United States v. JG-24, Inc.

United States Court of Appeals
For the First Circuit
No. 04-2577

UNITED STATES OF AMERICA,

Plaintiff, Appellee,

v.

JG-24, INC.; JORGE ORTIZ; GLORIA ALVAREZ, a/k/a
GLORIA ORTIZ; DURA MAS, INC.; REAL PROPERTY LOCATED
AT PR ROAD #675, KM. 4.0, BARRIO BAJURAS SECTOR LOS
CHORROS, VEGA ALTA, PUERTO RICO,

Defendants, Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Raymond L. Acosta, Senior U.S. District Judge]

Before

Boudin, Chief Judge,

Cyr, Senior Circuit Judge,

and Lipez, Circuit Judge.

Julie A. Soderlund for appellant.
Robert H. Oakley, Attorney, Environment & Natural Resources
Division, with whom Sue Ellen Wooldridge, Assistant Attorney
General, James C. Kilbourne, and Elizabeth Yu, Attorneys,
Environment & Natural Resources Division, were on brief for
appellee.

February 16, 2007
 CYR, Senior Circuit Judge. The owners and operators of

two fiberglass manufacturing facilities in Puerto Rico appeal from

a district court judgment which determined them jointly and

severally liable for the costs of a hazardous-substance removal

action conducted by the United States Environmental Protection

Agency (EPA) pursuant to the Comprehensive Environmental Response,

Compensation and Liability Act, 42 U.S.C. § 9607(a) (CERCLA), and

imposing civil penalties for their failure to respond in writing to

the EPA’s request for information pursuant to the Resource

Conservation and Recovery Act, 42 U.S.C. § 6927(a) (RCRA). We

affirm.

I

BACKGROUND

Between 1992 and 2000, JG-24, Inc. (“JG-24"), a company

wholly owned by Jorge Ortiz and Gloria Alvarez, operated a

fiberglass manufacturing facility in Vega Alta, Puerto Rico (“Vega

Alta site”), which utilized various materials (e.g., styrene,

acetone) classified as “hazardous substances” under CERCLA, 40

C.F.R. § 302.4. Ortiz also owned Fiberglass Dura Mas, Inc. (“Dura

Mas”), which operated another fiberglass manufacturing and storage

facility in nearby Cataño, Puerto Rico (“Cataño site”).

In December 1997, EPA inspectors visited the Vega Alta

site, observed large leaking metal drums scattered throughout the

site, and detected the strong odor of airborne solvents. In

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February 1998, the EPA obtained a warrant to conduct another

inspection, and soil samples tested positive for CERCLA-regulated

hazardous substances. Thereafter, defendants declined to comply

with the administrative notices of mandatory access to the site

issued by the EPA.

In April 1999, the EPA obtained a warrant to conduct a

removal evaluation inspection at the Vega Alta site, which

inspectors described as a “war zone,” containing hundreds of

deteriorating and leaking drums strewn throughout the site,

evidence that waste materials had been burned or buried below

ground, and high concentrations of airborne styrene and acetone

vapors. Tests revealed that the drums and surrounding soil not

only contained hazardous substances regulated by CERCLA, but also

highly flammable hazardous waste prohibited by RCRA, which strictly

regulates the manner in which these wastes must be stored and

disposed.

Following its April 1999 inspection, the EPA determined

to undertake a removal action at the Vega Alta site, based on its

express findings that (i) the metal drums continued to deteriorate

and discharge CERCLA-regulated hazardous substances; (ii)

preliminary soil sample tests descried high concentrations of those

hazardous substances; (iii) this eflux created a fire risk, and

because the site is situated on porous limestone atop a groundwater

aquifer, it jeopardized local drinking water supplies; (iv) no

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other federal or state agency was equipped to undertake the

cleanup; and (v) since the threatened release, migration, and fire

were imminent, the removal action should be exempt from the normal

$2 million cost cap, see 42 U.S.C. § 9604(c)(1). See 40 C.F.R. §

300.415(b)(2); infra notes 2 & 4. When the EPA notified the

defendants of the EPA decision, defendants repeatedly refused to

permit EPA access to the site.

In August 2000, the EPA commenced the instant CERCLA and

RCRA actions against the defendants in the federal district court.

The EPA then obtained a court order for unimpeded access to the

Vega Alta site, and during the period from October 2000 through

August 2001, it removed from the site seven hundred cubic yards of

soil contaminated with hazardous substances and two thousand five

hundred leaking drums from its surface and subsurface.

During August 2001, the EPA also discovered one hundred

leaking drums at the nearby Cataño site, and issued a RCRA Notice

of Violation and Information Request to Dura Mas and Ortiz for

company data concerning what (if any) hazardous substances had been

stored or disposed of at the facility. See 42 U.S.C. § 6927(a);

infra note 7. Defendants failed to respond to the information

request.

Subsequently, the EPA amended its complaint in the

pending federal court action to seek, inter alia, recovery of its

removal costs at the Vega Alta site (approximately $4.1 million),

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and civil penalties for defendants’ failure to respond to the

August 2001 Information Request at the Cataño facility. See 42

U.S.C. § 6928(a)(1).1

Following a nine-day bench trial, the district court held

that defendants JG-24, Ortiz, and Alvarez were jointly and

severally liable for all costs of the removal action at the Vega

Alta site, then imposed $263,000 in civil penalties against Dura

Mas and Ortiz for failure to comply with the August 2001

Information Request for the Cataño site. United States v. JG-24,

Inc., 331 F. Supp. 2d 14, 75 (D.P.R. 2004). Defendants appeal from

the judgment.

1
The RCRA penalty provision provides, in pertinent part:

[W]henever on the basis of any information the
Administrator determines that any person has violated or
is in violation of any requirement of this subchapter,
the Administrator may issue an order assessing a civil
penalty for any past or current violation, requiring
compliance immediately or within a specified time period,
or both, or the Administrator may commence a civil action
in the United States district court in the district in
which the violation occurred for appropriate relief,
including a temporary or permanent injunction.

42 U.S.C. § 6928(a)(1).

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 II

DISCUSSION

A. The EPA’s Characterization of the Cleanup as a “Removal
Action”

Appellants first contend that the district court erred in

finding them liable for the EPA’s response costs at the Vega Alta

site, in that the EPA’s cleanup action was inconsistent with the

National Contingency Plan (NCP), 40 C.F.R. pt. 300 (2004), and thus

cannot satisfy the CERCLA definition of a “removal action.” See 42

U.S.C. § 9601(23).2 Appellants specifically argue that the EPA

action was inconsistent with the NCP because, inter alia, (i) the

2
Subsection 9601(23) defines “remove” or “removal” as:

the cleanup or removal of released hazardous substances
from the environment, such actions as may be necessary
[to take] in the event of the threat of release of
hazardous substances into the environment, such actions
as may be necessary to monitor, assess, and evaluate the
release or threat of release of hazardous substances, the
disposal of removed material, or the taking of such other
actions as may be necessary to prevent, minimize, or
mitigate damage to the public health or welfare or to the
environment, which may otherwise result from a release or
threat of release.

42 U.S.C. § 9601(23). By contrast, a “remedial action” is defined
as:

[T]hose actions consistent with permanent remedy taken
instead of or in addition to removal actions in the event
of a release or threatened release of a hazardous
substance into the environment, to prevent or minimize
the release of hazardous substances so that they do not
migrate to cause substantial danger to present or future
public health or welfare or the environment.

Id. § 9601(24).

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NCP requires that a removal action begin “as soon as possible”

after discovery of contamination, see United States v. W.R. Grace

& Co., 429 F.3d 1224, 1233 (9th Cir. 2005), cert. denied, 127 S.

Ct. 379 (2006) (quoting 40 C.F.R. § 300.415(b)(3)), whereas the EPA

waited twenty-one months to begin the removal at the Vega Alta

site; and (ii) a “Final Pollution Report” issued in October 2002

refutes the district court’s factual finding that there were

significant levels of RCRA hazardous substances found at the Vega

Alta site, and therefore undercuts the court’s related decision

that the EPA reasonably decided to undertake a CERCLA removal

action. They suggest that, as a consequence of this

mischaracterization of the cleanup as a “removal action,” the EPA

should be liable on their Federal Torts Claims Act (FTCA)

counterclaim for damages to the site resulting from the cleanup,

and/or the EPA should not be permitted to recover costs in excess

of the $2 million cost cap permitted for some removal actions.

Questions concerning the interpretation of CERCLA

normally are reviewed de novo, see Am. Cyanamid Corp. v. Capuano,

381 F.3d 6, 12 (1st Cir. 2004), with appropriate deference given to

agency interpretations, see Chevron U.S.A. v. Natural Res. Def.

Council, 467 U.S. 837, 843 (1984), and the EPA’s decision whether

to conduct a removal action is reviewed under the deferential

“arbitrary and capricious” standard, 42 U.S.C. § 9613(j)(2). Since

appellants did not raise their legal arguments below, however, the

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arguments are forfeited, and we review them on appeal for plain

error only,3 which requires that appellants demonstrate (i) an

error (ii) which was clear or obvious and which not only (iii)

affected their substantial rights, but also (4) seriously impaired

the fairness, integrity, or public reputation of the judicial

proceedings. See Cipes v. Mikasa, Inc., 439 F.3d 52, 55-56 (1st

Cir. 2006).

We perceive no “clear or obvious” error. The contention

that the cleanup of the Vega Alta site was inconsistent with the

3
Appellants filed no reply brief to the government’s
contention that they did not preserve these “removal action” issues
in the district court, see Gonzalez v. El Dia, Inc., 304 F.3d 63,
74 (1st Cir. 2002) (noting that party’s failure to file a reply
brief contesting the opposing party’s allegations of forfeiture is
itself some evidence that the issues were forfeited), nor has our
independent review of the record unearthed any articulation of
these legal issues by the defense below. At oral argument, the
appellants contended that issue preservation occurred when the
district court announced that it would assume, without taking
expert evidence, that the EPA’s cleanup was properly characterized
as a “removal action.” We disagree. At that juncture, appellants’
trial counsel should have notified the court – but did not – that
appellants were contesting the EPA’s characterization of the
cleanup as a removal action. Appellants also maintain that they
preserved the legal issues merely because the appellate record
contains all the facts necessary to decide them. This contention
is patently absurd. Many hypothetical legal issues may lurk in a
given factual record, yet the district court is not obligated to
reach such issues absent counsels’ explicit identification of the
legal questions actively disputed. Indeed, given that appellants’
legal contentions turn in part on whether the EPA’s cleanup was
“inconsistent” with the NCP, their failure to raise these
contentions deprived the government of the opportunity to develop
a factual record refuting the alleged inconsistency. See Cool
Moose Party v. Rhode Island, 183 F.3d 80, 83-84 (1st Cir. 1999)
(noting that finding of forfeiture is “particularly appropriate”
where preservation would have enabled further development of
factual record below).

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NCP because the EPA did not initiate it “as soon as possible” after

discovery of contamination falls well short of the mark.

Appellants rely on W.R. Grace, in which the court merely noted

that, in some circumstances, the manner in which the EPA executes

a cleanup plan may undercut or belie its initial characterization

of the plan as a “removal action.” 429 F.3d at 1232-34 (finding,

however, that EPA did comply with 40 C.F.R. § 300.415(b)(3)). For

example, because the EPA’s initial characterization depended on its

determination of an imminent risk of fire and aquifer contamination

at the Vega Alta site, see 40 C.F.R. § 300.415(b)(2),4 one would

4
NCP regulations require the EPA to consider eight factors
before deciding whether to conduct a removal action:

(i) Actual or potential exposure to nearby human
populations, animals, or the food chain from
hazardous substances or pollutants or
contaminants;
(ii) Actual or potential contamination of drinking
water supplies or sensitive ecosystems;
(iii) Hazardous substances or pollutants or
contaminants in drums, barrels, tanks, or
other bulk storage containers, that may pose a
threat of release;
(iv) High levels of hazardous substances or
pollutants or contaminants in soils largely at
or near the surface, that may migrate;
(v) Weather conditions that may cause hazardous
substances or pollutants or contaminants to
migrate or be released;
(vi) Threat of fire or explosion;
(vii) The availability of other appropriate federal
or state response mechanisms to respond to the
release; and
(viii) Other situations or factors that may pose
threats to public health or welfare of the
United States or the environment.

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expect a reasonably expeditious execution of the cleanup plan.

Appellants’ predicament, however, is threefold.

The appellate record demonstrates that the EPA’s April

1999 inspection described the Vega Alta site as a “war zone”

littered with exposed flammable hazardous materials, and the EPA

made all the statutorily required factual determinations pursuant

to § 300.415(b)(2) necessary to its initial characterization of the

cleanup as a “removal action.” Further, a delay of twenty-one

months is not per se unreasonably dilatory, and in part because of

appellants’ failure to raise the legal issue below, the appellate

record contains no factual basis from which we fairly might assess

whether twenty-one months was not reasonably prompt either in terms

of the average execution time of EPA cleanups in general, or of

cleanups conducted in comparable circumstances. Finally,

appellants are in an especially poor position to argue that any

prorogation of the cleanup efforts was unreasonable, given their

repeated refusals voluntarily to allow EPA access to the site,

which required that the EPA seek warrants to enter. Absent record

foundation, appellants cannot begin to demonstrate any error which

was “clear or obvious.” W.R. Grace, 429 F.3d at 1245 (“Once we

determine that a response action on the whole is, by nature,

classified as a removal action under the law, we will not delve

40 C.F.R. § 300.314(b)(2).

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further to second-guess the underlying data absent a showing of

specific evidence that the EPA's conclusions were not warranted.”).

Likewise, we discern no “clear or obvious” error based on

the appellants’s assertion that a “Final Pollution Report” refutes

the district court’s finding that there had been significant levels

of RCRA hazardous substances stored and disposed of at the Vega

Alta site, and therefore undermines the court’s related decision

that the EPA was not arbitrary or capricious in undertaking a

CERCLA removal action. The Final Pollution Report was issued in

October 2002, long after the EPA initially characterized the

cleanup as a removal action, and a year after it initiated the

cleanup. Under CERCLA, judicial review normally is limited to the

administrative record as it existed at the time of the challenged

agency action. See Camp v. Pitts, 411 U.S. 138, 142 (1973). That

contemporary record, including the portentous results of the EPA’s

April 1999 inspection, graphically depicts Vega Alta as a “war

zone” with hundreds of deteriorating and leaking drums strewn

throughout the property, evidence that waste materials had been

buried below ground, and high concentrations of styrene and acetone

vapors in the air. Normally, we do not allow supplementation of

the administrative record unless the proponent points to specific

evidence that the agency acted in bad faith. See Town of Norfolk

v. U.S. Army Corps of Eng’rs, 968 F.2d 1438, 1458-59 (1st Cir.

1992). At most, appellants charge that the Final Pollution Report

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proved the EPA wrong or overcautious in its initial assessment of

the RCRA threat. Yet more importantly, the government aptly notes

that the Final Pollution Report purports to detail only those RCRA

wastes recovered during the excavation, and does not preclude a

finding – based on the condition of the property (e.g., blatant

evidence that appellants previously had burned RCRA wastes) – that

substantial amounts of these RCRA wastes already had been stored

and/or disposed of at the site during appellants’ pre-cleanup

operations which could not be recovered during the removal action.

Appellants also fail to specify how the district court’s RCRA

findings – whether or not refuted by the Final Pollution Report –

undercut the district court’s discrete finding that the EPA’s

initial assessment of the CERCLA violations at the Vega Alta site

was neither arbitrary nor capricious. See Acushnet Co. v. Mohasco

Corp., 191 F.3d 69, 76 (1st Cir. 1999) (noting that CERCLA

regulates the designated hazardous substances “however

insignificant” the amount). A fortiori, appellants have not met

their burden to demonstrate an error which was “clear or obvious.”5

B. Civil Penalties for Noncompliance with RCRA § 6927

Appellants Ortiz and Dura Mas next argue that the

5
As we conclude that the district court did not commit plain
error in upholding the EPA’s characterization of the cleanup as a
“removal action,” we also must affirm its decision that the EPA
properly exceeded the $2 million cost cap for removal actions, as
well as its decision to dismiss appellants’ FTCA counterclaim for
damages.

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district court erred in imposing civil penalties for their failure

to respond to the EPA’s August 2001 Information Request for the

Cataño site because, only fourteen days after that request, the EPA

made an on-site inspection, during which the EPA had the statutory

authority to collect the requested information itself. See 42

U.S.C. § 6927(a).6

We normally review questions regarding the interpretation

of RCRA provisions de novo, see Maine People’s Alliance & Natural

Res. Def. Council v. Mallinkrodt, Inc., 471 F.3d 277, 286 (1st Cir.

2006), giving appropriate deference to agency interpretations, see

6
Section 6927(a) provides, in pertinent part:

For purposes of developing or assisting in the
development of any regulation or enforcing the provisions
of this chapter, any person who generates, stores,
treats, transports, disposes of, or otherwise handles or
has handled hazardous wastes shall, upon request of any
officer, employee or representative of the Environmental
Protection Agency, duly designated by the Administrator
. . . furnish information relating to such wastes and
permit such person at all reasonable times to have access
to, and to copy all records relating to such wastes. For
the purposes of . . . enforcing the provisions of this
chapter, such officers, employees or representatives are
authorized-

(1) to enter at reasonable times any establishment
or other place where hazardous wastes are or have
been generated, stored, treated, disposed of, or
transported from;

(2) to inspect and obtain samples from any person
of any such wastes and samples of any containers or
labeling for such wastes.

42 U.S.C. § 6927(a).

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Chevron U.S.A., 467 U.S. at 843. Appellants did not raise their

statutory construction before the district court, however, so we

again review only for plain error. See Cipes, 439 F.3d at 55-56;

supra note 3.

Any error in refusing to employ appellants’ unarticulated

statutory interpretation was not remotely “clear or obvious.”

Cipes, 439 F.3d at 55-56. Appellants cite no case authority for

the proposition that an intervening EPA inspection relieves a party

of the responsibility to respond in writing to an RCRA Information

Request. The RCRA’s plain language sets forth the two remedies as

distinct and cumulative (viz., “furnish information relating to

such wastes and permit such person at all reasonable times to have

access”) (emphasis added), which comports with Congress’s expressed

intention that the RCRA serve the broadest remedial purposes. See

United States v. Charles George Trucking Co., 823 F.2d 685, 689

(1st Cir. 1987). “By authorizing the agency to mount inspections

and to collect information from persons and entities involved with

hazardous residues, § 6927(a) directly facilitates the government’s

ability to battle the polluters.” Id. (emphasis added). As the

party with the greatest knowledge and control of the pertinent

records, the person receiving an Information Request is in the best

position to cull the records with maximum efficiency. Accordingly,

we discern no plain error in the district court’s decision to

impose per diem civil penalties for appellants’ conceded

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noncompliance with the § 6927(a) Request.7

Affirmed.

7
Oddly, appellants also challenge – as “irrelevant” – the
district court’s decision to pierce the corporate veil of JG-24 and
Dura Mas to impose strict liability on their individual owners and
operators (viz., Ortiz and Alvarez). They observe that CERCLA and
RCRA already make the individual owners and operators of corporate
polluters jointly liable for cleanup costs. Appellants did not
preserve this issue below. If the veil-piercing is indeed
irrelevant, however, they cannot show that the district court’s
decision “affected their substantial rights,” and thus they cannot
demonstrate plain error. See Cipes, 439 F.3d at 55-56.

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