The court
noted that the cost calculation for the motion represented only
past costs because the EPA had yet to commence the selected remedy
for the Site, but that PRIDCO would be liable for all future costs,
as well. Id. at 167. Reviewing the administrative record, the
court also concluded that the EPA's removal and remedial actions
were consistent with the national contingency plan. Id. at 169–
70.
On July 17, 2020, the district court entered an amended
final judgment, awarding the United States approximately $5.5
million in past response costs and declaring the United States'
entitlement to future response costs consistent with the national
contingency plan.6 PRIDCO appeals from that judgment. Phase III
6 The judgment was not docketed until July 23, 2019.
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of the litigation -- that is, the contribution phase -- has been
stayed pending appeal.
II.
Orders granting summary judgment are reviewed de novo,
"drawing all reasonable inferences in favor of the non-moving
party." Pac. Indem. Co. v. Deming, 828 F.3d 19, 23 (1st Cir. 2016)
(internal citation omitted). Those inferences are drawn based "on
the record as it stands, not on litigants' visions of what the
facts might some day reveal." Finamore v. Miglionico, 15 F.4th
52, 58 (1st Cir. 2021) (quoting Maldonado-Denis v. Castillo-
Rodriguez, 23 F.3d 576, 581 (1st Cir. 1994)).
Summary judgment is appropriate when there is no
genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law. Arabian Support & Servs. Co. v.
Textron Sys. Corp., 943 F.3d 42, 47 (1st Cir. 2019). A genuine
issue exists if "a reasonable jury could resolve the point in favor
of the nonmoving party." Finamore, 15 F.4th at 58 (quoting
McCarthy v. Nw. Airlines, Inc., 56 F.3d 313, 315 (1st Cir. 1995)).
A fact is material if "it possesses the capacity, if determined as
the nonmovant wishes, to alter the outcome of the lawsuit under
the applicable legal tenets." Id. (quoting Roche v. John Hancock
Mut. Life Ins. Co., 81 F.3d 249, 253 (1st Cir. 1996)).
Review of questions concerning the interpretation of
CERCLA is de novo "with appropriate deference given to agency
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interpretations." JG-24, 478 F.3d at 32. A court considering
issues raised as to the EPA's actions "shall uphold the [EPA's]
decision in selecting the response action unless the objecting
party can demonstrate, on the administrative record, that the
decision was arbitrary and capricious or otherwise not in
accordance with law." 42 U.S.C. § 9613(j)(2).
A. Prima Facie Liability
PRIDCO first challenges the district court's entry of
summary judgment on prima facie liability in favor of the United
States. PRIDCO argues that there remain genuine issues regarding
the United States' prima facie case -- specifically whether there
was a "release" of hazardous substance from the Property -- thereby
precluding summary judgment. We disagree.
CERCLA states that: "the owner and operator of a . . .
facility . . . from which there is a release, or threatened release
which causes the incurrence of response costs, of a hazardous
substance, shall be liable . . . ." 42 U.S.C. § 9607(a); see
Dedham Water, 889 F.2d at 1151 n.4 (explaining that the phrase
"from which there is a release, or threatened release" modifies
all four subparagraphs in section 9607(a)). Subject only to narrow
affirmative defenses or exceptions set forth in 42 U.S.C.
§ 9607(b), (q), the statute imposes strict liability on the owner
of a facility, "without reference to whether [the owner] caused or
contributed to the threat of release." Id. at 1152–53; see also
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Acushnet Co. v. Mohasco Corp., 191 F.3d 69, 74 (1st Cir. 1999)
("By and large, a person who falls within one of the four
categories defined in § 9607(a) is exposed to CERCLA liability.");
Niagara Mohawk Power, 596 F.3d at 120 ("[P]roperty owners are
strictly liable for the hazardous materials on their property,
regardless of whether or not they deposited them there.").
To establish a prima facie case against an owner under
§ 107(a) of CERCLA, the United States has the burden to prove only
that the Property constitutes a "facility" as defined by 42 U.S.C.
§ 9601(9); PRIDCO owns the facility, id. §§ 9601(20), 9607(a);
"there was a release, or threatened release . . . of a hazardous
substance" from the facility, id. §§ 9601(14), (22), 9607(a); and,
as a result, the United States incurred response costs "not
inconsistent with the national contingency plan," id. §§ 9601(23)–
(25), 9607(a). Because PRIDCO owns the facility at issue, the
United States can establish PRIDCO's liability based on a "release"
of hazardous substances from that facility. See 42 U.S.C.
§ 9607(a). By contrast, CERCLA requires proof of a "disposal" to
hold the other three classes of PRPs (i.e., past owners and
operators, arrangers, and transporters) liable. See id.CERCLA defines a "release" as "any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing into the environment."
42 U.S.C. § 9601(22) (emphasis added). A "disposal," which is
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defined more narrowly by the Solid Waste Disposal Act of 1965, is
"the discharge, deposit, injection, dumping, spilling, leaking, or
placing of any solid waste or hazardous waste into or on any land
or water . . ." 42 U.S.C. §§ 6903(3), 9601(29).
Unlike "disposal," courts have construed the definition
of "release" broadly, see Dedham Water, 889 F.2d at 1152, and to
include passive migration into the environment, see United States
v. CDMG Realty Co., 96 F.3d 706, 715 (3d Cir. 1996) (concluding
that Congress used the term "leaching" in its definition of
"release" but not of "disposal" to include passive migration only
for the former); ABB Indus. Sys., Inc. v. Prime Tech., Inc., 120
F.3d 351, 358 (2d Cir. 1997) (same). The term "environment"
includes "ground water" and "drinking water supply." 42 U.S.C.
§ 9601(8)(B).
As the owner of the Property, PRIDCO is clearly prima
facie liable due to the undisputed presence of hazardous substances
in its "ground water." 42 U.S.C. § 9601(8). On these facts,
evidence of soil contamination is not required. The undisputed
evidence is that the groundwater on PRIDCO's property (and within
its "facility," see PRIDCO I, 287 F. Supp. 3d at 142) is
contaminated with at least two hazardous substances: TCE and cis-
1,2-DCE. 40 C.F.R. § 302.4. This contaminated groundwater is
included within the statutory definition of "environment," 42
U.S.C. § 9601(8), in addition to constituting part of PRIDCO's
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"facility" in this case. Because groundwater flows and is not
static, the hazardous substances have migrated "from" the
groundwater in the facility, to the groundwater in the environment,
constituting a release.7
If that were not enough, the undisputed existence of a
contaminated groundwater plume under PRIDCO's property that has
migrated towards and been "intercept[ed]" by the Maunabo Well #1
drinking water supply clearly establishes the release element.
The undisputed evidence that the PRIDCO Plume extends to the
downgradient Maunabo Well #1 drinking water supply shows further
migration into the environment. Tests conducted by PRASA in 2002
discovered that the groundwater associated with the well contained
TCE and cis-1,2-DCE, the same hazardous substances detected in the
PRIDCO Plume. Additional tests detected these contaminants in the
tap water of PRASA's customers between 2001 and 2004.
PRIDCO's arguments to the contrary lack merit. PRIDCO
focuses on the United States' allegation that the release occurred
"at" PRIDCO's property, rather than "from" it as stated by the
statute. This argument is misplaced. It is the statute that
governs here, not the language used by the United States in its
7 Although PRIDCO asserts this argument is waived because
it was not raised in the district court, "[w]e are at liberty to
affirm a district court's judgment on any ground made manifest by
the record, whether or not that particular ground was raised
below." United States v. George, 886 F.3d 31, 39 (1st Cir. 2018).
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pleadings. As just explained, the undisputed evidence satisfies
the "release" element as provided in the statute.
PRIDCO further argues that the use of the word "from" in
§ 107(a) of CERCLA requires the United States to identify the
source of the contamination to establish a prima facie release.
That is also incorrect.8 Nothing in the statute indicates the
United States has this burden of proof. See Dedham Water, 889
F.2d at 1152; cf. Cnty. of Maui v. Hawaii Wildlife Fund, 140 S.
Ct. 1462, 1473 (2020) (explaining, in the context of groundwater
pollution under the Clean Water Act, that "the specific meaning of
the word 'from' necessarily draws its meaning from context").
Section 107(a) sets forth the four elements the United States must
prove to establish its prima facie case. The United States has
8 Because the United States was not required to prove the
source of contamination at the liability phase, the district court
did not abuse its discretion by denying PRIDCO's request under
Fed. R. Civ. P. 56(d) to defer the resolution of the United States'
Phase I summary judgment motion until the source was identified.
PRIDCO I, 287 F. Supp. 3d at 139; see Hicks v. Johnson, 755 F.3d
738, 743 (1st Cir. 2014) ("We reverse denials of Rule 56(d) motions
only upon a clear showing of manifest injustice" where, at the
least, the party opposing summary judgment proves likely "to garner
useful evidence from supplemental discovery." (internal quotation
marks and citations omitted)). Further, by the time Phase I
summary judgment was entered, the case had been pending for more
than two years and the investigation of the Site had been
proceeding for nearly a decade. PRIDCO provides no reason why it
did not, or could not, conduct its own investigation of the Site
to determine the source of contamination.
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shown all four elements. Nothing in the provision's text requires
the United States also to identify the contaminant's source.
Further, nothing in § 107(a) of CERCLA limits liability
only to those who own facilities from which the contamination
originated. Rather, CERCLA holds strictly liable any owner of a
"facility" "from which there is a release, or threatened release
. . . ." 42 U.S.C. § 9607(a). The statute extends liability
wherever a hazardous substance both has "come to be located" on a
property, id. § 9601(9) (defining "facility"), and has threatened
to escape into the environment, see id. § 9601(22) (defining
"release"). As the Second Circuit has recognized, under CERCLA,
"property owners are strictly liable for the hazardous materials
on their property, regardless of whether or not they deposited
them there." Niagara Mohawk Power, 596 F.3d at 120.9
The legislative history further supports this position.
As we observed in Dedham Water Co. v. Cumberland Farms Dairy, Inc.,
9 PRIDCO's cite to the "Final Policy Toward Owners of
Property Containing Contaminated Aquifers" memorandum issued by
the EPA in 1995 does not help its claim. 60 Fed. Reg. 34790 (July
3, 1995). That policy has since largely been codified in the
statute as the contiguous property owner exception. See 42 U.S.C.
§ 9607(q); S. Rep. No. 107–2, at 9–10 (2001) (stating that the
statutory contiguous property exception "is similar to EPA
guidance" of 1995 which "clarifies that EPA will not bring
enforcement actions against owners of property that has been
impacted by contaminated groundwater migrating from a neighboring
facility"). We analyze this statutory exception infra, mentioning
it here only to note that it does not relieve PRIDCO of prima facie
liability.
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that history shows that the original CERCLA House bill required a
causal connection between a PRP and a release, but that "this
causation language was deleted from the final bill that was
passed." 889 F.2d at 1152–53 (citing H.R. Rep. No. 96–1016, at 33
(1980), reprinted in 1980 U.S.C.C.A.N. 6119, 6136–37; and H.R.
7020, 96th Cong. 2d Sess. § 3071(a)(1)(C) (1980), 126 Cong. Rec.
26, 779, reprinted in 2 A Legislative History of CERCLA, at 39
(1983)); see 42 U.S.C. § 9607(a). "[T]he statute that was passed
imposed liability on classes of persons, i.e. owners, former
owners, generators, or transporters, without reference to whether
they caused or contributed to the threat of release." Dedham
Water, 889 F.2d at 1153 (internal citation omitted). Later
legislative history also notes that, "[u]nder CERCLA, [landowners]
can be held liable for the entire cost of cleanup, even if . . .
innocent," in the sense that they are not the source of
contamination. S. Rep. No. 107-2, at 2 (2001). This history
supports the district court's conclusion that "identifying the
source of contamination is immaterial to the prima facie liability
analysis." PRIDCO I, 287 F. Supp. 3d at 139.
B. Contiguous Property Owner Exception
There was no error in the district court's holding that,
on the undisputed facts, PRIDCO had not met its burden to show the
contiguous property owner exception. PRIDCO bore the burden to
establish the exception "by a preponderance of the evidence." 42
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U.S.C. § 9607(q)(1)(B); Atl. Richfield, 140 S. Ct. at 1356. This
burden requires PRIDCO to satisfy eight statutory requirements, of
which we highlight the following:
(A) [The person] owns real property that is
contiguous to or otherwise similarly situated
with respect to, and that is or may be
contaminated by a release or threatened
release of hazardous substance from, real
property that is not owned by that person
. . .
(i) the person did not cause, contribute,
or consent to the release or threatened
release; [and]
(ii) the person is not--
(I) potentially liable, or affiliated
with any other person that is potentially
liable, for response costs at a facility
through any direct or indirect familial
relationship or any contractual,
corporate, or financial relationship
(other than contractual, corporate, or
financial relationship that is created by
a contract for the sale of goods or
services); or
(II) the result of a reorganization of a
business entity that was potentially
liable.10
10 The other criteria are as follows:
(iii) the person takes reasonable steps to--
(I) stop any continuing release; (II) prevent
any threatened future release; and
(III) prevent or limit human, environmental,
or natural resource exposure to any hazardous
substance released on or from property owned
by that person; (iv) the person provides full
cooperation, assistance, and access to persons
that are authorized to conduct response
actions or natural resource restoration at the
vessel or facility from which there has been
a release or threatened release (including the
cooperation and access necessary for the
installation, integrity, operation, and
maintenance of any complete or partial
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§ 9607(q)(1)(A). As the United States argues, PRIDCO is required
to establish each requirement. PRIDCO has not done so.
PRIDCO has failed to establish a genuine dispute as to
whether it is affiliated with whoever caused the contamination.
PRIDCO's expert witness, Eng. Raúl Colón Vicenty, opines that,
given the absence of detected contaminants in the soil at the
Property, it is not "likely" that PRIDCO caused or contributed to
response action or natural resource
restoration at the vessel or facility);
(v) the person -- (I) is in compliance with
any land use restrictions established or
relied on in connection with the response
action at the facility; and (II) does not
impede the effectiveness or integrity of any
institutional control employed in connection
with a response action; (vi) the person is in
compliance with any request for information or
administrative subpoena issued by the
President under this chapter; (vii) the person
provides all legally required notices with
respect to the discovery or release of any
hazardous substances at the facility; and
(viii) at the time at which the person
acquired the property, the person--(I)
conducted all appropriate inquiry within the
meaning of section 9601(35)(B) of this title
with respect to the property; and (II) did not
know or have reason to know that the property
was or could be contaminated by a release or
threatened release of one or more hazardous
substances from other real property not owned
or operated by the person.
42 U.S.C. § 9607(q)(1)(A). The statute also specifies certain
actions that a contiguous property owner need not take where the
hazardous substance migrates solely through the groundwater. See
id. § 9607(q)(1)(D).
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the contamination found in the groundwater. We assume, without
deciding, that this expert opinion creates a genuine dispute of
material fact as to whether PRIDCO "cause[d]" or "contribute[d]"
to the release. Id. § 9607(q)(1)(A)(ii).
Regardless, PRIDCO's assertion of the contiguous
property exception fails for the separate reason that it has not
shown an ability to prove it is unaffiliated with any other PRP,
as required by the second requirement, 42 U.S.C.
§ 9607(q)(1)(A)(ii). PRIDCO contends that it does not own the
neighboring property from which PRIDCO asserts the contamination
originated. But PRIDCO has failed to identify the actual cause of
the release. PRIDCO has not identified what person or entity
disposed of the hazardous substances on that property. Instead,
PRIDCO's expert merely opines that it was "possible" that dumping
occurred "at or nearby" the neighboring property. When asked who
dumped the hazardous substances, the expert replied: "Who knows.
I don't know." We cannot say that PRIDCO is unaffiliated with the
responsible party without knowing with whom or what PRIDCO is to
be deemed unaffiliated. Because PRIDCO bears the burden to
disprove its association with the responsible party by a
preponderance of the evidence, id. § 9607(q)(1)(B), and has failed
to create a triable issue on the matter, the district court's
conclusion was correct.
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C. The Selected Remedy Was Not Arbitrary and Capricious
PRIDCO finally contends that the district court abused
its discretion by "de facto" granting the United States' motion to
limit the scope of review by failing to consider at Phase II
materials falling outside of the EPA's administrative record.
PRIDCO argues that, due to that "de facto" grant, it was prevented
from challenging the EPA's selection of the air sparging remedy
which PRIDCO asserts was arbitrary and capricious. PRIDCO again
misrepresents the record. There was no claimed "de facto" grant.
Under CERCLA, a responsible party is liable for "all
costs of removal or remedial action incurred by the United States
. . . not inconsistent with the national contingency plan." 42
U.S.C. § 9607(a)(4)(A). Consistency of the EPA's response actions
with the national contingency plan is presumed. City of Bangor v.
Citizens Commc'ns Co., 532 F.3d 70, 91 (1st Cir. 2008).
"[J]udicial review of any issues concerning the adequacy of any
response action taken or ordered by the [EPA] shall be limited to
the administrative record." 42 U.S.C. § 9613(j)(1).
i. The Court's Review of the Remedy Selection
Was Properly Limited to the Administrative
Record
PRIDCO first argues the district court abused its
discretion at Phase II by "de facto" granting the United States'
motion to limit the scope of review of the remedy selection. The
United States specifically sought to exclude the opinion of
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PRIDCO's expert, Dr. Konrad J. Banaszak, as to the air sparging
remedy; the opinion was submitted six years after the remedy was
selected and the ROD was completed. On March 25, 2019, the
district court denied the United States' motion without prejudice.
See PRIDCO II, 368 F. Supp. 3d at 343. The United States never
renewed the motion and the district court did not thereafter
expressly grant it. PRIDCO argues the motion was "de facto"
granted in the court's May 2019 summary judgment opinion and order
because, in that opinion, the court did not consider materials
falling outside the EPA's administrative record. See PRIDCO III,
386 F. Supp. 3d at 169–70. Relevant here, the district court
stated that, generally, judicial review of the agency's response
action "is limited to the administrative record." Id. (citing 42
U.S.C. § 9613(j)).
PRIDCO's argument is based on the contention that the
court was obligated on these facts to go outside that record to
review the selected removal and remedial actions taken by the EPA.
Ordinarily, courts do not do so and this case presented no occasion
to diverge from that standard practice. 42 U.S.C. § 9613(j)(1);
id. § 9613(j)(2) ("In considering objections raised in any judicial
action under this chapter, the court shall uphold the [EPA's]
decision in selecting the response action unless the objecting
party can demonstrate, on the administrative record, that the
decision was arbitrary and capricious." (emphasis added)); see
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also Liston v. Unum Corp. Officer Severance Plan, 330 F.3d 19, 23
(1st Cir. 2003) (precluding supplementation of an administrative
record, reasoning "how could an administrator act unreasonably by
ignoring information never presented to it?"). The EPA in this
case had compiled an administrative record that was made available
to the public and contained the agency's studies, investigations,
review of public comments, and comparative analysis of alternative
response actions.
PRIDCO challenges this conclusion, arguing that this
case warrants the review of extra-record materials as to remedy
selection because post-ROD studies were considered at the
liability phase. This is incorrect. Admissibility at the
liability stage is governed by the Federal Rules of Evidence.
Challenges to the EPA's selected response action(s) are subject to
§ 113(j) of CERCLA. Subject to narrow exceptions not presented
here, § 113(j)(1) limits judicial review of the EPA's response
action(s) to the administrative record. See 42 U.S.C.
§ 9613(j)(1); JG-24, 478 F.3d at 34 ("Normally, we do not allow
supplementation of the administrative record unless the proponent
points to specific evidence that the agency acted in bad faith.");
Olsen v. United States, 414 F.3d 144, 155–56 (1st Cir. 2005)
(stating a limited exception for "failure to explain
administrative action as to frustrate effective judicial review."
(internal quotation marks and citation omitted)). The district
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court did not abuse its discretion by adhering to the express
limits of review set forth in § 113(j). See JG-24, 478 F.3d at33–34 ("Under CERCLA, judicial review normally is limited to the
administrative record as it existed at the time of the challenged
agency action.").
ii. The EPA Adequately Considered Alternative
Remedies
PRIDCO argues the EPA's selection of the air sparging
remedy was arbitrary and capricious because there was inadequate
consideration of alternative remedies in the ROD. PRIDCO prefers
the less expensive remedy of monitored natural attenuation.
PRIDCO again misrepresents the record. The ROD contains
a six-page discussion of the EPA's various alternatives. That
discussion includes a careful comparative analysis between the air
sparging remedy and monitored natural attenuation, among others,
to determine which remedy would best "protect human health and the
environment." See 40 C.F.R. § 300.430(a)(1)(i) ("The national
goal of the remedy selection process is to select remedies that
are protective of human health and the environment, that maintain
protection over time, and that minimize untreated waste."). The
EPA acknowledged that concentrations of the contaminants were, as
PRIDCO offers, decreasing naturally, and that monitored natural
attenuation would be cheaper to implement. The EPA nonetheless
rejected monitored natural attenuation as the sole remedy for the
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PRIDCO Plume because it found the process insufficiently
protective of human health. The EPA determined that the process
was too slow to protect drinking water supplies -- namely, Maunabo
Well #1 -- within a reasonable timeframe. The EPA also warned
that "the total volume of contaminated groundwater . . . might
increase if natural attenuation processes are unable to contain
the plume."
Based on these findings, the EPA reasonably selected the
active air sparging remedy instead to "accelerat[e] what nature
would do," "promote the degradation in less time," and "remove the
contaminants . . . permanently." This decision was neither
arbitrary nor capricious. See United States v. Ne. Pharm. & Chem.
Co., 810 F.2d 726, 748 (8th Cir. 1986) ("Because determining the
appropriate removal and remedial action involves specialized
knowledge and expertise, the choice of a particular cleanup method
is a matter within the discretion of the EPA.").
III.
The district court's holdings that the United States had
made out its prima facie case against PRIDCO for liability; that
PRIDCO had failed to meet its burden as to the contiguous property
owner exception; and that the United States was entitled to recover
$5,491,278.78 in response costs through February 28, 2018, plus
post-judgment interest, are affirmed. Costs are awarded to the
United States.
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