AES Puerto Rico, L.P. v. Trujillo-Panisse

United States Court of Appeals
For the First Circuit
No. 16-2052
AES PUERTO RICO, L.P.,
Plaintiff, Appellant,
v.
MARCELO TRUJILLO-PANISSE, in his Official Capacity as Mayor of
the Municipality of Humacao; MUNICIPALITY OF HUMACAO; WALTER
TORRES-MALDONADO, in his Official Capacity as Mayor of the
Municipality of Peñuelas; MUNICIPALITY OF PEÑUELAS,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Francisco A. Besosa, U.S. District Judge]
Before
Torruella, Lipez, and Barron,
Circuit Judges.
Peter D. Keisler, with whom Ricardo L. Ortiz-Colón, Fiddler
González & Rodríguez, P.S.C., David T. Buente, Samuel B. Boxerman,
Paul J. Zidlicky, Christopher A. Eiswerth, and Sidley Austin LLP
were on brief, for appellant.
Francisco José Medina-Medina, with whom Pedro E. Ortiz-
Álvarez, LLC was on brief, for appellees.
John F. Cooney, Douglas H. Green, Margaret K. Fawal, and
Venable LLP on brief for amici curiae the Utility Solid Waste
Activities Group and the American Coal Ash Association.
May 16, 2017
LIPEZ, Circuit Judge. This case requires us to decide
whether two Puerto Rico municipalities may prohibit the beneficial
use and disposal of coal ash at landfills within their borders
even though a state agency has authorized such activities at those
particular landfills. Appellant AES Puerto Rico, L.P. ("AES-PR"),
a coal-fired power plant owner, claims that the two municipal
ordinances banning the approved handling of "coal combustion
residuals" ("CCRs") are preempted by federal and Commonwealth law
and also violate various provisions of the United States and Puerto
Rico constitutions. The district court granted summary judgment
for the municipalities on AES's federal claims and declined to
exercise jurisdiction over the Commonwealth claims.
After careful review, we conclude that the local
ordinances may not be enforced to the extent they directly conflict
with Commonwealth law as promulgated by the Puerto Rico
Environmental Quality Board ("EQB"). Hence, we reverse the summary
judgment in favor of the municipalities and remand with directions
to the district court to enter judgment for AES-PR based on its
claim of Commonwealth law preemption.
I.
We begin by examining the legal framework that governs
the disposal of CCRs in Puerto Rico. That multi-tiered scheme
consists of (1) federal law, specifically, the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. §§ 6901-
- 2 -
6992k; (2) the Commonwealth's Environmental Public Policy Act,
P.R. Laws Ann. tit. 12, §§ 8001-8007f, the source of the EQB's
authority; and (3) the Autonomous Municipalities Act, P.R. Laws
Ann. tit. 21, §§ 4001-4008, 4051-4058, the source of the
municipalities' authority. We briefly describe each in turn, as
pertinent to our analysis.
A. Federal Law: RCRA
Congress enacted RCRA, "a comprehensive environmental statute
that governs the treatment, storage, and disposal of solid and
hazardous waste," based, inter alia, on its finding that waste
disposal had become a national problem requiring federal
involvement. Meghrig v. KFC W., Inc., 516 U.S. 479, 483 (1996);
see 42 U.S.C. § 6901(a)(4); 42 U.S.C. § 6901(a)(2) (noting the
"rising tide of scrap, discarded, and waste materials"). Despite
the perceived need for federal action, however, Congress affirmed
in RCRA that "the collection and disposal of solid wastes should
continue to be primarily the function of State, regional, and local
agencies." Id. § 6901(a)(4). Hence, RCRA anticipates that
federal, state, and local governments will work cooperatively to
ensure the safe and environmentally appropriate management of
solid waste, and the statute's objectives expressly include
establishment of "a viable Federal-State partnership" to "promote
the protection of health and the environment and to conserve
valuable material and energy resources." Id. § 6902(a)(7), (a).
- 3 -
This cooperative approach applies both to "hazardous
wastes" under RCRA subtitle C, id. §§ 6921-6939g, and to
nonhazardous solid waste under RCRA subtitle D, id. §§ 6941-6949a.
See City of Chicago v. Envtl. Def. Fund, 511 U.S. 328, 331 (1994).
The federal Environmental Protection Agency ("EPA") has classified
CCRs as nonhazardous waste, see 40 C.F.R. § 261.4(b)(4)(i), and,
accordingly, they are regulated under subtitle D. 1 With respect
to such materials, Congress sought to promote methods of disposal
1 In a May 2000 Regulatory Determination, the EPA reaffirmed
its earlier conclusion that coal combustion wastes should not be
regulated as hazardous waste and "decided that it is appropriate
to establish national regulations under non-hazardous waste
authorities for coal combustion wastes that are disposed in
landfills and surface impoundments." Notice of Regulatory
Determination on Wastes from the Combustion of Fossil Fuels, 65
Fed. Reg. 32,214, 32,221, 32,229 (May 22, 2000), 2000 WL 642307.
However, the EPA also stated that regulation was "not warranted"
for most of the beneficial uses of coal combustion wastes, such as
waste stabilization and use in construction products. Id. at
32,214, 32,221.
Ten years later, the EPA announced that it was again
considering whether to regulate CCRs under subtitle C "when they
are destined for disposal in landfills or surface impoundments,"
or to "regulate disposal of such materials under subtitle D of
RCRA by issuing national minimum criteria." Hazardous and Solid
Waste Management System; Identification and Listing of Special
Wastes; Disposal of Coal Combustion Residuals From Electric
Utilities, 75 Fed. Reg. 35,128 (June 21, 2010), 2010 WL 2470432.
The EPA expected to continue excluding most beneficial uses of
CCRs from hazardous waste regulation, however, noting that they
"offer significant environmental benefits." Id. at 35,154.
In April 2015, EPA settled on the subtitle D
classification for coal combustion waste, and it set national
minimum criteria for landfills receiving CCRs for disposal.
Hazardous and Solid Waste Management System; Disposal of Coal
Combustion Residuals from Electric Utilities ("2015 Rule"), 80
Fed. Reg. 21,302 (Apr. 17, 2015), 2015 WL 1734632. Beneficial
uses remained excluded from regulation. Id. at 21,309.
- 4 -
that are "environmentally sound" and maximize the reuse of
recoverable resources. 42 U.S.C. § 6941. To advance those
objectives, states and regional authorities are provided technical
and financial assistance to develop and implement solid waste
disposal plans, consistent with federal guidelines, to be
submitted for EPA approval. Id. §§ 6941, 6943, 6946-47. Among
other requirements, the state plans must "prohibit the
establishment of new open dumps within the State," and require
that solid waste either be used for resource recovery, disposed of
in sanitary landfills, "or otherwise disposed of in an
environmentally sound manner." Id. § 6943(a)(2). Congress
directed the EPA to adopt "regulations containing criteria for
determining which facilities shall be classified as sanitary
landfills," and, under those criteria, "a facility may be
classified as a sanitary landfill . . . only if there is no
reasonable probability of adverse effects on health or the
environment from disposal of solid waste at such facility." Id.
§ 6944(a).
The Commonwealth's plan to regulate the disposal of non-
hazardous solid waste at landfills, approved by the EPA in 1994,
gives the EQB "authority and responsibility for implementing and
enforcing solid waste management regulations, including a permit
program, inspection authority and enforcement activities." 59
Fed. Reg. 44,144, 44,145-46 (Aug. 26, 1994), 1994 WL 460341. The
- 5 -
EPA notice approving Puerto Rico's program stated that the EQB had
adopted comprehensive regulations governing waste disposal
"intended to bring Puerto Rico into full conformity" with federal
specifications, id. at 44,145, and that Puerto Rico's application
showed compliance with "all of the statutory and regulatory
requirements established by RCRA," id. at 44,146. The Commonwealth
was thus "granted a determination of adequacy for all portions of
its municipal solid waste permit program." Id. 2
B. Commonwealth Law: Environmental Public Policy Act
The Environmental Public Policy Act of 2004 designates
the EQB as the agency charged with managing Puerto Rico's response
to federal laws pertaining to "environmental conservation, natural
resources, solid waste, and other matters" related to
environmental quality. P.R. Laws Ann. tit. 12, § 8002g. Among
other functions, the statute authorizes the EQB to (1) "adopt,
promulgate, amend and repeal rules and regulations for solid waste
2 The EPA approval was for Puerto Rico's "municipal solid
waste permit program," 59 Fed. Reg. 44,144, and the regulation
establishing minimum national criteria likewise refers
specifically to "municipal solid waste landfill (MSWLF) units," 40
C.F.R. § 258.1. Although the parties and district court refer to
the landfills at issue in this case as "sanitary" landfills, rather
than MSWLFs, the EQB's authorization for placement of CCRs is based
on the landfills' compliance with "the design and operation
criteria laid down in Title 40, Part 258 of the Code of Federal
Regulations under Subtitle D of the RCRA and [Puerto Rico
regulations]." EQB Resolution No. 14-27-20, Sept. 2, 2014, at 13.
Hence, our analysis presumes the sanitary landfills in this case
are equivalent to MSWLFs.
- 6 -
disposal and establish the sites and methods to dispose of such
solid waste," id. § 8002c(b)(4)(A); (2) "adopt rules and
regulations to establish a permit-awarding and licensing mechanism
that regulates the control of the pollution in the air and water
and by solid waste and noise," id. § 8002c(b)(3)(E); and (3) issue
orders "that, in its judgment, are necessary to achieve the
purposes of [the Act] and the regulations promulgated thereunder,"
id. § 8002c(a)(8).
Under its statutory authority, the EQB adopted State
Regulation No. 5717, which consists of a series of rules governing
the management of non-hazardous solid waste. See P.R. Envtl. Laws
& Regs. No. 5717 ("the 1997 Regulation"). The 1997 Regulation's
purposes include "[t]o establish a program for the design,
construction, operation, closure and post-closure maintenance of
[sanitary landfills] for non-hazardous solid waste." The Rules
specify, for example, where such facilities may be located (Rule
540), design criteria (Rule 541), the minimum personnel and their
training (Rules 543, 544), and the need for a system of ground
water protection and monitoring (Rules 551-558).
A "final resolution or decision" of the EQB is reviewable
"in the manner provided for in the Puerto Rico Uniform
Administrative Procedures Act," and EQB decisions may not be
"stayed, unless so ordered by the Circuit Court of Appeals of
Puerto Rico or by the Governing Board [of the EQB] itself." P.R.
- 7 -
Laws Ann. tit. 12, § 8002c(a)(8); see also id. § 8002f(a)(4)
(providing that "[a]ny person adversely affected by a resolution,
order or decision of the Governing Board [of the EQB] may request
the latter to reconsider its determination or request a review by
the Court of Appeals of Puerto Rico"). Individuals who fail to
comply with EQB resolutions or orders "shall be guilty of a
misdemeanor," id. § 8002j(a), and may be subject to criminal or
administrative fines, damages, and sanctions, id. §§ 8002j(a)-(c).
C. Local Authority: Autonomous Municipalities Act
Puerto Rico's Autonomous Municipalities Act gives local
governments authority to exercise their "legislative and executive
powers in any matter of a municipal nature" to promote "the welfare
of the community and its economic, social and cultural development"
and to protect "the health and safety of the people." P.R. Laws
Ann. tit. 21, § 4051(o). A separate provision vests municipalities
with "the powers that are necessary and convenient to carry out"
some twenty-odd functions, id. § 4054, including to "[e]stablish
solid waste collection services and programs and public sanitation
programs in general, and adopt the standards and measures that are
necessary for the improvement and adequate control and disposal of
waste," id. § 4054(a). This municipal authority is "subject to
applicable legislation," id. § 4051(o), and "subordinate[] to the
Constitution of the Commonwealth of Puerto Rico and to its laws,"
id. § 4003. The required compatibility of local and commonwealth
- 8 -
law also is recognized in a provision that authorizes
municipalities to adopt ordinances regulating "solid waste
collection management," stating that such measures must be "in
harmony with the environmental public policy of the Commonwealth
of Puerto Rico." Id. § 4055.
II.
We now sketch the background of the dispute before us,
drawing liberally from the district court's well-crafted summary.
The facts set forth here are undisputed.
A. Factual Background
1. AES-PR and the Placement of CCRs
AES-PR's coal-fired power plant, located in Guayama,
produces approximately fifteen percent of the electricity used in
Puerto Rico. The Guayama facility imports the coal from Colombia
and, pursuant to a long-term contract, AES-PR sells the electricity
generated at the plant to the Puerto Rico Electric Power Authority
("PREPA").
The combustion of coal produces two types of ash: bottom
ash and fly ash, which are collectively labeled coal combustion
residuals, and referred to as CCRs. AES-PR produces approximately
200,000 to 250,000 tons of CCRs each year, some of which it uses
in a manufactured aggregate product marketed in Puerto Rico under
- 9 -
the trade name AGREMAX ("Agremax"). 3 According to AES-PR, Agremax
has various beneficial uses, including as "structural fill" for
building construction and as "subbase material in road
construction." Agremax also has waste treatment applications; it
can be used to solidify liquid waste, 4 or be placed each day on
top of solid waste in a landfill -- a use known as "daily cover"
-- to prevent the waste materials from spreading. In the latter
role, Agremax substitutes for soil and other natural materials.
See 40 C.F.R. § 258.21(a) (stating that sanitary landfills "must
cover disposed solid waste with six inches of earthen material at
the end of each operating day, or at more frequent intervals if
necessary, to control disease vectors, fires, odors, blowing
litter, and scavenging"); id. § 258.21(b) (allowing the "Director
of an approved State" to approve "[a]lternative materials" for
daily cover).
In September 2014, the EQB Board of Governors issued
Resolution No. 14-27-20 ("the 2014 Resolution") authorizing
disposal of CCRs generated by AES-PR's coal plant at sanitary
landfills approved by the EQB that meet the design and operation
requirements of RCRA's subtitle D and the Commonwealth's 1997
3 Agremax is produced from a mixture of CCRs and water; the
mixture is compressed and allowed to cure, during which time it
hardens into what is generically called "rock ash."
4 Federal law places a number of restrictions on the disposal
of liquid waste in sanitary landfills. See 40 C.F.R. § 258.28.
- 10 -
Regulation. Before a sanitary landfill may begin receiving CCRs
for disposal, however, it must file an application to modify its
operation permit and submit a plan that, at a minimum, includes
"adequate methods to control the material particles and compact
the waste; a description of the safety and protection equipment of
the operators and employees of the facility; a detailed description
of the runoff control system; and a description of the groundwater
monitoring plan." The 2014 Resolution similarly limits the use of
CCRs as daily cover to approved sanitary landfills that meet the
specified requirements, and it likewise requires submission of an
application with an amended operation and emergency plan as a
prerequisite for such use.
AES-PR has contracts with the operators of three
landfills in Puerto Rico -- Peñuelas Valley Landfill and Ecosystems
Peñuelas Landfill in Peñuelas, and El Coquí Landfill in
Humacao -- to provide CCRs, including Agremax, for use as daily
cover, or to solidify non-hazardous liquid waste, or for disposal.
All three landfills are lined, sanitary landfill systems designed
to meet RCRA and EQB specifications. They were issued permits by
the EQB to operate as facilities for the final disposal of non-
hazardous solid waste.
In October 2015, the EQB Board issued Resolution No. 15-
23-1 ("the 2015 Resolution") approving requests by the El Coquí
and Peñuelas Valley landfills to receive CCRs generated by AES-
- 11 -
PR. Specifically, the EQB approved the use of Agremax to solidify
liquid waste in the Peñuelas Valley Landfill and reaffirmed its
prior authorization for the use of other CCRs at that landfill for
the same purpose. The EQB also approved disposal of CCRs,
including Agremax, in both landfills. The 2015 Resolution further
advised the landfills that, if they wished to use Agremax for daily
cover, they needed to apply for a waiver from the EQB by following
the procedures specified in the 1997 Regulation. 5 Several months
later, in January 2016, the EQB also authorized disposal of CCRs,
including Agremax, in the Ecosystems Peñuelas Landfill, and it
similarly directed Ecosystems to follow the procedures specified
by Puerto Rico law if it sought approval for using CCRs for daily
cover. Ecosystems' permit did not authorize liquid waste
solidification with CCRs "because the necessary facilities for
these purposes have not been built."
2. The Humacao and Peñuelas Ordinances
More than two years before the EQB issued its 2015
Resolution, the Municipality of Peñuelas adopted Ordinance Number
13 (the "Peñuelas Ordinance"), and several months later, the
Municipality of Humacao adopted Ordinance Number 21 (the "Humacao
5The Resolution notes that the Humacao landfill's 2013
Operation Plan "listed the materials that the facility would
petition for in a future request for a waiver as materials proposed
as alternate cover." Among the materials listed was "Rock Ash
from the AES generation plant." However, no request for a waiver
had been submitted at the time the Resolution was issued.
- 12 -
Ordinance"), both of which prohibit the placement of CCRs on the
ground within the boundaries of their municipalities, including in
sanitary landfills. 6 Although the ordinances do not prohibit all
uses of CCRs, they bar the disposal and uses that the EQB has
authorized for the El Coquí, Peñuelas, and Ecosystems landfills
because those activities involve depositing CCRs on the ground. 7
Both ordinances reflect particular concern about the
activities of AES-PR and its disposal of the coal ash produced by
6 The Peñuelas ordinance provides, in pertinent part, that
"[t]he use of ashes coming from the burning of coal, in energy
generating plants, as landfill material and its depositing on lands
within the territorial limits of the Municipality of Peñuelas is
forbidden."
The Humacao ordinance prohibits "[a]ny kind of use of the
ash derived from coal combustion in electric power generating
plants . . . as filler material, whether to level the terrain, for
landfills, or in any other kind of filler." Despite the Humacao
ordinance's focus on the use of CCRs as "filler material," the
municipality's administrator testified in his deposition that the
measure prohibits CCRs from being deposited within the
geographical boundaries of Humacao. In addition, defendants'
motion for summary judgment states that the ordinances ban "the
depositing of said CCRs on the ground within the geographical
limits of the Municipalities in question." Although the breadth
of the prohibition does not affect the outcome of this appeal, we
accept the defendants' characterization for purposes of our
analysis. Cf. AES Puerto Rico, L.P. v. Trujillo-Panisse, 199 F.
Supp. 3d 492, 512 (D.P.R. 2016) (noting that the ordinances "allow
CCRs to be bought, sold, and transported in the municipalities so
long as they are not deposited on the ground in the process").
7 Indeed, appellees do not argue -- and did not argue below -
- that their ordinances do not apply to the specific uses of CCRs
authorized by the EQB in those landfills. Although appellees note
that the ordinances do not "pose a complete ban on the use of
CCRs," the uses contemplated by the EQB resolution -- disposal,
alternative daily cover, and waste solidification -- are not among
- 13 -
its coal-fired power plant. In background explanatory clauses,
the ordinances discuss AES-PR's extensive use of coal ash in Puerto
Rico, making explicit reference to Agremax. Both ordinances cite
studies revealing unsafe levels of toxic substances associated
with coal ash deposits and conclude that such deposits present a
threat to the environment and human health. 8
In accordance with the EQB Resolution, AES-PR delivered
Agremax and CCRs in other forms to the landfills. 9 In April 2016,
the Municipality of Humacao responded by fining El Coquí Landfill
for the "[u]se of ash from burning coal." On the same day,
Humacao's mayor sent the landfill a letter asking it to "refrain
those uses that appellees claim the ordinances permit. Nor did
appellees argue in their summary judgment briefing that the
ordinances' prohibition on "depositing of . . . CCRs on the ground"
excludes the three EQB-authorized uses of CCRs.
8 The Humacao ordinance states that "[d]epositing such ash
represents a threat to the environment and the health of people
exposed thereto when it is blown by the wind or when it runs off
into surface and/or underground water." The Peñuelas ordinance
similarly states:
The deposit of ashes as landfill creates toxic
substances situations blown by the wind and
breathed by its inhabitants, which would
entail the suffering of breathing ailments,
possible birth defects and a high percentage
in the pollution of surface and subterranean
water due to the runoff of rain and leaching
to the aquifers.
9 Although AES-PR had previously been depositing CCRs in the
landfills in Humacao and Peñuelas, we focus in this case on its
activities following the EQB's 2015 Resolution.
- 14 -
from receiving coal combustion products or ash . . . regardless of
how such products are being used or under what name you are
receiving it," and stating that the municipality would be "forced
to reconsider" its contractual relationship with the facility if
the practice did not stop. The maintenance manager of the AES-PR
plant reported in an affidavit that, also in April 2016, the
Municipality of Peñuelas "used municipal trucks and other
municipal equipment to physically block the entrance to the
Peñuelas Valley Landfill to prevent the tanker trucks from
delivering AES-PR's CCRs to the Landfill for use to solidify liquid
wastes."
B. Procedural Background
In its complaint against the municipalities of Peñuelas
and Humacao and their mayors, AES-PR asserted that the ordinances
restricting the placement of CCRs violate both federal and
Commonwealth law. Among other contentions, AES-PR argued that the
local laws are preempted by both federal and Commonwealth law
because they prohibit activities involving CCRs that are permitted
by RCRA and explicitly authorized by the EQB. 10 The company alleged
that its "coal combustion products have repeatedly been tested and
10AES-PR's complaint also alleges violations of the federal
Commerce Clause, the Due Process Clauses of the United States and
Puerto Rico constitutions, and the federal and Puerto Rico
Contracts Clauses. The complaint further asserts that the
ordinances are void and ultra vires under Puerto Rico law.
- 15 -
found safe for many applications, including as daily cover for
solid waste landfills, in construction as structural fill, and as
subbase material in road construction." AES-PR's complaint sought
declaratory and injunctive relief, as well as damages.
In May 2015, AES-PR moved for partial summary judgment
on its federal and state preemption claims. The district court
denied the motion, rejecting both preemption theories. 11 The court
held that RCRA does not preempt the ordinances because the federal
law does not indicate a preference for "one type of beneficial use
(such as daily cover) over any other," and the defendants "have
not completely banned CCRs within their boundaries; they simply
have banned one of several possible methods of use or disposal."
AES Puerto Rico, L.P. v. Trujillo-Panisse, 133 F. Supp. 3d 409,
426 (D.P.R. 2015) ("AES-PR I"). With respect to Commonwealth law,
the court "decline[d] to strike down the Ordinances as out of
'harmony' with Commonwealth law, particularly because Commonwealth
law permits both the EQB and municipalities to regulate in this
arena." Id. at 429.
In March 2016, after the close of discovery, AES-PR again
moved for partial summary judgment. The company renewed its
argument that the municipal ordinances were preempted by
11 The court also denied defendants' motion for judgment on
the pleadings, which raised issues of standing, ripeness, and
timeliness. That ruling is not before us.
- 16 -
Commonwealth law, relying in part on the EQB's 2015 Resolution
authorizing the use and disposal of CCRs at the El Coquí and
Peñuelas Valley landfills -- which the EQB had issued shortly after
the district court's prior ruling. AES-PR also sought summary
judgment under the federal Commerce Clause because the ordinances
"discriminate against products -- CCRs, including Agremax --
derived from imported coal" and improperly burden interstate and
foreign commerce in excess of "any putative local benefits." In
a cross-motion, the defendants sought summary judgment on AES-PR's
federal claims and dismissal of any remaining Commonwealth law
claims.
In its second Opinion and Order, the district court
reaffirmed its previous denial of summary judgment for AES-PR on
the federal preemption claim and granted summary judgment for
defendants on that claim, noting that AES-PR had not alleged any
changes in federal law that would affect the court's analysis.
AES Puerto Rico, L.P. v. Trujillo-Panisse, 199 F. Supp. 3d 492,
506, 519 (D.P.R. 2016) ("AES-PR II"). 12 On the Commonwealth
preemption claim, the court reviewed the provisions of the
Autonomous Municipalities Act giving municipalities the general
authority to take actions to protect "the health and safety of the
people," P.R. Laws Ann. tit. 21, § 4051(o), as well as those
12 As noted above, AES-PR had not renewed its request for
summary judgment based on federal preemption.
- 17 -
specifically authorizing municipalities to adopt "measures that
are necessary for [the improvement] and adequate control and
disposal of waste," id. § 4054(a) (alteration in original). See
AES-PR II, 199 F. Supp. 3d at 506. The court recognized that
municipal ordinances must give way to Commonwealth law when there
is a conflict, but observed that "[a] municipal ordinance that
regulates in the same area as a Commonwealth law . . . will not be
preempted 'unless it is impossible to harmonize it with the
[Commonwealth] law.'" Id. at 506-07 (second alteration in
original) (quoting Lopez v. Mun. de San Juan, 21 P.R. Offic. Trans.
71, 84 (1988)).
The court, however, declined to make the conflict
assessment concerning the Humacao and Peñuelas ordinances. It
noted that "[t]he Puerto Rico Supreme Court has not . . . resolved
whether resolutions of executive agencies carry the same power to
preempt as laws passed by the Puerto Rico Legislative Assembly,"
id. at 508, and it viewed that question under the Supremacy Clause
of the Commonwealth constitution as "a novel and complex issue of
state law," id. at 509. Comparing the issue to federal preemption,
the court observed that "the preemptive power" of federal agency
actions "depends on a myriad of factors and is a developing area
of jurisprudence." Id. at 508 & n.14 (citing cases). Describing
the Puerto Rico Uniform Administrative Procedures Act as similar
to the federal Administrative Procedures Act, the court concluded
- 18 -
that the preemptive force of the EQB actions at issue in this case
is thus a question of Puerto Rico constitutional law "best resolved
by the Puerto Rico Supreme Court." Id. at 508-09. 13 Accordingly,
the court declined to exercise jurisdiction over the Commonwealth
preemption claim. 14
The court also rejected AES-PR's claim under the
Commerce Clause, concluding that the ordinances do not
discriminate facially or in effect against out-of-state products.
Id. at 512. Although recognizing that the CCRS are derived from
imported coal, the court noted that "the Ordinances focus on CCRs,
which are produced domestically at the Guayama plant, not on the
imported coal used to create CCRs." Id. In any event, the court
observed, "[w]hether focusing on coal or CCRs, the burden of the
13The court also noted that "several of the Commonwealth law
issues presented are already being litigated in related cases in
Commonwealth courts." AES-PR II, 199 F. Supp. 3d at 519. In one
of those actions, the Municipality of Peñuelas sued Ecosystems,
Inc. seeking to enjoin the use of Agremax in the construction of
the Ecosystems Peñuelas Landfill. The resolution of that action
is discussed infra. In another civil action that was later
withdrawn, the Municipality of Humacao sought "a permanent cease
and desist order against the deposit of ash" in the El Coquí
landfill.
14 Although the court observed that "[d]istrict courts may
certify a question of state law to the state's supreme court when
the state issue is determinative and there is no controlling
precedent from the state court on the issue," it opted instead to
decline jurisdiction. 199 F. Supp. 3d at 509.
- 19 -
Humacao and Peñuelas Ordinances on interstate commerce is either
nonexistent or slight." Id. at 514. 15
On appeal, AES-PR challenges the district court's
rulings on both the federal and Puerto Rico preemption claims, as
well as on the federal Commerce Clause claim. The company asserts
that the ordinances "conflict with and frustrate the full
implementation of Congress's goals" in RCRA and likewise conflict
with the Commonwealth's environmental public policy as enacted
through EQB resolutions. The company further argues that, even if
the Commonwealth preemption claim raises a novel or complex issue
of Puerto Rico law, the court should have certified the question
to the Puerto Rico Supreme Court rather than dismissing the claim.
AES-PR also seeks reversal of the district court's Commerce Clause
ruling.
III.
We review de novo the district court's resolution of the
parties' cross-motions for summary judgment, Troiano v. Aetna Life
Ins. Co., 844 F.3d 35, 41-42 (1st Cir. 2016), and we may affirm
based on any ground supported by the record, id. at 42. In this
15
The court went on to consider, and ruled in favor of
defendants, on AES-PR's federal Contract Clause and due process
claims. 199 F. Supp. 3d at 514-18. As with the Commonwealth
preemption claim, it declined to exercise supplemental
jurisdiction over the remaining Commonwealth claims, "specifically
the Puerto Rico ultra vires, Contract Clause, and Due Process
Clause claims." Id. at 519.
- 20 -
instance, we have an advantage over the district court because of
a decision issued by the Puerto Rico Supreme Court after the
district court's ruling. See Autonomous Mun. of Peñuelas v.
Ecosystems, Inc., No. CC-2015-0325, Dec. 19, 2016, Certified
Translation ("Ecosystems"). As we shall explain, that recent
precedent confirms our reading of Puerto Rico's statutory
framework governing solid waste management, bolstering our
conclusion that the Humacao and Peñuelas ordinances are preempted
under Commonwealth law to the extent they bar uses of CCRs that
have been specifically approved by the EQB. Resolving the
Commonwealth preemption claim in favor of AES-PR makes it
unnecessary for us to address AES-PR's other arguments on appeal,
and we thus limit our discussion to that claim. 16
16
We recognize that the district court declined to exercise
jurisdiction over the Commonwealth preemption claim, a judgment
that ordinarily is subject to review only for abuse of discretion.
See, e.g., Ramos-Echevarría v. Pichis, Inc., 659 F.3d 182, 191
(1st Cir. 2011). However, the court's decision to dismiss that
claim was premised on its view that the preemptive force of EQB
resolutions was an unresolved issue of law. To the extent there
was uncertainty, we believe it was eliminated by the recent
Ecosystems decision. Hence, the court's rationale is no longer
sustainable as a matter of law and, indeed, the court indicated
that, absent the ongoing Commonwealth proceedings and the legal
uncertainty, it would have exercised supplemental jurisdiction.
See AES-PR II, 199 F. Supp. 3d at 519 (noting that "the advanced
stage of the litigation and the costs of translating documents
into English weigh in favor of the Court exercising supplemental
jurisdiction"). We thus consider the Commonwealth preemption
issue de novo -- like any other legal question raised on appeal.
See Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct.
1744, 1748 (2014) ("Traditionally, decisions on 'questions of law'
are 'reviewable de novo,' decisions on 'questions of fact' are
- 21 -
A. The Statutory Framework
As described above, Puerto Rico law envisions a
collaboration between Commonwealth and local authorities in
dealing with solid waste. See, e.g., P.R. Laws Ann. tit. 21,
§ 4055. However, in the case of a conflict, the statutory scheme
explicitly recognizes the preeminence of Commonwealth law. Id.
(stating that municipal measures concerning solid waste management
must be "in harmony with the environmental public policy of the
Commonwealth of Puerto Rico"); see also Liberty Cablevision of
P.R., Inc. v. Mun. of Caguas, 417 F.3d 216, 221-22 (1st Cir. 2005)
(noting that municipalities exercise only those powers derived
from the state, and, thus, "every municipal ordinance must be in
harmony with [state] government law, which shall prevail in
conflicting situations" (alteration in original) (quoting Lopez,
21 P.R. Offic. Trans. at 84)); see also P.R. Laws Ann. tit. 21,
§ 4003 (stating that "[t]he municipality is the juridical entity
of local government, subordinated to the Constitution of the
Commonwealth of Puerto Rico and to its laws"); id. § 4051(o)
'reviewable for clear error,' and decisions on 'matters of
discretion' are 'reviewable for "abuse of discretion."'" (quoting
Pierce v. Underwood, 487 U.S. 552, 558 (1988))); see also, e.g.,
Smith v. Holder, 627 F.3d 427, 433 (1st Cir. 2010) (concluding
that a decision "based on legal error" was an abuse of discretion).
- 22 -
(stating that municipal authority is "subject to applicable
[Commonwealth] legislation").
The district court recognized this legislated hierarchy,
but it questioned whether EQB resolutions carry the force of law
such that an EQB permit allowing disposal of CCRs in a sanitary
landfill would necessarily supersede a local ordinance prohibiting
that disposal. See AES-PR II, 199 F. Supp. 3d at 508 ("The Puerto
Rico Supreme Court has not . . . resolved whether resolutions of
executive agencies carry the same power to preempt as laws passed
by the Puerto Rico Legislative Assembly."). The court
acknowledged, however, that if EQB resolutions and landfill
permits authorized thereunder "carry the full force of law, then
the municipal Ordinances would likely be preempted to the extent
that they conflict." Id. As we have recounted, the district court
declined to delve into the legal force of the EQB authorizations
at issue in this case. See id. at 509.
Unlike the district court, we find that the governing
statutes are themselves revealing on the role played by EQB
resolutions in establishing Commonwealth law. As an initial
matter, the EQB is given the overall authority for the
Commonwealth's compliance with RCRA, see P.R. Laws Ann. tit. 12,
§ 8002g, and it has express authority to adopt "rules and
regulations for solid waste disposal" and "establish the sites and
methods to dispose of such solid waste," id. § 8002c(b)(4)(A). In
- 23 -
other words, the Commonwealth's law on solid waste management is
made by the EQB.
Moreover, the "final resolution[s] or decision[s]" of
the EQB's Governing Board are treated as decisive under
Commonwealth law, subject only to review by the courts. Id.
§ 8002c(a)(8). By statute, EQB decisions may not be "stayed,
unless so ordered by the Circuit Court of Appeals of Puerto Rico
or by the [EQB Board] itself." Id.; see also id. § 8002f(a)(4)
(providing that "[a]ny person adversely affected by a resolution,
order or decision of the Governing Board [of the EQB] may request
the latter to reconsider its determination or request a review by
the Court of Appeals of Puerto Rico"). As further evidence that
EQB decisions carry the full force of law -- including resolutions
such as the one authorizing use and disposal of CCRs at the
Peñuelas and Humacao landfills -- there are sanctions imposed for
failure to comply with the agency's rulings. Individuals who fail
to comply with any EQB "resolution, order or agreement . . . shall
be guilty of a misdemeanor," and also may be subject to criminal
or administrative fines, damages, and sanctions. Id. §§ 8002j(a)-
(c) (emphasis added).
In our view, these provisions (1) assigning
responsibility to the EQB for Puerto Rico's policy on solid waste
disposal, (2) limiting any review of EQB decisions to judicial
actions, and (3) imposing criminal consequences for failure to
- 24 -
comply with EQB directives definitively establish final EQB
decisions on solid waste as Commonwealth law with preemptive power
over local ordinances. These provisions are explicitly
comprehensive in their scope, giving the force of law not only to
generally applicable rules and regulations, but also to "any
resolution, order or agreement dictated by the Board." Id.
§ 8002j(a).
We are all the more persuaded of this view in light of
the Puerto Rico Supreme Court's recent Ecosystems decision, in
which both a majority opinion and concurrence address the
preemptive effect of EQB decisions on matters relating to the
handling of solid waste -- and, specifically, on the use of CCRs.
We thus turn to that decision.
B. The Ecosystems Opinion
In the Ecosystems case, the Municipality of Peñuelas
sought to enjoin Ecosystems, Inc. from using Agremax as filler
material in the construction of its sanitary landfill. Ecosystems,
Inc. had been granted a construction permit by Puerto Rico's Office
of Permit Management and the EQB to build the facility, but the
permit did not specify the materials to be used in the project.
See Ecosystems Majority Op., at 2 ("Ecosystems Op."). Following
enactment of the Peñuelas ordinance banning the deposit of CCRs in
the municipality, Ecosystems, Inc. obtained an amended permit
"authorizing, among other things, the use of manufactured
- 25 -
aggregate as filling material in the construction." Id. at 3.
The amended permit, however, did not reference or approve any
particular type of aggregate fill material. Id. The Municipality
thus maintained that it could bar the use of Agremax pursuant to
its ordinance because that prohibition did not conflict with the
EQB's generally worded authorization. See Ecosystems Concurring
Op. at 8 ("Concurring Op.") (noting that manufactured aggregates
may be created from "rubble from demolition of buildings" and
"removed pavement," as well as from coal ash).
In a lengthy analysis, the Puerto Rico Supreme Court
first took up the question of which entity is "in charge of
establishing in Puerto Rico the requirements applicable to the
handling and disposal of . . . solid waste," Ecosystems Op. at 8-
9, and it reviewed the missions of the three levels of government
that share responsibility for setting the environmental agenda in
the Commonwealth, id. at 9-20. Noting that the EPA's 2015 Rule
established only "minimum national criteria to dispose of coal
combustion residuals," id. at 11-12 (emphasis omitted), the court
observed that "states may impose stricter requirements in relation
to this matter," id. at 12 (emphasis omitted); see also id. at 13
("[I]t is undeniable that a state may validly prohibit the disposal
and use of residuals from the burning of coal for energy production
within its territorial limits.").
- 26 -
The court then considered the role of the EQB. It noted
that the agency is authorized "[b]y express mandate" to "deal with
matters related to adequate disposal of solid waste," id. at 14
(citing P.R. Laws Ann., tit. 12, § 8002c), including by means of
"orders that it may deem necessary to make sure that the operation
of these plants or systems does not harm the environment," id. at
15. After reviewing EQB regulations governing solid waste, the
court summed up: "In short, [EQB] is the agency in charge of
determining the form and manner in which to install, operate and
maintain facilities for the final disposal of solid waste, for
which it approves construction permits in accordance with its
public policy." Id. at 17.
Turning to the role of municipalities, the court noted
that the Commonwealth's public policy is to give municipalities
"as much autonomy as possible and provide them with the financial
tools and necessary powers and faculties to assume a central and
fundamental role in the urban, social and economic development of
our country." Id. at 18. These powers, the court stated, include
"provid[ing] by way of ordinance the way in which the handling of
solid waste shall be carried out." Id. at 19 (citing P.R. Laws
Ann. tit. 21, § 4055) (emphasis omitted). However, the court also
recognized that municipal power is subject to a higher authority,
and a municipality cannot "promote and further its own public
policy" if that policy conflicts with Commonwealth law. See id.
- 27 -
at 20 (stating that a municipality may not act "in contravention
with the public policy established by the State" (citing López, 21
P.R. Offic. Trans. at 84)).
The court then addressed the specific case before it,
observing that the amended EQB permit issued for the Ecosystems
landfill did not "expressly authorize[]" the use of CCRs in the
construction. Id. at 21. Rather, as noted above, "the
authorization to fill with manufactured aggregate was issued in
the generic or broad definition of the term," Concurring Op. at 9,
meaning that it covered both Agremax and aggregate manufactured
from materials other than coal ash. The court also pointed out
that the permit did not purport to override "local prohibitions."
Ecosystems Op., at 21. In addition, the court observed that
neither the EPA nor the EQB had imposed rules governing the use of
CCRs as construction materials. Id. at 22-23. Hence, although
the EQB permit theoretically authorized the use of Agremax in the
landfill construction -- as one type of "manufactured aggregate"
-- neither the permit nor any other applicable law specifically
addressed or approved the use of Agremax in the construction
project. The court thus identified no federal or Commonwealth law
in direct conflict with the Peñuelas ordinance.
Accordingly, the court concluded that the ordinance's
prohibition of coal ash as fill material could be enforced against
Ecosystems, Inc. Id. at 24. That conclusion rested, however, on
- 28 -
the court's determination that the EQB "at present has not
preempted the field as to the use of aggregate manufactured from
ash produced while burning coal as construction material." Id. at
23 (emphasis omitted). Importantly, the court recognized that the
EQB could accomplish preemption: "Nothing prevents the [EQB] from,
in the future, exercising its regulatory power as to this matter
and expressly preempting the field." Id. Indeed, the court
reiterated near the conclusion of its opinion "that what is decided
herein by this Court does not prevent the [EQB] from establishing
public policy for the Commonwealth of Puerto Rico as to this
matter, if it deems appropriate and in accordance with the legally
provided mechanisms." Id. at 29. A concurring opinion emphasized
the same point:
We clarify, as done in the Court Opinion,
that the [EQB] may, as a matter of public
policy of the State, regulate the use of
aggregates including the ash produced when
burning coal. The decision taken by the Board
as to this matter shall necessarily prevail
over municipal decisions. Otherwise, this
would lead to balkanization of the State.
Concurring Op. at 10 n.10.
The two opinions leave no doubt that this preemptive
force attaches to EQB resolutions addressing specific
circumstances, as well as to the agency's more broadly based
regulations. Both opinions focus on the EQB-approved construction
permit for the Peñuelas Valley landfill construction project. The
- 29 -
majority notes that, even as amended after the Peñuelas ordinance
was enacted, "the permit did not state anything as to the use of
this type of construction material [CCRs]. That is, the material
prohibited by the Municipal Ordinance was not expressly
authorized." Ecosystems Op. at 21. From this observation, we
think it a fair and obvious inference that, if the permit had
expressly authorized the use of CCRs, the municipal ordinance could
not have overruled the EQB. Indeed, later in their opinion, the
majority confirmed that the ordinance's enforceability would be
precluded by conflicting EQB action, including in a permit, when
they explained that the ordinance was enforceable against
Ecosystems, Inc. "as it does not in any way violate the current
public policy of the Commonwealth of Puerto Rico or the
construction permit issued by the [EQB and Permit Office]." Id.
at 24 (emphasis added).
The concurring member of the court likewise treated the
EQB permit as authoritative, noting that the amended permit issued
to Ecosystems, Inc. "was approved by the appropriate agencies and
that -- for the moment -- it is in effect." Concurring Op. at 7;
see also id. (observing that "it is a well-known rule that
administrative proceedings are assumed to be correct and in
accordance with regulations"). And, like the majority, the
concurring justice saw room for the Peñuelas ordinance alongside
federal and Commonwealth law because the amended Ecosystems permit
- 30 -
authorized the use of manufactured aggregate generically, id. at
9, and the municipal ordinance could properly supplement the permit
in the absence of "federal or state regulations related to the use
of ash as aggregate material for fill," id. at 7. Hence, she
observed, Ecosystems, Inc. could use any manufactured aggregate
"as long as it is not aggregate from ash produced by burning coal"
-- a ruling that "sought to harmonize the regulatory faculties of
the Municipality with the State's reasoning power, as mandated by
the Autonomous Municipality Act." Id. at 9-10.
In this case, the question is whether EQB resolutions
and permits that explicitly approve particular uses for CCRs
preempt contrary municipal ordinances. Based on the foregoing
discussion, we must conclude that they do. In contrast to the
broad, generic language of the construction permit at issue in the
Ecosystems case, the EQB's 2015 Resolution provides, inter alia,
that "[t]he use of rock ash [i.e., Agremax] is authorized as a
material for the solidification process at the Peñuelas [landfill]
in addition to the use of the CCR, which has been already
authorized." The Resolution also gives explicit permission "to
include the CCR and rock ash in the list of non-hazardous solid
waste that may be disposed of at the Peñuelas [landfill] and
Humacao [landfill]." The Resolution further contemplates the use
of rock ash as alternative daily cover at the two landfills,
subject to the EQB's approval of a petition for a waiver.
- 31 -
Ecosystems Peñuelas Landfill's operating permit likewise
explicitly identifies CCRs among the types of non-hazardous solid
waste "to be received for disposal" at the facility. Appellees do
not contend that the terms "CCR" or "rock ash," as used in the EQB
resolutions here, are generic in the same way that the term
"manufactured aggregate" was held to be in Ecosystems. Nor do
they counter AES's argument that Ecosystems conclusively
established that EQB resolutions can have preemptive effect.
Hence, in the words of the Ecosystems concurrence, "[t]he decision
taken by the [EQB] as to this matter shall necessarily prevail
over municipal decisions." Id. at 10 n.10.
IV.
In sum, the EQB's authorization for particular uses and
disposal of CCRs in the Humacao landfill and the two Peñuelas
landfills preempts the bar on any such uses and disposal imposed
by the challenged municipal ordinances. According to the record
before us, the EQB has authorized (1) disposal of CCRs at all three
landfills, and (2) the use of CCRs, including Agremax, for
solidification at the Peñuelas Valley Landfill. Further, the EQB
has invited requests for waivers to allow the use of Agremax as
alternative daily cover at the three landfills.
Thus, to the extent AES-PR has complied with all
regulatory prerequisites for the deposit of CCRs at the three
landfills and obtained the EQB's approval to move forward, it is
- 32 -
entitled to do so. Accordingly, we vacate the summary judgment in
favor of the defendants, and remand the case to the district court
with directions that it enter judgment for AES-PR consistent with
this decision. Each party shall bear its own costs.
So ordered.
- 33 -